Vinod Khosla, the founder of Khosla Ventures and co-founder of Sun Microsystems has raised $1.1 billion for his venture firm.  About $800 million will be going to Khosla Ventures III and $275 million will go to a new seed fund.

Altogether $1.1 billion is the largest that a venture firm has raised in the last 10 years.  This is also the first time that Khosla Ventures raised money externally.  One of the biggest partners in this round of funding is CALPERS (the California state employees retirement fund).

The previous rounds of Khosla Ventures were provided by Vinod Khosla himself.  Khosla founded the venture firm in 2004 and now the company has 8 partners.  Gideon Yu was recently hired as a General Partner at Khosla.  Before that he was the CFO of Facebook.

Sun Microsystems Inc. has reported a $147 million loss for the April-June quarter.  This is likely the last quarter that the company will have before being absorbed by Oracle.  Oracle agreed to buy out Sun for $7.4 billion back in April, but the deal is pending approval from European antitrust regulators.

The numbers were reported on a regulatory filing but there wasn’t a news release or conference call.  Sun Microsystems invented the JAVA programming language which is a key component for the web, PC applications, and mobile applications.

About a year ago during the same quarter, Sun had a profit of $88 million.  Revenues for this past quarter was $2.63 billion.  The year before, sales were $3.78 billion.  Thomson Reuters analysts expected revenues to be $2.37 billion for the quarter.

“We are definitely not going to exit the hardware business. While most hardware businesses are low-margin, companies like Apple and Cisco enjoy very high-margins because they do a good job of designing their hardware and software to work together. If a company designs both hardware and software, it can build much better systems than if they only design the software. That’s why Apple’s iPhone is so much better than Microsoft phones,” stated Larry Ellison in an interview with Reuters that was filed with the SEC.

Despite Oracle’s $7.4 billion acquisition of Sun Microsystems, CEO Larry Ellison insisted that his company will remain in the hardware business.  When Oracle bought Sun, they were primarily interested in the way that Java and Solaris software interacted with their hardware.

Many analysts believed that Oracle would focus more on software after buying a company whose core products revolve around software and online databases.  Oracle also plans to invest more in Sun’s Sparc microprocessors.  Oracle believes designing their own chips is becoming increasingly important just like Apple is beginning to do.

“Sparc machines are much less expensive to run than Intel machines,” added Ellison.

After IBM recently backed out of making a deal with Sun, Oracle stepped up to the plate and bought out the Java-making company for an astonishing $7.4 billion.  IBM’s offer was about $6.5 billion.

This will give Oracle the opportunity to become even more competitive against IT firms such as Hewlett-Packard, IBM, SAP, etc.  Sun also holds the assets to two of the most impressive pieces of software Java and MySQL.

Sun Microsystems bought MySQL for $1 billion in January 2008.

“To me, this proposed acquisition totally redefines the industry,” wrote Sun President and CEO Jonathan I. Schwartz in an e-mail to Sun employees.  “Let me assure you [Oracle is] single minded in [its] focus on the one asset that doesn’t appear in our financial statements: our people.”

Oracle will be paying $9.50 per share for common stock in Sun, but the agreement is subject to the Justice Department’s approval.   Sun was founded by Vinod Khosla, Andy Bechtolsheim, and Scott McNealy. Oracle was co-founded by Lawrence (Larry) Ellison.

“Java is the single most important software we’ve ever acquired,” stated Ellison in a conference call. “With the acquisition of Sun, Oracle is now able to make all of the pieces of the technology stack fit together and work well.”

Sun Microsystems (NASDAQ:JAVA) is now utilizing the Intel Nehalem microarchitecture in a new line of servers they have released called NEM.  This move directly competes with Cisco Systems.  Sun also unleashed a new line of servers that contain the Intel Xeon 5500 processors built on Nehalem.  This is the first time that Sun is using flash storage combined with microprocessors, thus reducing latency through the boost of input/output speeds.

These servers have a 24GB capacity and works through the conjunction of hard disk drives and solid-state drives.  The NEM servers sold by Sun will work with existing and new servers.  The flash storage module connects to a chassis blade through a PCI Express backplane.  The cost of the NEM servers are about $4,999.  The flash storage modeuls ranges from about $1,488 to about $8,779.

[via InformationWeek]

IBM has withdrawn their offer from Sun Microsystems. The whole event was pretty similar to what happened with Microsoft’s offer for Yahoo! IBM made an offer to Sun, Sun held out for more, and eventually both companies walked away from the table.

Currently Sun’s market cap is about $5 billion.

If the deal did go through, IBM would have become the biggest supplier of Unix-based servers. IBM would have also became a bigger competitor against HP and Oracle.

About 100 of IBM’s lawyers worked on putting the offer together and putting together the due diligence. After finding out about some of the antitrust concerns and contracts that are already put in place with Sun, IBM reduced the acquisition price.

After Sun refused the lower price, the talks ended. When IBM made the offer, Sun had to exclusively deal with only them. Now that the offer is off the table, Sun may shop around with rivals such as HP and Cisco.

[via NYT]

Intel CEO Paul Otellini was on a Webcast earlier this week to discuss the company’s stock options program.  The subject of IBM’s interest in Sun came up during the Webcast and Otellini gave his two cents about the Java-producing company.  One employee asked Otellini whether Cisco’s entrance to the storage market drove Sun to seek a buyer.

Oh, I don’t know if the Cisco entry spurred IBM. I think (a) cheap Sun price–a low price–spurred a lot of interest. I can tell you that Sun was shopped around the valley and around the world in the last few months. A lot of companies got calls or visits on buying some or all the assets of the company. It looks like IBM is in the hunt now. And at a hundred and some odd percent premium, I suspect they’ll get it.

I don’t think it had anything to do with Cisco. I think IBM is trying to consolidate architectures. IBM has the strongest Java license in the industry. By picking up Sun–which is the creator of Java–they really consolidate their position not just in Linux, but also in Java.

I think the stuff on Solaris and SPARC is likely to see EOLs over time through the IBM acquisition. But no strategic reason for IBM to maintain that except to attempt to convert the very large Sun SPARC Solaris base to power. I think that would be their most likely strategy as part of this.

Is it good or bad for us? I don’t know. I’d rather have Sun be independent, I guess.

Those statements were published on an SEC filing on Wednesday.

It will be interesting to see who does end up buying Sun or if are forced to compete directly against Cisco. Whoever ends up buying Sun will end up owning MySQL too. MySQL is an integral part of today’s web technologies.

[via CNET]

International Business Machines Corporation (IBM) today is rumored to be buying out Sun Microsystems Inc. for $6.5 billion.  This is 100% more than the closing price of Sun’s stock price of $4.97 on Tuesday.  Upon the rumor hitting the press, Sun’s stock price jumped over 70% to about $8.84.

This acquisition would enhance IBM’s precense in Internet, data storage, and telecommunications.  Sun has been contacting several technology companies to promote acquisition of their own company.  Hewlett Packard declined the offer according to a source with Bloomberg.

About a year ago, Sun made a large acquisition themselves when they acquired MySQL for $1 billion.

More news to follow as this story develops.

[via Bloomberg]

Michael “Monty” Widenius is one of the original founders of MySQL.  As you may recall, MySQL was acquired by Sun Microsystems for about $1 billion.  Widenius is planning on launching a storage engine company and will be opening a restaurant.  Widenius will be using MySQL for customer service purposes in his new restaraunt venture.

So why is Monty leaving now? Basically he is unhappy the way that MySQL is being handled by Sun.  He believes that he can make more meaningful contributions to the open source database software outside of the company.  MySQL AB was started by Mony and David Axmark around 1995.  Last year MySQL 5.1 was released with some fata bugs.  Monty believed it was ready to be shipped at the time and wrote a blog post about it.

One of the names that Monty called out for the MySQL problems is Mårten Mickos, SVP of Sun’s database group.  Mickos has served as the former CEO of MySQL AB from Jan. 2001 until the time that the company was acquired.

“Sun and I concluded in the end that I have much higher chances of achieving my goals outside of Sun, so it’s just better to swallow the bitter apple, go out and get things going. We parted in good terms and we both expect to continue to do business and work together,” wrote Monty on his blog.  “I would have like to see the server development to be moved to a true open development environment that would encourage outside participation and without any need of differentiation on the source code. Sun has been considering opening up the server development, but the pace has been too slow.”

Background of Andreas von Bechtolsheim
Andreas (Andy) von Bechtolsheim was born in 1955 in the country of Germany.  When he was 21, he graduated Carnegie Mellon Univ. with a Master’s in Electrical Engineering.  Then he moved on to get a PhD from Stanford between 1977-1982. 

While Bechtolsheim was at Stanford, he had discovered a way to build a powerful computer based on a network connected to a Unix operating system.  Bechtolsheim created the workstation because he was bored of waiting for the computer time on the campus university system.  Vinod Khosla approached Bechtolsheim regarding his invention and they decided to start a company together, Sun Microsystems, Inc. (NASDAQ:JAVA).  Sun was actually an acronym for Stanford University Network.

Bechtolsheim dropped out of the PhD program to go full-time on Sun and pulled in his friend Scott McNealy to become a co-founder.  The four original founders of Sun were Andy von Bechtolsheim, Vinod Khosla, Bill Joy, and Scott McNealy.

Today Sun Microsystems is a $3.38 billion company.  Sun’s brands include Java, MySQL, and Sun StorageTek.  Sun bought out MySQL for $1 billion earlier 2008.

Investments/Other Startups/Back to Sun
Bechtolsheim stepped down from Sun in 1995 and then started Granite Systems.  Granite was bought out by Cisco Systems, Inc. (NASDAQ:CSCO) for $220 million in 1996.  After that Bechtolsheim became VP and GM of Cisco Gigabit Systems Business Unit.

Bechtolsheim stepped down in 2003 from Cisco to become the head of Kealia.  Sun bought out Kealia in 2004 and brought Bechtolsheim back to Sun.  Bechtolsheim became the Chief Architect and SVP at Sun.  

Bechtolsheim and David Cheriton, who both were at Granite, were two of Google’s first investors.  They wrote a $100,000 check to “Google Inc.” before the search engine company even incorporated itself.  Larry and Sergery did not even have a company checking account at the time.

The New Start-Up
Bechtolsheim stepped down from Sun again recently to work on a new startup.  This startup plans to take-on network giant and Bechtolsheim’s former employer, Cisco.  Bechtolsheim’s new company is called Arista Networks and they have built a fast network switch that costs 1/10th of the prices of Cisco’s products.

Some of Arista’s customers already include several government labs, Internet startup companies, and other data intensive companies like Google.  Today the company is also announcing that they have hired Jayshree Ullal as their CEO.  Ullal was an executive at Cisco that lead their corporate switch business.

Cheriton will also be joining Arista as the company’s chief scientist.  

Arista, based in Menlo Park, Calif. has kept their team at a small number.  This is because Bechtolsheim believes if you hire a bunch of key executives at once, they’ll just twiddle their thumbs while collecting large sums of money.  Even though the company has already been shipping units, they did not have an official CEO until today.

Don’t Forget Where You Came From
Although this is the second time Bechtolsheim is leaving Sun, he stated that he will a part-time advisor with the company.   ”It’s my baby,” Mr. Bechtolsheim said. “I will always be associated with Sun.”

Michael Widenius is one of the authors of the original version of MySQL. Widenius is also a co-founder in MySQL AB, the company that owns MySQL. In 1995, Widenius worked with David Axmark to create the original MySQL and released a book seven years later called MySQL Reference Manual. Widenius was the CTO of MySQL AB until Sun Microsystems, Inc. (NASDAQ:JAVA) acquired them this past January.

Valleywag has reported that Widenius has put in his resignation at Sun yesterday. Although it is not known who will be Widenius’ replacement at Sun, there is speculation that it will be Brian Aker. Aker is another MySQL developer who is working on a lighter version of the web database software called Drizzle.

Aker also helped rewrite the database back-end behind Slashdot by converting it to Oracle. Aker has previously worked on Memcached storage, Blackhole storage, CSV storage, and WebMethods storage.

Image credit: Wikipedia

Brian “Krow” Aker chatted with Rackspace’s CTO a few months ago about memcached and Gearman.  Memcached is a distributed memory caching system that many large social networks use to handle all of their constant traffic.  Gearman is when a server calls out other faster servers to perform functions that they are better suited for.  Rackspace’s CTO asked Aker if he had ever though of creating more of a slim version of MySQL to work with Rackspace servers.  This question turned into a project called Drizzle.

Drizzle will have several components of MySQL stripped from it’s functionality including Stored Procedures, Views, Query Cache, Triggers, Prepared Statements, etc.  Drizzle opens up the development of MySQL to the open source community and now it won’t take years to have patches created.

Drizzle developers are constanty refactoring servers which will make the database system faster and more stable.  Drizzle won’t replace MySQL databases, but will enhance the experience.  Although the new database doesn’t have a timeline, the stable version of Drizzle is expected to release in 3-4 months.

Aker stated that this new open source project wouldn’t be possible without the Sun’s support.  Sun Microsystems, Inc. (NASDAQ:JAVA) acquired MySQL for $1 billion, $800 in cash and $200 in stock options.

Related Links:
1. Drizzle Wiki
2. Blog of Michael Widenius, MySQL founder and original developer
3. Brian Aker’s blog
4. Drizzle on Launchpad

“Today’s acquisition reaffirms Sun’s position at the center of the global Web economy. Supporting our overall growth plan, acquiring MySQL amplifies our investments in the technologies demanded by those driving extreme growth and efficiency, from Internet media titans to the world’s largest traditional enterprises,” stated Jonathan Schwartz, CEO and President at Sun Microsystems. “MySQL’s employees and culture, along with its near ubiquity across the Web, make it an ideal fit with Sun’s open approach to network innovation. And most importantly, this announcement boosts our investments into the communities at the heart of innovation on the Internet and of enterprises that rely on technology as a competitive weapon.”

Sun Microsystems, Inc. (NASDAQ:JAVA) announced that they have reached a definitive agreement to acquire MySQL AB for $1 billion.  MySQL AB is an open source database company that many of today’s biggest websites use, Facebook and YouTube included.  All the top blogs use MySQL as well including Pulse 2.0, TechCrunch, Mashable, GigaOM, etc.  The software that Google uses to power AdWords, the company’s biggest revenue source, depends on MySQL.

Sun’s goal for MySQL is to spread it among more of an enterprise environment through Sun’s relationships with Intel, IBM, and Dell.  LAMP, the software mash-up of Linux, Apache, MySQL, and PHP/Perl is also very commonly used to create dynamic web sites.  MySQL’s open source database software has been downloaded over 100 million times.  The software gets about 50,000 downloads per day as well.

MySQL will be integrated into Sun Microsystem’s Software, Sales, and Service organization.  Marten Miickos, CEO of MySQL will join Sun’s senior exec. leadership team as well.

“The combination of MySQL and Sun represents an enormous opportunity for users and organizations of all sizes seeking innovation, growth and choice,” stated Mickos. “Sun’s culture and business model complements MySQL’s own by sharing the same ideals that we have had since our foundation — software freedom, online innovation and community and partner participation. We are tremendously excited to work with Sun and the millions of members of the MySQL open source ecosystem to continue to deliver the best database for powering the modern Web economy.”

[Information Source: MySQL press release]

Google Inc. [a.k.a. Earchsay Engineway Uggernautjay (Pig Latin for "search engine juggernaut")] will be acquiring web communication security company, Postini Inc.  The amount paid for the company is $625 million.

Postini’s services will be a valuable add-on for Google Apps.  As 1,000 small businesses are signing up for Google Apps per day, Postini will most likely be used to protect the information transferring between these businesses.

“Larger enterprises, however, face a challenge: though they want to deliver simple, useful hosted applications to their employees, they’re also required to support complex business rules, information security mandates, and an array of legal and corporate compliance issues. In effect, many businesses use legacy systems not because they are the best for their users, but because they are able to support complex business rules. This isn’t a tradeoff that any business should have to make,” stated Dave Girouard, VP & GM of Google Enterprise on the official Google Blog.

“We realized that we needed a more complete way to address these information security and compliance issues in order to better support the enterprise community. That’s why we’re excited to share the news that we’ve agreed to acquire Postini.”

Postini is a private, San Carlos, Calif.-based company.  August Capital, Bessemer Venture Partners, Mobius Venture Capital, Pacifica Fund, Summit Partners and Sun Microsystems Inc. are all investors in Postini who will potentially see a nice return on investment.

Postini intends on using Google technologies to develop a new suite of products.  The synergy created through this acquisition also aligns Google’s partnership with Salesforce.com.

References:
[1]  Reuters: Google to buy Web security co Postini for $625 mln (via Yahoo! News)
[2] The Official Google Blog: Welcome, Postini team
[3] Pulse 2.0: Google AdWords Officially Merging Into Salesforce.com Apps