VentureBeat

Sun said today it will acquire open source database company MySQL for about $1 billion, a deal that would keep Sun at the center of the thriving open source software industry (see the announcement here).

The deal is for $800 million cash and $200 million in stock.

Simultaneously, in big news for the corporate “enterprise” industry, database software giant Oracle said it had reached an agreement to acquire middleware giant BEA for $8.5 billion, a few months after its original offer offer of $6.7 bilion was rejected by BEA.

Both deals are significant for the Internet industry, but the first is most important for the start-up industry VentureBeat covers.

MySQL has become increasingly popular as a low-cost database (its basic version is free) for Web applications. The database is the core of a Web company’s information system, a sort of container of software. VentureBeat itself, for example, uses MySQL, for its database. VentureBeat uses the Wordpress blogging software, to manage the content of articles, which works hand in hand with MySQL. MySQL claims 10o million copies have been downloaded, though some users are bound to have downloaded several versions, and the active number is likely smaller. Still, 50,000 copies are being downloaded each day, the company says.

The flip side of this, though, is that MySQL has never been a major generator of revenue. The database market is huge, with Sun estimating it as worth $15 billion. However MySQL has gotten only a sliver of that. We use MySQL, but we aren’t required to pay for it, and so we can’t be considered a “customer.” Its ubiquity has served it well, however, and it has tried to make money from offering support services. While some questioned whether it had the muscle to do well in the public market, insiders said it had the chops to do so. Last year, it signaled it planned to go public.

“MySQL clearly could have gone public,” Kevin Harvey, partner at Benchmark Capital and chairman of MySQL told VentureBeat this morning in a call. “Everyone felt that this [Sun acquisition] was a better outcome for the MySQL community, and better financially as well.”

With his investment in MySQL, Harvey (pictured left) has solidified himself as the venture industry’s leading investor in open source. He also previously backed Zimbra and RedHat, two big wins.

With MySQL part of the modern infrastructure software being standardized in company data centers, Sun’s reach into large corporations with its server products makes it the best partner to help push MySQL’s adoption, Harvey said.

This also keeps Sun in the heart of the thriving open source movement, and the growing Web application business centered around MySQL. MySQL has become the dominant database within the most popular “stacks” of open source services. It is the “M” in the LAMP, MAMP, and WAMP platforms (Linux/Mac/Windows-Apache-MySQL-PHP/Perl/Python). That’s where most of the growth is. Modern companies are designing their servers with this Web 2.0 stack from the beginning. MySQL, for example, counts Facebook, Google and Yahoo as its customers.

Oracle’s database products, meanwhile, are becoming more and more the domain of large companies that require extremely robust service. In the late 1990’s, you weren’t taken seriously as a company if you didn’t have an Oracle database. Now, if you’re a new company, its not worth spending resources on Oracle. For 90 percent of new “quick and dirty” applications, MySQL is the way to go. “Oracle has the innovator’s dilemma,” Harvey said. “They have a business model that doesn’t fit the new web economy. They’re a prisoner of their business model.”

Will Oracle buy Sun? “They’re so acquisitive, I wouldn’t rule anything out,” Harvey added.

BEA, Oracle’s latest target in a string of 30 companies acquired over the last three years, is one of the market’s leading application servers, and is popular mainly within large companies. But still, it isn’t part of the fast-emerging, low-cost open source movement. JBoss (bought by RedHat) is a major player there, and there are others, such as Interface21.

Sun, meanwhile, has a range of open source products, from the office application suite OpenOffice, to the server product OpenSolaris and application language open Java.

One question is how Sun will deal with MySQL’s licensing. MySQL is owned by the for-profit company MySQL AB, headquartered in Sweden and Silicon Valley (Cupertino, Calif.) which is owns the copyright to the codebase. However, the MySQL project’s source code is freely available under terms of the GNU General Public License.

Sun said MySQL will be integrated into Sun’s software, sales and service organizations, and will be distributed through all of Sun’s channels including its OEM deals with IBM and Dell. MySQL’s CEO, Marten Mickos (pictured here), is expected to join Sun’s senior executive team. The deal is expected to be finalized in the third quarter.

MySQL was backed with about $40 million in venture capital since 2001, led by Benchmark Capital, which should earn a smart return from the acquisition. Other investors included Intel, Red Hat Ventures, SAP, Scope Venture Capital, Index Ventures, and Eficor Oyi.

What the deal also removes doubt that open source is great area for venture investing. Benchmark, in particular, has benefited from the trend, having invested, as mentioned, in Redhat and Zimbra. Benchmark partner Peter Fenton also backed JBoss, but did so while he was at Accel.

Here’s the latest action:

Scribd hype — Maybe because it calls itself the “YouTube for documents,” the young Scribd is getting a lot of interest from Silicon Valley’s venture capitalists. We’ve talked to some eager to invest. Rumors are leaking out, including at Gigaom and Techcrunch that the round is almost done, with GigaOm saying it is done and citing a large $10 million valuation. We talked with Scribd’s Trip Adler today, and he didn’t want to say much. He said those other reports are “inaccurate.” He hasn’t closed the round yet, he added. (Our coverage of Scribd here.)

Adobe open sources Flex platform tools — The company announced that outside developers can use its Flex platform to participate in building rich Internet applications for the Web, including Apollo applications for the desktop. This is significant because Adobe’s Flex/Flash platform — around which many cutting-edge Web sites are being built these days — has remained relatively closed. Announcement here, and more details here. Robert Scoble had an early look.

TheStreet.com buys Stockpickr.com — This is another success for Web 2.0. Stockpickr offers place for people to compare and exchange investment tips. (Story here).

Grand Central offers its one-telephone number feature via mobile devices — You’ll recall (VentureBeat’s coverage) that Grand Central is the company that lets you create one telephone number for all your needs. Through a Web dashboard, you can direct calls to whatever phone you want to use, and centralize voicemail. Now, you can control all this from your cell-phone too. (Grand Central Mobile)

Oak Pacific Incorporated falling apart? — The Chinese Web company that some have called the Chinese Myspace, backed by U.S. venture capitalists, has laid off serious numbers of employees. From recent blog posts (here and here, you’d think the company is disintegrating, and chief executive Joe Chen out of control. However, we talked with David Chao, partner at DCM and an investor in OPI, and he said bloggers have focused on the visible lay offs from units that have struggled, in part because of new regulations imposed by China Mobile. Those regulations increase the revenue share on wireless services such as SMS, MMS and voicemail management, and also restrict their use in some ways — so the revenues of all wireless companies got hit, not just OPI. That said, OPI is sort of like IAC — a holding company with lots of properties. Some units are going to do poorly, and they’ll be cut. Others are growing quickly, including Mop.com and Xiaonei, which Chao likens to the Facebook of China, and is on fire — one of the fastest growing companies in China, in terms of page views and visits. We covered Xiaonei here. All told, Chao says the business is a “net positive.” And chief executive Joe Chen is talented at making multiple bets, he said.

Red Herring not as dire it seems — While we had Chao on the phone, we asked him about the struggling business magazine Red Herring, where Chao is a board member. ValleyWag says the mag is in default, and that it has the proof to show it — in the form of lawsuit papers filed by Comerica. Sighing at the question, he said he didn’t want to get in a pissing match with another publishing company (i.e., Valleywag’s parent, Gawker) but that the financials aren’t as bad as they appear.

Tim Draper in Vietnam — Tim Draper, who has been expanding his Silicon Valley venture firm, Draper Fisher Jurvetson more aggressively internationally than just about any other firm, announced a $50 million Vietnam fund last year (see our coverage). He was in Ho Chi Min City a few days ago to celebrate its launch, and looks quite at home.

Razz, the voice-mix service, raises another round — The San Francisco company, earlier known as Phonebites, lets you insert noises while you are talking on the phone. As Thealarmclock puts it, “farts” for example. Mayfield Fund, one of the alleged new investors, did not respond to our request for confirmation of the investment, reported by PE Wire. Besides Mayfield, Cardinal Venture Capital, Garage Technology Ventures and Greenpark Capital also reportedly invested. (Our past coverage)

Cozmo.TV, latest personalized TV site — The San Francisco start-up joins a crowded space of players wanting to let you personalize and share the TV programming you watch. With Cozmo, you select shows from places like YouTube, Google, MySpace and combine them into channels that you then roll into an embeddable widget, which you share. Problem is, there are other sites that do something similar. There’s Blinkx, Channels.com, Joost and MeeVee. (See Techcrunch)

Speaking of Blinkx, it is being taken public — The video search company will go public on the London AIM exchange, which has somewhat of a flimsy reputation. Om says Blinkx has been adrift, and suggests public investors may be duped.

Speaking of Joost, it is signing up lots of advertisers — This is advantage you get if you have the name recognition Skype co-founders Niklas Zennström and Janus Friis. The duo haven’t even formally launched their company Joost, yet have lined up several major advertisers. The company wants to send free videos and other programming to your TV. The NYT says United Airlines, Microsoft, Sony Electronics and Unilever are among 30 on board as “launch partners.” The launch is planned for Tuesday, the Times says.

In other news:
– Metamatrix, a company backed by venture firm Kleiner Perkins, has been bought by Redhat, and some suggest it was at a loss. Kleiner did not respond to a request for comment.
– MySQL, the open source database company that lots of Web sites run on, got $50M in revenue last year and plans to go public, its chief executive says.
–ChinaCache raises $32 million from Draper Fisher Jurvetson, Ignition Partners, IntelVC, Internet Investor Growth, JAFCO ASIA, SIG, Starr International, and Susquehanna International Group. It is a ten-year old company, and helps speed up content delivery over the Web.
–Lifelock, an online identity management and identity theft prevention company based in Phoenix has raised $6 million in Series B funding from Kleiner Perkins, according to Gigaom. Word is, it’s valued at more than $40 million. Kleiner declined comment.
–Here’s a beginner’s guide for Twitter. It has everything (via Nolan).

The latest Silicon Valley round-up:

Correlation between bomb building and entrepreneurship? — Former PayPal chief executive Peter Thiel reportedly says four of six founders of the online payment service built bombs while in high school. Meanwhile, Silicon Valley venture capitalist Steve Jurvetson designs rockets.

MyYearbook.com, a social networking site for teens, raises $4.1M – The site looks like a Facebook knock-off. It raised the first round of finance from U.S. Venture Partners (USVP) and First Round Capital. The site, hq’d in New Hope, Penn., is nothing to sneeze at: It boasts 1.7 million members globally, and over 5 million unique visitors per month. It prides itself in shunning banner ads of the kind that run on Facebook, saying teens like more interactive, social ads.

Don’t incorporate in Delaware — We know that’s what they all tell you to do, because of Delaware’s business-friendly laws. But a U.C. Berkeley study shows that an entrepreneur who incorporates in California may make $1.75M more in the event a sale triggers a preference clause, or otherwise leads to a showdown with an investing VC. The threat of a suit in your home state is enough to make the VC back off. Via Paul Kedrosky. Valleywag mentions it too.

SIPphone latest company to launch a new browser based calling service — as it tries to answer rivals such as Jajah, Jaxtr, Wengo. The company’s chief exec Michael Robertson told VentureBeat yesterday that “the call is made via the browser, like Skype, but unlike Skype there’s no big software download/install and registration period. You can walk up to any computer and call any phone number in the world. No mobile or landline is required to play.” More details here.

Latest on Google’s social application — Google’s Niniane Wang (left) is currently leading a team of Googlers to develop a new product in the social application space. Via Blogoscoped.

Google puts Wikipedia definitions at top of search results — Details via Rubel. This is the latest sign of continued momentum for Wikipedia, and comes as founder Jimmy Wales rolls out a Google competitor. Oh, and then there’s Amazon.com’s Wikipedia-clone for products, Amapedia. Confused yet? If not, read on…

Proliferation of Web site review and rating sites — Here’s a summary by Gigaom of the growing number of competitors to Amazon.com’s existing review service. There’s PowerReviews, a Millbrae, Calif. company that raised $6.25 million last year from Menlo Ventures and Draper Richards, and which is a Web-based portal for consumer reviews of products. There’s new player Ratepoint. Not mentioned is MerchantCircle, which lets businesses being reviewed keep up with these proliferating ratings.

Ironkey, a Los Altos, Calif. file encryption company, raises around $2.6M – The funding, apparently part of a larger second round of capital, is led by Leapfrog Ventures, reports Alarmclock.

Amie Street, the company that sells DRM-free MP3s at prices dependent on their popularity — It is looking to raise a first round of capital, reports Techcrunch.

We’re not raising VC! Well, maybe we are.. — CastTV, a video search engine company, which told us in Oct. it was not looking for cash, is reportedly about to close a first round of capital,.

TechStars is a new startup fund/incubator like YCombinator — It gives 10 start-ups a summer camp in Boulder, Colo. and $15,000 in seed funding. TechStars will take 5 percent of the equity in each startup. More at Techcrunch.

News Corp. to invest in ROO — The media giant will invest $12 million for a ten percent stake in the New York online video technology provider, according to the WSJ.

Global warming alert — Six years ago, scientists predicted global temperatures would rise at least 1.4 degrees by 2100. Now, they expect at least 2 degrees. Sea levels will rise between 28 and 43 centimeters. Time to wake up. And it’s not going to be easy.

Mozeen, the stealth mobile web portal — The company, mentioned by AlarmClock, is funded by big-name venture firm Sequoia Capital and the company reportedly claims “top talent from YouTube, Yahoo, Nokia, and Facebook.”

Mobile payment service Obopay has acquired social payment service, Billmonk — Details here.

Pickspal creates popular culture betting site — We covered Pickspal, which raised $6 million for a site where sports fans can bet on event outcomes. Now it has launched Pickspop, which lets you predict, say who will be on this week’s cover of people.

MySQL, the open source database company, is in talks with bankers about going public — Details here, but question is, will Oracle kill it first?