Zelerate nixes open-source plans

Zelerate, an e-commerce software company that hoped its open-source package would displace competitors' proprietary products, has all but shut down in a restructuring this week.

Zelerate laid off 50 of its 55 employees, and the remaining employees will focus on a new, undisclosed software project, Chief Executive Bonnie Crater said in an interview Thursday. The move was required because companies delayed and scaled back on e-commerce plans that would have used the software, she said.

"It's a rough business environment right now," she said.

The San Mateo, Calif.-based company, formerly named OpenSales, had hoped to take on larger companies such as Intershop Communications. But evaporation of formerly abundant funding for Internet companies took its toll. Indeed, another open-source e-commerce software company, Akopia, sold its business to Linux company Red Hat.

Zelerate had been funded by Internet incubator Idealab. But as other Idealab-funded companies such as eToys and Eve.com faltered, Idealab itself has closed offices and withdrew from initial public offering plans last year.

Crater found a silver lining in the company's demise, however. Because the software was released under the open-source General Public License, customers will be able to continue to develop the code if they wish.

Open-source software is "the ultimate insurance policy for customers. If a software company changes direction, they've always got access to the product," Crater said.

The software package is available at VA Linux Systems' SourceForge site.

Zelerate cofounder Glenn Ferber will lead the new software development effort, Crater said.