EnterpriseDB: A New Stake from IBM, and its Novel Approach

Over the last few years, two dominant open source business models have emerged: Charge for service and support, or release the software under a dual license. EnterpriseDB, whose Oracle-compatible database servers are based on PostgreSQL, offers a third approach: Embrace and support the open source community, while charging for proprietary, highly-valued extensions.

How can you make money from open source software? EnterpriseDB, which unveiled a number of open-source and proprietary products earlier today along with the stake from IBM, might have a new answer to this question.

Traditionally, companies have made money from open source software in two different ways. The first is by charging for service and support; Red Hat is probably the best-known company employing that model. The second way has been by offering the software under an open-source license for free, or a proprietary license for a price. This second tactic has worked well for MySQL, whose database is licensed under the GPL, ensuring that people who download the open-source version cannot then offer a closed-source version.

EnterpriseDB is taking a different tack, essentially offering one product to the commercial world and another to the open source world.

To the commercial world, EnterpriseDB offers a database that is largely compatible with Oracle, but at a fraction of the price. They accomplish this through the use of extensions to PostgreSQL, a powerful open source database. Because PostgreSQL is already a stable, powerful database product, EnterpriseDB can focus its development efforts on its Oracle compatibility layer.

If PostgreSQL were licensed under the GPL, then EnterpriseDB's extensions would automatically be affected by the GPL as well. But PostgreSQL is released under the BSD license, which means that the source can be used for, and mixed with, proprietary code. The reason why everyone doesn't do this is simple, namely the community. You could theoretically take PostgreSQL and turn it into a proprietary product, making all sorts of changes -- but you would then have to track changes to the database made by the larger community, which would become increasing difficult as time went on.

EnterpriseDB has thus decided to embrace the PostgreSQL community, becoming a part of it, and contributing heavily to it. According to Derek Rodner, EnterpriseDB's director of product strategy, three of the eight main PostgreSQL committers now work for EnterpriseDB, and the company is looking to hire more PostgreSQL gurus in the near future. He says that some of the most advanced features from recent releases of PostgreSQL, such as heap-only tuples, were contributed to the community by EnterpriseDB.

EnterpriseDB's contribution to the PostgreSQL goes further than that, including a distribution of PostgreSQL that they're calling "Postgres Plus." Postgres Plus is an open-source product, including not just the PostgreSQL database, but also a number of add-ons, such as the PostGIS geographic database, the GridSQL tool for enhanced reporting, and better connection management.

You could download and install all of these extensions yourself, but Postgres Plus puts them into a single package. When I asked Derek why the core PostgreSQL distribution doesn't come with these packages, he said that the community prefers to have a minimalist distribution, letting people add extensions on their own. Postgres Plus, by contrast, is a "batteries included" distribution, with many of the extensions that people are likely to want, precompiled and tested.

Of course, Postgres Plus doesn't include EnterpriseDB's proprietary add-ons, distributed as part of the commercial (and confusingly named) "Postgres Plus Advanced Server" product. But by keeping itsr open source distribution aligned with their proprietary product, EnterpriseDB is managing to make money from an open source product.

In addition to their software announcements, EnterpriseDB also announced that IBM had made a $10 million investment into the company. Given that IBM develops and distributes its own proprietary DB2 database, it might seem odd for them to be putting money into an open -source database company. Derek simply responded that IBM has long supported open -source software, which is true. But I have to wonder if IBM sees this investment as a way to further compete with both Sun and Oracle.

Sun, as you may recall, purchased MySQL for $1 billion earlier this year; by investing in EnterpriseDB, IBM supports a database that is considered by many to be more advanced than MySQL, and which can now be folded into IBM's packaged offerings to its enterprise clients. The investment also allows IBM to challenge Oracle, by supporting the development of ever an ever more advanced Oracle competitor, one which can be plugged into many Oracle clients' clusters with a minimum of downtime, and with a substantial cost savings.

EnterpriseDB has only been selling its products for two years, but is making an increasingly obvious impact on the PostgreSQL community. With today's software introductions, they may well be on the way to making inroads into the general world of enterprise database servers -- which would demonstrate the viability of this business model for open source products.

Do you they have a good chance in the enterprise database server arena?