Can I reliably create a merge module from a regular MSI package like MySQL to merge it with my own installation?
WiX has appropriate tools for that, but what pitfalls should I expect from such translation?
What are alternatives for installing other MSI packages from my own package?
Can I reliably create a merge module from a regular MSI package like MySQL
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You could create a bootstrapper application. The application would install your installation package and then the 3rd party application(s).
If you have InstallShield, a popular way to do this is to create an InstallScript-based bootstrapper which calls the MSI files.