Mr. Mickos, are you sure about Oracle?

I think the urge to post a reply to Nick Carr's piece 'Oracle's open source rollup' came because I work at Oracle and after a little more than a year working there, am beginning to understand how this company ticks. In general, I thought Nick was open to the idea that Oracle may be headed to some interesting place with its OSS acquisitions, but it was the comment by mySQL CEO Marten Mickos towards the end of Nick's post that made me sit up and write out this rebuttal.

Before I start, I did hear the buzz somewhere that the Oracle-JBoss deal closed last week for $485m. Now that would be an amazing development!

Also by the way, this is the first post on this blog that's not about on-demand services, but I think it marks the beginning of my intent to start writing on Open Source as well out here. They're two different animals, On-demand and OSS, but in ways not entirely unrelated. They're both about the collision between the worlds of software and services. They're both about marginal cost economics of software products continuing to play their hand, with software prices tending ever closer towards reflecting the cost of service delivery and product costs tending to reflect...well..marginal costs. :o They're both where the future of the industry is going. Currently, both suited for different purposes - OSS for infrastructure software, and on-demand for Apps delivery - but that's not a strict divide, and they are both increasingly intertwined parts of the same services. RightNow being a perfect example here of on-demand service running on open source infrastructure.

Getting back to Mr. Mickos' comment, I think he underestimates his opponent. Oracle is fully aware of the commoditization that OSS is driving up the tech stack and the consequent blur its creating between software and services. Of licensed databases selling on Linux, Oracle has an 80%+ market share so they're pretty warm to working with OSS. About 60% of their revenue comes from support services, so they know the value services drive. Also - recent hire is Omar Tazi (check his blog here), Oracle's chief evangelist for OSS. The fact is, Oracle is quickly sizing up the OSS force. I think their OSS acquisition moves - Sleepycat last week, possibly JBoss this week, maybe Zend as well...reflect a trade-off between the uncontrollable risk to proprietary license revenue, versus the more controllable risk of baking in OSS IP strategies into the company's development and business model. Tazi even calls it OPAL (Oracle, PHP, Apache, Linux)!

From the community angle, deep technology firms like Oracle, Sun, IBM and Microsoft tend to understand how their business success emerges out of talented engineers and their problem solving vision. A lot of talented developers today are passionate about working for OSS projects. What better way to align with their interests than to compensate them for their labor through OSS acquisitions, afford them the freedom to continue tinkering with a sustained focus on IP creation, while providing a reliable, global service infrastructure to business users who need it and will pay for it. Ofcourse, Microsoft may take longer to figure this out. There's an axiom there - the more the perceived threat to a company's business, the better it sizes up the threat and the faster it responds to it (call it Mohit's axiom ;) )

So that's where I think Oracle is heading. While I work at Oracle, I'm nowhere near privy to what Larry is really thinking right now about how to play this game. But I am continually awed with his business sense and ability to keep Oracle ahead in the game.