If the folks at Oracle play it smart, they could take advantage of the Sun acquisition to put together a serious Open Source portfolio and coherent strategy.  This would help them protect their existing customer base, expand their market reach and make them a lot of money.  Who knows, it might even help them improve their image with the tech community.

With the Sun acquisition, Oracle gets several Open Source (OSS) products.  Among them MySQL, the popular database management system, and GlassFish, a Java Application Server.  These could be the "anchors" of a formidable OSS portfolio that would expand Oracle's reach to the lower end of the market.

The expanded reach will even benefit Oracle's own database products and Weblogic, the Java Application Server it got with the purchase of BEA Systems, back in 2008. It would also help tie together some of their earlier OSS acquisitions, like InnoDB.

But You Can't Sell Open Source Software, Can You?

Contrary to popular belief, OSS software can be sold under commercial license, not just support services.

Like SugarCRM and other OSS vendors, Sun owns the copyright to MySQL and GlassFish.  This allows them to release the code under an Open Source license and a commercial license.

Even though companies could deploy and modify these products on their own, many choose to purchase the commercial license instead.  In the end, it is more efficient to get support from the vendor than to develop the expertise in-house to maintain and customize these products.

So, yes, OSS vendors make money from sales of these commercial licenses. And they do it without spending a lot of money in sales.

Very Efficient Sales

Like other OSS products, MySQL and GlassFish have very low COGS (Cost of Goods Sold).  For the most part, people find their way to the project site, download the OSS version of the product and use it for a while.  They write applications on top of it and may even run small installations.  When they are ready to deploy the technology widely, in mission-critical applications, they then purchase the commercial version.  Except for very large deployments, these sales are completed over online or over the phone. This is a lot more efficient (i.e., less costly) than traditional Enterprise sales.

So, even though only a fraction of these downloads turn into sales, an Open Source company spends next to nothing to make these sales happen.

It's All about the Money

The OSS tier of products could become the engine that feeds the rest of the company in the future.  OSS licenses are cheaper and more licenses are sold to more companies than in the Enterprise market.  Oracle could easily target many of these customers to up-sell products and services to.

It would also help Oracle keep current Enterprise customers that otherwise might jump ship to an OSS platform.

It's the People, Stupid!

BTW, the value of the acquisition is not primarily in the technology Oracle is getting, but rather in the people that come along with it.  These are world-class, talented and innovative engineers, product managers, etc., who understand the OSS space really, really well.  I hope Oracle listens to them, carefully, and take their message to heart.  It will be good for all involved.

What Do You Think?

The question now is, will Oracle will recognize their value?  Or will they just take the technology and the customer base and never mind them people?

However it turns out, it's going to be really interesting to watch.