Most entrepreneurs are lucky to sell one start-up. A chosen few manage to repeat the feat, building and selling two or more businesses. The folks at Zimbra have outdone them all, selling the same company...twice.
As Kara Swisher of All Things Digital reports, VMware is expected to soon announce the acquisition of open-source messaging company Zimbra from Yahoo. My own sources at VMware confirm the deal.
While Swisher's report gets the Zimbra ownership change correct, its indication of a distressed asset sale misses the mark.
It's true that Yahoo has never known what to do with Zimbra, leading it to shop the Zimbra business to various potential buyers, including Red Hat and Cisco Systems. But this is a reflection of Yahoo figuring out that it doesn't have a future in the enterprise, a place that Zimbra is increasingly calling home, after early success with Internet service providers such as Comcast.
You do the math.
(Credit: Matt Asay)Zimbra has delivered 100 percent subscriber growth, along with roughly 100 percent sales growth, according to sources close to Zimbra, through the worst economic meltdown since the Great Depression, much of that growth driven by sales to marquee enterprise customers such as Bechtel.
In other words, Zimbra is a growth asset, though the price paid by VMware is almost certainly lower than the $350 million paid by Yahoo in 2006. That's just the nature of valuing an asset carve-out versus a standalone company pre-recession.
Even so, Zimbra can be a highly strategic asset for VMware. It's not surprising that the virtualization specialist would be interested in Zimbra, especially as it seeks to differentiate its cloud offerings.
Last week, I wrote that an "application war is brewing in the cloud," a war that VMware, more than any other company, is set to launch with its acquisition of Zimbra. Infrastructure isn't enough of a competitive differentiator, especially since most applications aren't designed to run well in the cloud.
Customers, and particularly hosting and service providers, are therefore looking to their infrastructure vendors like VMware to sort out applications for them, or at least give them a head start.
This is where Zimbra comes in. The company's technology was designed from the start as a cloud application, and it should give VMware a viable contender to Microsoft Exchange to offer hosting and service providers, rather than having to peddle applications from cloud competitors like Microsoft and IBM.
With SpringSource, Hyperic, and its adoption of Linux, VMware was already increasingly the open alternative to the closed cloud offerings from Microsoft, IBM, and others. Now, with Zimbra, it is adding its ability to compete at the application level, while retaining its open-source approach.
It's a smart, bold approach. Ironically, it's also an indication that the first shot fired in cloud computing's infrastructure war looks an awful lot like an application.
Today's cloud-computing vendors focus on infrastructure, but that won't be the case for long. It can't be. As competing vendors seek to differentiate themselves, they're going to move "up the stack" into applications.
It's like the history of enterprise computing, played out in months and years instead of decades.
Just give me my !%!%! apps, already!
Oracle arguably set this strategy in motion when it acquired its way to a complete infrastructure-plus-applications portfolio to lower customer acquisition costs and improve its competitive differentiation for CIOs. IBM and Microsoft also went that route, though to differing degrees and in different ways.
Cloud-computing platform vendors are going to have to do the same thing, except they don't have the luxury of waiting.
It's not enough for cloud vendors to build the infrastructure and pray, "Field of Dreams" style, that customers will come. They won't. Not without applications and a host of other issues worked out for them, not by them.
Even Google, born in the cloud, recognizes this. Instead of forcing government customers into its public cloud, the company is building a dedicated cloud for government organizations in the U.S. Google's reasoning?
We also want to do our part to make it easier for government to transition to cloud computing. We recognize that government agencies have unique regulatory and compliance requirements for IT systems, and cloud computing is no exception. So we've invested a lot of time in understanding government's needs and how they relate to cloud computing. To help meet those requirements we're taking two important steps....
One step is certification, and the other is dedicated hosting. As much as Google may hope that its other prospective Google Apps customers won't have "unique...requirements," they do (or think they do). it's a losing battle to tell them otherwise, at least in the short term. If an enterprise giant like GE demands a private cloud, GE is going to get it.
This same pragmatism will drive Google and other cloud-infrastructure providers to build out their application suites. Why? Because enterprises that move to the cloud expect to see applications follow them there. Today, however, most enterprise applications don't work well in the cloud, leaving would-be enterprises buyers all dressed up with nowhere to go, in terms of the ability to run desired applications.
Vendors are jockeying to satisfy this demand for cloud-based applications. Google is already well on its way with Gmail and the rest of its Apps, and has been in the market lately for more, but others like Cisco, Microsoft, VMware, and IBM will be jumping into the M&A market to round out their offerings in order to deliver increasingly full application suites.
Microsoft has been actively courting developers to build cloud-ready applications for its Azure platform, while VMware bought into the Spring developer community for the same purpose. But in the winner-takes-most cloud platform war, the best short-term strategy is to provide applications, and not simply hope they get built.
Perhaps this is one reason IBM CEO Sam Palmisano claims to be undisturbed by Google's rise. IBM already has Lotus and more running in the cloud, and has a strong hold on enterprise wallets.
Some, like Red Hat or Amazon, may elect to sit it out and stick to their infrastructure-only guns, but such vows of paucity won't help potential service provider customers, and threaten to position them out of the longer-term battle for enterprise customers. Amazon can afford to refrain from seeking enterprise customers; Red Hat can't.
Microsoft is arguably best positioned in such a battle, at least from a portfolio perspective. After all, it has the applications--e.g., Exchange/Outlook, SharePoint, Office--that enterprises already use. What it doesn't have, at least, not yet, is experience running these applications in significant cloud deployments. But that will come.
Until it does, expect the big cloud-infrastructure vendors to buy competitive application offerings so as to distinguish their platforms to hosting and service providers. Sure, they can sell hosted Exchange, but that's a recipe for entrenching Microsoft in the cloud, just as happened on the "desktop" and server. Cisco et al. don't have much appetite for reliving Microsoft's glory.
Who are the likely targets? Zoho just became belle of the ball, of course, but there are others. I'd expect any application with either a significant following, like Acquia's Drupal, or significant cloud/hosting experience, like SugarCRM (Disclosure: I am an adviser to SugarCRM), to be up for grabs.
Follow me on Twitter @mjasay.
Cloud computing is still more attractive to venture capitalists than it is to enterprise IT buyers, and that's unlikely to change in 2010. As IT buyers warm to the idea and implementation of cloud computing, 2010 is going to prove to be a very big year for cloud-computing M&A as big-fish vendors like VMWare, Microsoft, IBM, and Oracle round out their cloud product portfolios with little-fish innovators.
Computing (and M&A) heads for the cloud
Some, like Oracle CEO Larry Ellison, suggest that cloud computing is simply a fad, one that attempts to solve many of the same problems that SOA, EDI, etc. already attempted to fix.
Tell that to the buyers. Gartner expects the cloud-related SaaS market to top $8 billion in 2009, which suggests that real customers paying real money.
They may not be paying enough, however, to support the mushrooming cloud vendor marketplace. Not yet.
Industry insiders are predicting a shakeout as pre-recession venture funding runs out for many of the early cloud vendors, forcing them into the arms of buyers or bankruptcy courts.
This is the inevitable separation of wheat from chaff, and it's a very good thing for an industry that has been long on hype and short on delivery to date.
But don't confuse the hype with vaporware. And don't for a minute think that any of the big (or small) vendors has a complete offering yet. As IDC research director Dan Yachi posits:
Cloud computing is more than just buzz. It is here to stay and is expected to take increasing shares of total IT spending worldwide. From a VC perspective, the even better news is that cloud computing is still far from maturity. There are many technology gaps that are not yet filled, especially in the areas of cloud enablement, management, monitoring, and security. In particular, VCs can find investment opportunities in start-up companies that develop solutions for hybrid cloud, which is expected to experience increased demand over the coming years.
Cloud computing offers real advantages, and has attracted a significant array of pent-up demand. Start-up vendors like Cloudera, VMOps, Rightscale, and others are inundated with requests for pilot projects as enterprise IT dips some very big toes into the cloud-computing water.
Indeed, it is start-ups like these that will help bridge the gulf between cloud hype and cloud practice in 2010, as the big vendors round out their offerings with the start-ups' technology.
Who will be bought? Those that solve real-world IT problems, not simply those that offer enterprises the ability to build private clouds or give them an on-ramp to public clouds.
Take VMOps, for example. The company's product suite enables service providers and others to build out private clouds. Where it becomes particularly interesting, however, is in the details.
While it sounds great to build a private cloud within an enterprise, the reality is that its resources will be funded by a number of different groups. There's no such thing as a common pool of funding in big enterprises. Among other things, VMOps has management tools for handling billing/resource allocation within private cloud deployments.
This sort of real-world understanding makes its cloud tools much more practical and, hence, much more interesting than those from competing vendors that may solve the technical difficulty of building a cloud but overlook the practical problems of managing it on a day-to-day basis.
Or, as Appiro predicts for 2010, "The real innovation will be in the business of cloud computing, not the technology."
This is why 2010 will be the year when the big vendors buy up innovative start-ups, in terms of both technology and business acumen, that help to make cloud computing reality, not theory, as cloud computing leaves the labs and becomes accepted practice in forward-looking enterprises.
It's a trend that should make enterprise IT very happy...and venture capitalists even happier.
Canonical, creator of the Ubuntu Linux distribution, has taken its share of criticism for not being innovative enough for some in the Linux community. In 2010, however, Canonical's focus on design and packaging will come to be seen as a seriously shrewd strategy as it helps to take Linux to the masses.
The reason? The innovation that pays is changing, and UI matters more and more.
When we think of innovation, we normally think of traditional research and development (R&D), complete with a white-coated scientist or pizza-gobbling engineer.
As Apple, Google, and other highly successful software companies demonstrate, however, today's innovation opportunities may lie more in user interface than traditional R&D. Google's emissary to the start-up world, Don Dodge, hints at this in a discussion of the various email systems he has used:
[O]ver my career, my first email thing was Vax Mail, which was awesome at the time, it was revolutionary. I went from Vax Mail, to Outlook, to Lotus Notes when I was working for Ray Ozzie, then back to Outlook again, and now Gmail. Email is a pretty straightforward application. They have basically the same features, it's all a question of user interface.
Sure, there are differences under the hood between Google's Gmail and Microsoft's Outlook, but the innovation that matters most today may well be the "superficial" e-mail experience that these different systems offer.
Back to Canonical and Ubuntu.
Canonical's founder, Mark Shuttleworth, understands that innovation is shifting from core research to the user experience, as he's opined on his blog. He has set his sights high, not content to replicate the Windows PC or Mac experience, for example, but has instead insisted on surpassing it.
The money for Canonical is in packaging open-source technology, not necessarily in creating the technology in the first place. The Linux world should be grateful, given Red Hat's and Novell's focus on the data center.
Linux benefits when mainstream users buy into it. Or, rather, when they use it without thinking about "it."
No one cares that their TiVo devices runs Linux. It just does. No one cares that the Kindle runs Linux, either. They care about the functionality these devices deliver. That's the way it should be.
Canonical's opportunity is to make Linux so easy that it becomes completely invisible to the end user. And Canonical may well be the best positioned to do this, among its open-source peers.
Neither Red Hat nor Novell employs an executive to focus on consumer products. Canonical does. No other open-source company has had its CEO discard the executive mantle to "focus [his] Canonical energy on product design," as Canonical recently did.
Hence, perhaps no other open-source vendor is better positioned to capitalize on the rising (and changing) Netbook market or other open-source friendly consumer markets.
Red Hat dominates the enterprise Linux market. Let it.
Canonical could well be set to dominate the consumer Linux market, a potentially massive market that demands a single-minded focus on design. It's a big bet, but one that Shuttleworth is committed to making.
2010 is promising to be a big year for technology IPOs, but will open source join the party? Probably not. Not yet, anyway.
Noted finance blogger Paul Kedrosky speculates that "it may start with Twitter, or Facebook, or Zynga (or even Yelp), but an IPO wave is coming and all it requires is a Netscape moment."
While I (along with Tom Foremski) believe there's more IPO smoke than fire, it does feel like we're due for a big year of technology IPOs. "Big" as in "more than the last few years."
I guess that would require just one. Or so.
But what about open source? It seems clear to me that we're entering a phase in commercial open source when the best businesses will grow, rather than explode into $300 million to $400 million acquisitions. (Yes, I'm weeping as I write this.)
Ingres CEO Roger Burkhardt disagrees. As he writes in Dr. Dobb's Journal, 2010 should see the IPO of a non-Linux open-source company:
The growth rates of certain open source companies has been impressive (50%+). We also believe a few have crossed the Wall Street friendly $50 million in run rate Billings barrier. The investment community is itching for new ideas and open source has been a theme (along with cloud computing) that resonates well with investors due to its highly visible model. The open source Enterprise Content Management (ECM) space has been hot and we would not be surprised to see an IPO candidate emerge from that area in 2010.
I don't think so. I don't believe we'll see an open source IPO until a company crosses the $100 million threshold, and we're simply not there yet. Growth rates are great. SugarCRM, a company I advise, is promising 100 percent growth in 2010. But profitability and long-term proof of company viability, as measured by revenue, is what will sell to institutional investors.
Hence, I can't see a still-skittish Wall Street buying into an open-source IPO in the absence of the psychologically pleasing $100 million revenue figure.
Once we get an open-source company in that frame, I think we'll see a real boom of open-source IPOs. With the cost of IT project failure estimated at $6.2 billion, and open source serving up a great remedy, the conditions are right for the market to embrace open source.
Once that embrace translates into $100 million in revenue, we'll see Wall Street embrace open source again, too.
Lost in the flutter over Google's hymn to openness is an intriguing factoid on open-source licensing:
Though many of the programs hosted on Google Code are licensed under the GNU General Public License (GPL), when Google wants to open-source its software, it turns to the Apache Software License version 2.0.
Why?
Google's Jonathan Rosenberg elucidates:
When we open source our code we use standard, open Apache 2.0 licensing, which means we don't control the code. Others can take our open source code, modify it, close it up and ship it as their own. Android is a classic example of this....
Control. Apache is a signal that a company is prepared to fully remove its hands from a software project's steering wheel. The GNU General Public License (GPL), a more widely used open-source license, tells a different story.
Glyn Moody correctly articulates that "the GNU GPL gives a disproportionate advantage to the company that owns the copyright." Bingo.
In fact, as I wrote back in 2006, the GPL is the closest thing to traditional copyright ever devised in open-source licensing:
Please keep in mind that the supposed paragon of software freedom [GPL] is also the license that most tightly imposes a distinct lack of freedom on downstream users. If you're a capitalist like me, you probably like this fact. But if you're a software developer...?
Google, at the top of its game (and with its profits firmly secured by a very proprietary revenue stream), doesn't need to constrain its development community with the GPL. Indeed, doing so would be counterproductive, given the persistent privacy concerns that hover over its every action.
Google needs to demonstrate a lack of control. Apache helps it do so.
This shouldn't be underestimated. Microsoft, having lived on the regulator's rack for so long, may be anxious to ensure Google gets to know U.S. and European regulators, too. Apache licensing could help.
Apache licensing is one of the cards played by MySQL co-founder Monty Widenius with European regulators recently: Apache puts original developers and downstream developers on equal footing, so why not keep Oracle from snuffing out MySQL's life by relicensing it under Apache instead of the GPL?
It was a jaundiced card for Widenius to play, but it would be a decent card for Google to play against claims that it's too dominant. (Competition is "just a click (or a fork) away....)
Rosenberg writes that because of Google's open-source licensing, "others can use our software as a base for their own products if we fail to innovate adequately." True. Google is clearly betting on its ability to innovate fast, which is incidentally also the very thing that makes the prospect of seeing its code forked so remote.
Even if competitors are technically and legally capable of taking Google's code and using it to create competing products, the truth is that it's very hard to fork fast-moving code, especially if you're not an active contributor to that code. Google understands this. It's the savviest open-source company around.
Ubuntu has led the Linux community's efforts to improve on form, not simply function, and thereby make the Linux experience as good or better than Mac OS X in terms of usability. Mark Shuttleworth, founder and CEO of Canonical, the company set up to shepherd development and commercialization of Ubuntu, is the heart of that effort.
Mark Shuttleworth, provocateur
(Credit: Matt Asay)From March next year, I'll focus my Canonical energy on product design, partnerships and customers. Those are the areas that I enjoy most and also the areas where I can best shape the impact we have on open source and the technology market.
Is this good or bad for Ubuntu? And what about Canonical?
Canonical is reportedly doing $30 million per year in sales, and is working on some significant projects that may establish it as the de facto Linux distribution for Netbooks, if it isn't already. (Ubuntu is arguably the community choice for personal computers.)
Even so, Linux still has a long way to go to match the user experience of Mac OS X, or even Windows. Shuttleworth has given me a sneak peak of his vision for where Ubuntu can go from a UI perspective.
I was blown away. This is a man who "gets it."
Even so, he and the Ubuntu community still have a ways to go to match Microsoft or Apple in user experience, and certainly in market share. To get there, Ubuntu needs Canonical, and Canonical needs Shuttleworth fixated on improving Ubuntu's user experience.
When I asked what his resignation as CEO means for Ubuntu, and his involvement with it, Shuttleworth responded:
I don't expect to be less visible, just have stronger management for the business units.
As reported by CNET and as reported on Canonical's corporate blog, Jane Silber, currently Canonical's COO, will replace Shuttleworth as CEO. A search for a new COO will commence in the first few months of 2010.
This, I believe, is an opportunity for Canonical to tighten its focus. While Shuttleworth suggests that Silber's appointment "doesn't mark a change of direction," perhaps it should. With over 300 employees and products that span mobile, Netbooks and other personal computers, cloud computing, enterprise servers, and more, Canonical has its fingers in a lot of pots.
It's possible that the operations-minded Silber may channel Ubuntu's ambition into a few products where Ubuntu can dominate.
When I asked her for comment, Silber indicated that the move is more evolutionary than revolutionary:
This move should not be read as a precursor to a paring back in markets or as a dramatic shift in strategy. We continue to be committed to making Ubuntu the best possible platform, and to ensuring that Canonical provides high quality engineering, online and professional services to Ubuntu partners and customers worldwide....
I will still bring an operations discipline to company, but I will assume more responsibility and authority for the overall performance of the company including, I expect, greater participation in executive level sales and business development.
That involvement--i.e., working with customers and hearing them demand focus and discipline--may well prod Silber to instigate the changes she initially has disavowed.
Red Hat is instructive. Though many of us would like to see it broaden its focus, the company remains rooted in the enterprise server and middleware markets. Canonical, in my view, should take a lesson from Red Hat and channel some of its energy into fewer markets, markets where it can thrive.
Regardless of what happens, stay tuned to see how Shuttleworth's design aesthetic, now set to overdrive, can impact the cozy duopolies in "desktop" (Apple and Microsoft), servers (Red Hat and Microsoft), and more. With more time to focus on what customers and partners want, Canonical and Ubuntu may be set to take a more commanding position in the market.
Can you find the openness in Google Search?
Google is perhaps the world's largest open-source company. That does not, however, make it the most open. Not even if Google says it's so.
The company is fond of believing itself different. And perhaps it is. For all of its stumbles over privacy concerns, it's still the company that insists it will "not be evil." I give its executives the benefit of the doubt that it really does want to be open, as revealed in a blog published Monday by Senior Vice President Jonathan Rosenberg.
But the irony of Google's position is that it's very open...until it needs to make a buck. Or a billion of them. At that point it's just as closed as its competitors. Perhaps more so.
Rosenberg doesn't shy away from the inconsistency, arguing that Google is closed when it's for its customers' own good:
While we are committed to opening the code for our developer tools, not all Google products are open source. Our goal is to keep the Internet open, which promotes choice and competition and keeps users and developers from getting locked in. In many cases, most notably our search and ads products, opening up the code would not contribute to these goals and would actually hurt users. The search and advertising markets are already highly competitive with very low switching costs, so users and advertisers already have plenty of choice and are not locked in. Not to mention the fact that opening up these systems would allow people to "game" our algorithms to manipulate search and ads quality rankings, reducing our quality for everyone.
Am I the only one that just had Napoleon of "Animal Farm" flash through their minds while reading that statement? Some animals are more equal than others, and some companies know better than others when to keep code closed.
It's not that Rosenberg is wrong. It's just that his embarrassment at admitting Google likes the revenue that results from closed systems ties his arguments up in knots, as Gartner's Brian Prentice highlights:
I don't think Rosenberg is making any attempt to mislead. I think he's thinking out loud and trying to reconcile the paradox he's created for himself--that open systems win even though Google's success is so clearly the result of being strategically closed.
Prentice adds further color:
The truth is that closed systems still win. Open systems, practically speaking, are basically good for making others lose.
The art of business in the 21st century is figuring out how to open up your suppliers' and competitors' business while keeping yours tightly sealed. And in that endeavor Google has proven highly successful.
From Red Hat to Facebook, from Google to Microsoft, from MySQL to Oracle, the same lesson applies: openness is exceptional for creating developer interest, lead generation, and many other things, but some element of proprietary still pays the bills. The big ones, anyway.
No exceptions.
Google is a fantastic company that groks the strategic benefits of openness better than most, and certainly better than its lumbering counterpart in Redmond.
But it's not exceptional in understanding open on-ramps and closed exits. Other important businesses like IBM have been leveraging such principles for years (even before Hewlett-Packard's Martin Fink explained the strategy in "The Business and Economics of Linux and Open Source").
Google isn't original with the business strategy. It's just better at it than most. It's open...until closed takes over to pay the bills.
Follow me on Twitter @mjasay.
Many governments, particularly those in developing nations, are increasingly legislating preferences for open-source software. A much smarter approach may be that recently adopted by Hungary, however, which has mandated the use of open standards.
Hungary's flag
Smarter, because for all the noise about open-source mandates in places like Latin America, I've been hearing from contacts in these markets that government IT workers have continued to use the software they prefer, not the software mandated by legislation.
And smarter, because it focuses on creating real competition in government IT, which arguably is a much better way to keep vendors honest and citizens empowered than an open-source license. If you can have both, even better, but the right place to start government policy is in the realm of standards.
The Open Standards Alliance proposed and lobbied for the change to Act LX of 2009 on electronic public services within Hungarian law. The goal? To "promote the spread of monopoly-free markets that foster the development of interchangeable and interoperable products," thereby opening up the market to "broad competition."
It's a laudable goal, and arguably much better than those efforts to mandate a particular licensing approach to software, which could result in adoption of software that doesn't work as well as its proprietary peers.
I like the way the Open Standards Alliance describes it:
Any device using a standard plug can be connected to the electric power supply by means of a wall socket. Connecting a television set or a refrigerator to the mains does not require the expertise of an electrician. And if the refrigerator is unplugged and a television plugged in instead, the television will work, too.
Similarly, the two types of portal set out by Hungarian legislation (the administrative portal and the client portal serving individual users) will function as statutory standard 'sockets' in intercommunication between computers.
In other words, the law isn't picking winners. It's not deciding between open-source and proprietary software. It's actively fostering competition between open and closed systems.
The devil is in the details, of course, but the approach is promising. There are still questions to be answered, e.g., will Microsoft file formats like .docx be considered open standards? Some suggest the answer is yes.
Does this degrade the value of the legislation?
On a related note, it's also very possible that "open standard" may be redefined, as Glyn Moody points out may be happening with the European Interoperability Framework, to include not-so-open standards.
Even so, it's good to see a government focused on the interconnections between software, rather than the licenses thereof. As we increasingly see with open source in cloud computing, licenses matter little for ensuring openness. Standards, however, continue to have a big role to play.
BUENOS AIRES--Open source has successfully navigated its first two phases of development and adoption. We're now entering the third, and possibly final, phase: the time when consumers of open-source software also become producers.
Can enterprise IT make the leap?
Enterprise IT to give open source a piece of its mind
Billions of dollars in IT investment are at stake. Perhaps even more importantly, billions of lines of code could be, too. While significant software products are written for sale, arguably much more software is written by enterprise IT to run businesses as diverse as Safeway stores and Barclays banks.
Unlocking and distributing the value of that enterprise IT, developed to run behind the firewall, is the next big step for open source.
As Red Hat's general manager for Latin America, Julian Somodi, and Red Hat's Latin America marketing director, Martin D'Elia, speculated on Thursday at a lunch meeting here in Buenos Aires, open source's greatest value is unlocked when one moves from being a mere consumer of open-source software to also being a co-producer of such software.
It's a message Red Hat CEO Jim Whitehurst has been sounding for the past two years, and it may finally be catching on.
Today, enterprise IT is adopting and using open source on a grand scale. Gartner finds that 85 percent of enterprises are using open source today. (My hunch? The other 15 percent are, too, but the CIOs surveyed simply didn't know.)
The percentage contributing back? I've seen no data on this, but my personal, anecdotal evidence suggests that few enterprises contribute back to open-source projects, for a variety of reasons. Legal is probably the biggest, as enterprise IT weighs the risk of exposing itself to potential lawsuits from faulty or IP-infringing code.
This concern would appear more intractable had the vendor community not already navigated it in the second phase of open-source development. Vendors had the same concerns that plague enterprise IT today, and ultimately discovered that the value of open-source participation trumps its risk.
As a sign that we're coming to the close of this second phase, even laggards like SAP have announced significant progress in their open-source development efforts.
The same benefits that attracted SAP et al. will propel enterprise IT into this third and final phase of open-source participation, too.
Which benefits?
For starters, open-source software development offers a quicker path to resolution of bugs, a recent analysis finds.
It also enables finer-grained control and customization, as the French army has discovered with Mozilla Thunderbird, the customizations of which can be shared so as to offload the burden of supporting the code.
It might well be, as Gartner's Brian Prentice argues, that ultimately only vendors care about open source. But I think this view only rings true if enterprise IT remains blinded to the big benefits that derive from open-source participation, rather than mere consumption.
While not every company will have a great experience all of the time (witness, for example, the problems Farelogix had developing community around its open-source travel management point-of-sale tool), enough enterprises are experimenting that to suggest the third-phase train is leaving the station for good:
JP Morgan Chase led the way by open-sourcing its AMQP project. The Chicago Mercantile Exchange has also jumped into the fray with Linux. Reuters has its OpenCalais project, a project that is even being used here at CNET.
And so on. It's happening. It's real. And for those enterprises that jump into this third phase of open-source participation, the benefits promise to be palpable.
