Orignal Business model • Originally, MySQL collected one time licensing revenues from original equipment manufacturers (OEM) businesses. These were businesses that redistributed MySQL embedded into their own products as in a standalone application. This was based on the dual license model for open source database. In the dual license model, software is available both under a General public license (GPL) , usually for non commercial & end users, and under a commercial license for non GPL’ed redistribution.
Example: As an example, MySQL firm makes MySQL available under the GPL at no charge, but sells it under other more traditional licenses to clients who do not find the GPL to be ideal for their purposes, such as inclusion of MySQL AB technology in a closed source product. • A disadvantage of this model was that it did not generate significant revenues from end users. Hence inspite of a huge 33% market share, MySQL revenue share was less than 1%
MySQL Network – New business model • In early 2005, MySQL network was introduced. It is a subscription service that provides updates, alerts, notifications, knowledge base and production level support, that makes it possible for companies to easily manage hundreds or thousands of MySQL servers. This business model was growth focused and aimed at increasing revenues much higher than from OEM businesses. However, it lead to increased customer expectations as they were being charged for the first time.
What challenges they faced to remain sustainable?
Low revenue business model: • MySQL needed to find a healthy ratio between paying and nonpaying customers. It had low revenues inspite of a 33% market share. • This was equivalent to trading off a larger community against faster sales growth which was imperative to support the increased investments in infrastructure & new recruits. Competitors’ strategies: • IBM, Microsoft & Oracle had each lowered...