Sun Microsystems has bought Swedish software company MySQL, whose open-source database is used for some of the most widely visited websites in the world.
The company said the deal, worth $1 billion (£511m), would augment its position in the enterprise IT market,
including the $15 billion database market. MySQL's strength in software-as-a-service offerings - where applications are delivered over the Internet through a browser - are also a plus, Sun said.
Sun's acquisition ends speculation that MySQL might become a public company.
MySQL has become a formidable competitor to other relational database management systems from companies such as Oracle and IBM. The database itself is free for people to download, and MySQL makes money by offering subscription support packages.
MySQL CEO Marten Mickos - whose business cards list him as "Open Sourcerer"- will join Sun's executive team. MySQL will be folded into Sun's Software, Sales and Service organisations.
Sun said it plans to create a joint team to integrate MySQL, which has 400 employees in 25 countries, into its operations.
For Sun, the acquisition marks another phase in the turnaround of the company, which foundered after the dot-com bubble burst. Since being appointed in April 2006, CEO Jonathan Schwartz has helped revive Sun’s software and storage businesses and returned the company to a more stable financial footing.
Since Sun's server software and OS are free, the 32,000-employee company is dependent on revenue from hardware sales and support services.
Schwartz said while MySQL is used by companies such as Google and Facebook, it's not widely deployed in mission-critical situations due to concerns about support.
Sun, however, is in a good position to build enterprise confidence in MySQL support, Schwartz said. "That's exactly what we will be focused on immediately as we prepare to put the two companies together," he said,
calling the deal the most important in Sun's history.
Further, Sun will have an opportunity to offer more of its services and products, such as applications and authentication technology, to MySQL users, Schwartz said.
Mickos said MySQL has gone from "frugal" beginnings to the enterprise market, and is gaining traction in industries such as telecom operators. "We are the world's most popular open-source database," Mickos said.
The pending acquisition of MySQL will not dim Sun's support for another open-source database, PostgreSQL, as well as its own Java DB, said Rich Green, Sun's executive vice president of software.
One of the major deciding factors in acquiring MySQL was its use of pluggable components in its database, which allows it to be customised for operators and embedded developers, Green said. Sun said MySQL would gain new distribution through companies such as Intel, IBM and Dell via existing relationships Sun has with those vendors.
Sun is in need of a database management system, one analyst said. Its choice of MySQL "makes sense with Sun's open-source orientation," said James Kobielus, senior analyst with Forrester Research.
MySQL's acquisition may also contribute to a changing attitude that open-source software isn't about a few developers working "in a garage with a lava lamp," said David Mitchell, senior vice president for IT
research at Ovum.
The open-source services market is worth between $5 to $6 billion, an area that is prime for a major player to step in, Mitchell said. "This just proves there is money to be made in open-source software," he added.
(Peter Sayer in Paris contributed to this story).