Skip Links

Red Hat/Cygnus record run lost amid Sun/MySQL billion-dollar hoopla

By Paul McNamara on Fri, 02/08/08 - 6:16am.

Eight-plus years is an eternity in the technology industry, yet that is how long it has taken for Sun's recent billion-dollar acquisition of MySQL to supplant Red Hat's $675 million purchase of Cygnus back in 1999 as the most valuable deal in open source annals.

Much like yesterday's news, the Cygnus/Red Hat record run had gone largely ignored, too, at least by the press, until this list of all-time open source deals was compiled on a blog by uptime monitoring company Pingdom.

If anyone else was aware of the torch-passing, I figured it would be Michael Tiemann, a Cygnus founder, current-day Red Hat evangelist, and president of the Open Source Initiative. After all, Cygnus/Red Hat made him rich. We chatted by e-mail:

Had you been aware of the Cygnus/Red Hat deal holding this lofty perch in open source M&A history?

Yes.

Describe your reaction upon learning of the Sun/MySQL deal's value?

Good for David (Axmark), Monty (Widenius), and Marten (Mickos)! Records are made to be broken.

What's your view today of the $675 million price Red Hat paid for your company?

A bargain compared with some of today's acquisitions, but it was a vital piece of Red Hat's success. Cygnus had the longest and strongest pedigree of open source engineering and sales talent. Red Hat had the best platform (OS vs. tools) and some really stellar marketing and engineering talent. Together, Red Hat was able to ramp up from retail to enterprise sales faster than anybody would have predicted.

Why did the Cygnus/Red Hat "record" stand for so long?

Two reasons: (1) Red Hat had a large market cap in the days of 1999-2000 stock market and (2) Cygnus was earning in 1999 what very few open source companies are earning even today, almost 10 years later. At the end of the day, revenue and growth drives valuation, and Cygnus had revenue and growth.

Does that almost decade-long reign say anything about the real or perceived values of open source companies today?

It says more about how rare it is to find high-quality companies.

What's your best guess as to how long we'll have to wait for the next billion-dollar-plus open source deal?

Exempting Red Hat from my answer (because I cannot comment or speculate on Red Hat's future), I would not be surprised to see another $1B deal of some sort in the next 12-18 months. The reason is simple economics: open source beats proprietary software as a development platform and as a value-delivery platform, and given how many millions of dollars companies are seeing wasted on proprietary software, it's only a matter of time before the majority of software technology deals are denominated in open source.

(Update: Don Marti, my colleague over at LinuxWorld, asks, "Hey, what about VA Linux buying Andover.net.)


Welcome regulars and passersby. Here are a few more recent Buzzblog items. And, if you'd like to receive Buzzblog via e-mail newsletter, here's where to sign up.

'Reform' may kill EFF's 'Patent Busting Project.'

Yahoo to Microsoft: Cool your jets.

Get $500 just for going on a job interview. (No, really.)

Scott Adams on giving away Dilbert via widget: 'risky,' but 'fun'

A tank-filling robot: Because pumping gas is too darn hard.

Mark Cuban shouldn't get this foul call.

Top 10 Buzzblog posts for '07: Verizon's there, of course, along with Gates, Wikipedia and the guy who lost a girlfriend to Blackberry's blackout.

Super Bowl cat fight: Victoria's Secret disses the GoDaddy girls.

8 can't-miss tech predictions ... for 1998

This year's "25 Geekiest 25th Anniversaries."