March 25, 2008 6:00 AM PDT

IBM invests in open-source database firm EnterpriseDB

Posted by Martin LaMonica

IBM, a fan of many open-source projects, has taken a minority stake in EnterpriseDB, an open-source database that competes with Oracle and MySQL.

On Tuesday, EnterpriseDB is scheduled to announce a $10 million round of funding, with IBM taking a minority stake in the company. Existing investors Charles River Ventures, Fidelity Ventures, and Valhalla Partners led the round.

The money will be used to ramp up the company's product development and sales, according to EnterpriseDB CEO Andy Astor. Altogether, the 4-year-old company has raised $37.5 million.

EnterpriseDB makes a version of open-source database PostgreSQL that is compatible with Oracle's flagship database. The company sells it as a cheaper yet still industrial-strength alternative to Oracle and as a more robust offering than MySQL, a popular open-source database. Sun Microsystems bought MySQL for $1 billion earlier this year.

The funding highlights the viability of open-source databases in business--EnterpriseDB now has more than 200 customers and anticipates being profitable within a year, Astor said.

IBM's investment, which is somewhat unusual, signals where it sees competitive pressure.

Faced with open-source competitors to its own DB2 database, IBM in 2006 introduced a free, low-and version of DB2, although it does not publish the code publicly. Among closed-source incumbents, Oracle remains the database market leader.

IBM invested $50 million in Novell in 2003 and has made clear that it wants more than one provider of Linux support to businesses. Big Blue has bought dozens of software companies but nearly all, except open-source application server company Gluecode, are closed-source commercial companies.

Also on Tuesday, EnterpriseDB is expected to announce refreshes to its product lines, an announcement timed with the Open Source Business Conference in San Francisco.

The newly named Postgres Plus is the open-source edition of the company's product which now includes a module specifically tuned for business intelligence applications.

The high-and commercial version, called Postgres Plus Advanced Server, is now on the same code base, which means people can more easily upgrade from Postgres Plus, Astor said.

He said that the main difference between the two versions is the Oracle compatibility included in Postgres Plus Advanced Server.