Totally expectable, the sun has gone up and down for the past two weeks since Sun bought MySQL for $1 billion and we still trust in MySQL - do we trust in Sun?

In fact, Sun paid a high premium for MySQL’s credibility (aka brand value) to benefit from the high profile of the cute dolphin publicly. MySQL simply knows how to play the Open Source game right, that’s their largest asset. How high is it actually?

Let’s look at MySQL’s reputation management:

• MySQL is everybody’s Open Source darling. Their consistent brand design created trust and allowed for the amortization of goodwill.
• In the past 5 years, there was no proof of the viability of an Open Source business model without mentioning MySQL. MySQL is an Open Source thought leader.
• MySQL is the M in LAMP. Any doubts?

Let’s look at some numbers:

• MySQL’s revenue is assumed to be $65 million in 2008.
• MySQL’s profit is paltry.
• I estimate MySQL’s lines of code to be approximately that of PostgreSQL worth $8 million.
• When calculating MySQL’s forward-looking revenues and optimistically assuming growth of 100% per year, revenues should reach $1 billion in 2012 - but that’s still not profits amortizing Sun’s acquisition costs.

None of these numbers really explain the $1 billion price tag: forget about revenue, forget about profits, forget about the code - all irrelevant. Forward-looking revenues? Maybe, but they rely on assumptions about the continued business relevance of MySQL - something that is highly related to its brand.

Together with Lars, I tried to find a way how to reasonably calculate MySQL’s brand value. This is what we came up with:

1. Equate MySQL’s fictious market capitalization with the $1 billion price tag.
2. Estimate MySQL’s profits to be $10 million (remember, “paltry”?).
3. Let’s keep in mind that MySQL’s fictious market cap is a 100 multiple of its profits.
4. Take Sun for comparison: Their market capitalization is roughly 15 times their profits.
5. When applying Sun’s brand value to MySQL’s profits, the expected acquisition price would be $150 million.
6. What about those additional $850 million that Sun paid?

As of today, a whopping 85% of MySQL’s economic value added can be attributed to its strong Open Source brand. If you are in general skeptical about the brand concept, The Brand Gap will open your eyes.

Let’s compare MySQL’s brand value with some of the top 100 global brands:

• Xerox has a brand valuation of $6 billion accounting for 93% of its market capitalization.
• Coca Cola is the leading global brand with $70 million brand value, that’s 60% of its market capitalization.
• Hertz is bottom of the top 100 table, with a brand value of $3 billion.
• Sun is not part of the top 100 and MySQL’s $850 million won’t qualify it either.

MySQL was able to negotiate a good price due to its brand value - and rightly so!

Everyone I ever met at MySQL is straightforward, honest, simply credible and focused on creating a trustworthy Open Source business. I am very sure that MySQL’s founders and top management agreed on the acquisition because they were able to develop a trustful relationship with Sun in the past years and realized that Sun is truly embracing Open Source.

MySQL will be able to provide a lot of input to Sun on how to become a widely acknowledged authority in the Open Source domain. Even better: MySQL will lead by example. You can tell from Kaj Arnö’s blog post about his new role as MySQL’s Ambassador to Sun that MySQL is well aware of their strong role within Sun: “We want to take Sun by storm”.

Does MySQL orbit Sun or Sun orbits MySQL? As MySQL’s co-founder Monty Widenius put it in his recently opened blog:

Sun is a hardware company who has been for a long time in a transition to also be a software company. In their software space they where first closed source but has lately started to change most of their software to open source/free software.

MySQL AB on the other hand is a company that was originally totally committed to free software / open source but who has lately changed to be more closed.

This deal will allow both companies to learn from each others successes and failures and build a stronger company than we would have been able to do separately.

I am very confident that MySQL will successfully help Sun become one of the main centers of the Web universe and it seems that some MySQLers hope for the best from sun. We will see Sun’s brand value grow significantly this year - not sure though if they will already make it into the top 100 global brands.

CMSWire asked me to be the first they interview for their brand new column Flash Quiz. If you ever wondered how much I sleep and whether I like fancy cars, check out Flash Quiz: Sandro Groganz Speaks.

The potential for successfully building or extending a corporate identity based on Open Source depends on a company’s relationship towards an Open Source product. The graph below relates the extend of product ownership to the level of awareness potentially available for marketing:

Basically, the more you own the product, i.e. the more it is directly correlated to your company, the more you can make out of it.

If you’re the creator of the product (e.g. MySQL, the company, is the creator of MySQL, the database), you can utilize maximum awareness in your market. Your whole ecosystem will support your marketing efforts. For example, those providing extensions to your product, will automatically market your product while promoting their extension.

If you’re an external contributor to a product (e.g. providing patches with bug fixes), you might only be known amongst the developers community and your company will have a hard time transforming your contributions into business value via marketing. Nevertheless, being a contributor is not worthless. It allows you to build tight relationships within an OSS community, helping you to spot early trends and to mobilize visionaries and early adopters for whatever your offerings are.

System integrators market their specific expertise and experience, their goal is to build up a good reputation amongst customers. Of course, large system integrators (such as IBM) can leverage quite some awareness with all sorts of marketing tools, while small to medium ones typically try to score with their expertise (see for example Optaros White Papers).

Independent Software Vendors (ISVs) typically market to a certain industry. For example, they provide extensions or add-ons for an OSS product connecting to proprietary CRM systems (e.g. SAP connectors).

Distributors, such as the major Linux distributors, can utilize a similar level of awareness like large system integrators do - of course, depending on the fact whether their offerings are industry-specific or of general nature. Product ownership of distributors is two-fold: They don’t really own the OSS products they assemble, but they do provide tools which they own (e.g. installers, updaters, etc.) and which are crucial for a distribution’s business relevance.

Find more Open Source marketing articles in my Wiki.

Open Source software is often being referred to as commodity products. This is particularly true for OSS databases like MySQL or PostgreSQL. Developers of such systems can heavily make use of defined standards. In this case, it’s the various SQL standards. These standards define the general functionality set your product should have. They help you define the commodity features of your software.

The question is: where do you get your software requirements from if the OSS product you are developing cannot rely on any or only a few standards?

Let’s take a look at two other types of OSS products: Enterprise Content Management (ECM) and collaborative software. I used to work for an Open Source ECM vendor until recently and just started to work for a company offering Open Source collaborative software. Hence, I might be able to provide some useful information.

For ECM vendors, there exist a few standards in different areas of ECM. This is because ECM comprises a very broad set of functionality, e.g. content editing, workflow management, document management, accessibility, etc. Yet, these standards cover only a small fraction of what makes up a full-fledged ECM system. In fact, ECM is very much about customer-specific implementations and integration of legacy systems. It is a lot about experience, best practices.

Hence, a successful Open Source ECM project can define the set of commodity features by listening to its:

• customers
• partner companies
• developers and users community

These groups have different impact in different OSS ECM projects.

For example, eZ Publish is equally influenced by all three of them. At Alfresco, there is massive know-how of customer needs, simply because they have John Newton on board, co-founder of the very successful proprietary Documentum ECM. It will be interesting to see how eZ Publish and Alfresco will compete in the future. This will largely depend on how well the eZ Publish developers react upon market needs and on how fast Alfresco can grow its Open Source community. It’s actually not black and white, because customers can be a part of your developers community.

Before I talk about the interesting aspects of commodity features in collaborative software, one more note about highly standardized products: Of course, the MySQL developers need to also think of market needs. They first implemented the very basic features which made their RDBMS useful for simple, yet common scenarios in Web development. Standards do not free you from deciding which ones to implement first, but they help you to save time collecting all the potential features.

Now about collaborative software: Most development here is based on best practices. The interesting point is: these best practices are mostly already available in the Web. To be more precise: in the Web 2.0. At Mindquarry, we implement collaborative software which includes a Wiki, task and document manager (conversation tools for email and instant messaging coming soon).

Where do we get our basic ideas from? Well, from Wikipedia, Jabber, Bugzilla, etc. Mindquarry’s commodity features are out there in the Web and have been tested by a lot of users for several years. With Mindquarry, the trick is not about simply imitating an already existing and proven software infrastructure. It is about connecting the various bits and pieces of social software into one coherent infrastructure which you can use e.g. in your Intranet.

The point is: You can see the difference between the Web 1.0 and the Web 2.0 also in how OSS vendors define the commodity features of their products. An RDBMS is largely a Web 1.0 tool. It has at least one foot in the old days, when companies fought about software standards. Social or collaborative software is Web 2.0, you can find and influence its standards in the Web by providing efficient and rich user experience.

Of course, Web 2.0 standards rely on Web 1.0 standards, but the Web 2.0 is more about best practices and de facto standards on the user level compared to logical definitions of standards on the developers level. Again, the reality is not black and white. Take a look at MySQL’s and PostgreSQL’s ANSI92 SQL-defying LIMIT clause. It’s a best practice approach and shows that OSS developers always listened to their developers community just like Web 2.0 developers today listen to their users.

Hurry up, submit a paper! The LinuxTag Call for Papers ends tomorrow, February 16th.

Short info about LinuxTag from the homepage:

LinuxTag 2007 opens doors from May 30 to June 2, 2007 on Berlin Expo Center under the Funkturm. We invite users and experts to learn at Europe’s leading conference and expo more about the potential of Linux, Open Source, and Free Software.

Bård published a short note on his blog that the call for papers for the 5th annual eZ Conference is now open. Deadline for submissions is February 1st.

The conference is worth attending not only for eZ Publish or eZ Components users and geeks, it is also interesting if you’re interested in content and knowledge management or PHP/LAMP in general. Last year, I enjoyed talking to guests such as Martin White and Anne Jubert, Rasmus Lerdorf and David Axmark - and some more of the 350 attendees.

Zend recently decided to not call themselves the creators of PHP anymore. This change in Zend’s marketing has been long overdue. It caused friction with some PHP core developers over the past years that spread into the PHP community.

Others also make mistakes

It is not that Zend is the only company in the Open Source market that made some marketing mistakes in the past. MySQL for example had their CTO Monty Widenius talk fancier then usual in an internally conducted interview and the answers did not sound like he really said them. It made known members of the MySQL community wonder who kidnapped Monty.

Sex sells?

To some marketing experts, the Open Source community might seem like a mine-field with many traps, because there are just too many critical thinkers in the community. It is so because they don’t fully understand the ethics of sharing.

Marketing and ethics - how does that go together? Isn’t marketing based on emotions and instincts? Catching you with the “sex sells” trick? Open Marketing is different - yet still emotional.

Have a lot of fun

Open Marketing addresses the intellect, because in Open Source it’s all about transparency: transparent software (code), transparent collaboration (mailinglists), transparent deficiency (bugs), …

Open Marketing also addresses emotions, because it’s fun. After your Linux installation, you read “Have a lot of fun”. Open Source developers identify with what they do, because they believe in their skills, the good work of the team, the value of sharing. They care about their work and the results - isn’t that emotional?

Hubs and innovation

Intellect and emotions come together in the ethics of sharing. It’s supporters believe that they can still gain although sharing, or better: they gain because they share. The more you share, the more you become the center of communication flows in the Open Source community. Speaking in terms of communication theory, you become a hub in a communication network.

What does that have to do with Open Marketing? It means that the correct marketing is vital to an Open Source company because it needs to be one of the main hubs in the communication flow of the Open Source community it targets at. Otherwise, the company will slowly loose it’s innovative power and market share respectively.

Proprietary vs. Open Marketing

The ethic of sharing is not so much about naive persons longing to be good, instead it is at the heart of the Open Source business, it is egoistic as well as altruistic at once, intellectual and emotional, and the basis for making money.

To summarize: Open Marketing is just as “copyleft” to the traditional marketing, as the GPL is to proprietary software licensing. It is not about illusions, it is about realities. In that sense, Zend just fixed a bug in their marketing and move from a sometimes proprietary style marketingto a better open marketing. Welcome back to reality!

If the company MySQL is the cathedral in the bazaar, then Zak Greant was the secretary to the cathedral’s friends - he recently resigned.

His official title was “Community Advocate”. Once, he described his work to me like this: “Imagine MySQL AB as a person that acts in a social environment, then me and David Axmark take care that this person behaves properly in the Open Source community and is accepted within the group.” The last 2 years, Zak was mostly concerned with the licensing issues that arouse when the MySQL client library became GPLed.

Zak’s two main concerns were - not only concerning the licensing issues - to fully understand the Open Source community, not only that of the MySQL database, and to make the community understand the company MySQL, the reasoning behind their actions. I have attended several of Zak’s talks at conferences and it always amazed me, how well he tried to balance out the interests of the company and the community. I write “tried”, because not all interests could be satisfied, as some of them have a conflicting nature.

It was Zak’s respectful behaviour towards anyone contacting him that made him a person as well respected by the community. His respect for others is deeply rooted in his professional approach and work ethics as well as his believe in the principles of the Open Source community and good social behaviour in general.

I am very much looking forward to see what he will be doing in the future and who will hire him. For MySQL, it must be hard to find someone as committed to the job as Zak was, also someone as eloquently acting within the community. MySQL is loosing a skilled and experienced secretary for the cathedral’s friends - but I am pretty sure, that Zak will stay with the friends of the cathedral.

A substantial thread discussing the MySQL FLOSS License Exception has evolved on the mailinglist of the Open Source Initiative.

Some quotes:

Essentially, they’re trying to retrofit via a licence exception some of the licence semantics of LGPL. (Rick Moen)

As for the MySQL License Exception, I believe its interpretation of the effects of the GPL, and its description of what happens when you create *collective works* with MySQL and other open source software, is accurate. I also happen to believe that this “Exception” doesn’t need to be an exception at all, because that’s how the GPL should be interpreted anyway. “Independent and separate works” can never be forced under the GPL if they are not *derivative works* of GPL programs. The MySQL folks have tried to eliminate confusion about their licenses by stating in their own words what the GPL and LGPL really do anyway. (Lawrence Rosen, OSI)

In way of a brief update, the exception is currently being reviewed by our lawyers and then should be going through to our CEO for approval. (Zak Greant, MySQL)

Actually, v0.2 of the exception will apply to both client and server. (Zak Greant, MySQL)

It is interesting to see how MySQL has made its way out of the PHP community when switching the client code to GPL by introducing and openly discussing the license exception. I think it would be appropriate to label it “community crisis management”, a new discipline for future business consultants in the FLOSS market

Essentially, the trick that did it is common-place: once there is a conflict, only a pro-active strategy can re-ensure trust between the involved parties. No doubts, that MySQL has been late to actively seek for a solution with the PHP devs in the beginning. I guess that the delay is correlated with the experiences that MySQL made in the lawsuite with NuSphere, because MySQL had to thoroughly think through all the potential implications of a license exception to never let happen the NuSphere problem again. Given that in the future even bigger players (only an oracle can tell who…) could use wholes in the license exception to damage MySQL, one can understand the still very careful proceeding.

This month’s Issue 42 of the International Linux Magazine ships with a review I have written about MySQL Administrator.