Introduction
The role of competition in the economic life of the society is profound and multifarious. Promoting the growth of the most effective productions and wash out ineffective economic sections, competition acts as a regulative mechanism of economic proportions. Initially competition acts as method orienting entrepreneur toward raising the effectiveness of the economic system. Addressing the issue of market competition, this paper analyzes the position of the Swedish company MySQL AB as participant of the market of database software.
Analysis
The company was founded in 1995, and implemented the dual licensing policy distributing their products. The implemented model distributed two different versions of their software, a free version and a commercial version. (Holck, Zicari and Mahnke) As of 2005, “leading research firm Evans Data Corporation found that MySQL was the #2 most-used database server according to survey respondents.” (“Market Share”) In 2008, MySQL AB was acquired by Sun Microsystems for approximately $1 billion. (“Sun Acquires Mysql”)
Structuring the market of database management software can be found a bit tricky, due to the position of MySQL as open source software. Nevertheless, the share of the markets of the largest players in the market can be characterized as oligopoly, “a market that is characterized by the interdependence of firms” (Reynolds), where the major players are IBM, Microsoft and Oracle. (“Oracle”)
The main advantage of MySQL that allowed it to enter the market and compete is the approach implemented through the open-source license. In that sense, the main acquired products of MySQL are the HR department, where the best developers worked in a virtual organization from their homes and offices, while after downloading the software, more than 35,000 people test it and report for the problems that might exist. As stated by Marten Mickos, the CEO of MySQL AB, “Not even Microsoft has 35,000 QA engineers” (Holck, Zicari and Mahnke) In other factors such as distribution, where most of the software is downloaded through the website, it can be said that the costs are minimal, and if not for the prices of maintaining the file servers for initial download, it can be said that the costs are close to zero. In that regard, we can say that MySQL was not influenced by the set prices of the larger participants of the market.
The changes that MySQL has made in the market can be seen as innovative, where the implemented business model serving small and middle companies led to a large share of the market to be taken from the larger participants. A framework analysis of business models of open-source software applied to MySQL revealed that, “MySQL, using a combination of series of rapid incremental innovation, stack-based complement strategies, an open-source product testing approach, and a dual licensing strategy succeeded in the increasingly commoditized database software markets.” (Holck, Zicari and Mahnke).
Conclusion
Examining the position of MySQL and the database market in general, it can be implied that oligopoly might remain, with the larger companies targeting big enterprises. Nevertheless, the possibility of the market turning into duopoly and consequently into a monopoly is also possible. The competition among larger companies for the largest segments of the market implies controlling other segment by acquiring smaller companies. This statement can be explained by the latest news of the ongoing negotiation on the acquisition of Sun Microsystems by Oracle (Robertson and Liedtke), a company holding 33% of the market as of 2000 (Dataquest), and currently 45%. (“Oracle”).
Works Cited
Dataquest, Gartner. “Gartner Dataquest Says Worldwide Database Software Market Grew 10% in 2000”. 2001. Gartner Dataquest. Web.
Holck, Jesper, Roberto Zicari, and Volker Mahnke. “A Framework Analysis of Business Models for Open Source Software”. 2008. Institute of Computer Science-Databases and Information Systems. 2009. Web.
“Market Share”. 2009. MySQL.com.Web.
“Oracle”. 2009. Wikinvest. Web.
Reynolds, R. Larry. “Firms With “Market Power””. 2005. Boise State University. Web.
Robertson, Jordan, and Michael Liedtke. “After Ibm Dalliance, Sun Goes to Oracle for Us$7.4 Billion in Cash”. 2009. The Associated Press. Web.
“Sun Acquires Mysql”. 2008. MySQL.com.Web.