enterprisedb.jpgIBM has invested in open-source database company EnterpriseDB, part of the giant company’s effort to hold its own in the fast growing Web application services market.

IBM typically does not invest in start-ups, but it has watched on as competing server company Sun acquired the popular open-source database company MySQL. Databases are a key component of the “stack” required to run applications on the Web, basically a place that stores the information that is called upon by servers when people visit the Web site.

IBM participated in a $10 million third round of investment into EnterpriseDB, which also included prior investors Charles River Ventures, Fidelity and Valhalla Partners.

Open-source, cheap tools for Web developing have become very popular, as they are forming the base of some of the fastest growing Web companies, from Facebook to Google.

MySQL has been a hit, because it is so cheap, letting Web developers use a basic version for free, or charging about $599 if it used commercially. EnterpriseDB, which is also open-source, charges closer to $1,000 for its basic version, justifying the higher price by saying it offers more features that make it more like the robust databases offered by Oracle. EnterpriseDB is still much cheaper than Oracle, however.

However, there’s been some criticism of EnterpriseDB’s claim to be open-source. Its products are based on open-source PostgreSQL technology, but EnterpriseDB adds its own improvements on top of PostgreSQL, additions which it does not make open-source, and for the most part hasn’t contributed back to PostgreSQL to make that product better (only very recently did it contribute some improvements).

Notably, Sun Microsystems had been a big supporter of PostgreSQL, offering it with its Solaris 10 server operating system, and partnering with EnterpriseDB. However, with Sun moving to acquire MySQL, the relationship with EnterpriseDB has cooled somewhat. To make things more complicated, IBM also has a relationship with MySQL, bundling it into many of its servers — which is unlikely to change.

The New Jersey-based EnterpriseDB has seen slower growth that MySQL, having 200 customers after raising $37.5 million. MySQL raised about $40 million, before selling to Sun for $1 billion last month (see our coverage ). MySQL says some 100 million copies of its product had been downloaded (see our coverage), though only a small portion of users request support or pay for the product.

Clarification: EnterpriseDB’s CEO Andy Astor got back to me and contested my point that EnterpriseDB hasn’t been contributing back to PostgreSQL. Here are a few lines his company’s PR representative sent me:

EnterpriseDB is the single largest contributor to the PostgreSQL community project, measured by financial contributions, resources, and technology contributions. It has regularly contributed back to PostgreSQL since its launch in May, 2005, so the statement that “only very recently did it contribute some improvements” isn’t quite right. Last week, in addition to the Series C financing, EnterpriseDB announced that it has open sourced its business intelligence/data warehousing technology, GridSQL, which is now available on SourceForge: http://www.enterprisedb.com/about/news_events/press_releases/03_25_08c.do

…Finally, here’s the blog from Matt Asay, one of the open source industry’s most vocal “purists” who applauded EnterpriseDB’s recent announcements: http://www.cnet.com/8301-13505_1-9902671-16.html. Matt writes: “EnterpriseDB deploys the same hybrid model as Zimbra, SugarCRM, Funambol, and others. While I’m not a big fan of hybrid models, the reality is that it’s an accepted, successful model within commercial open source. If it means that EnterpriseDB and these others also contribute ever growing mountains of open-source code, which it does, then I can accept that.”

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