Trying to figure out a company's acquisition strategy is often complex. Some companies have very purposeful approaches to scoping out companies, products, and market segments, while others' approaches are much more scattershot.
Acquisitions of open-source companies have been a big topic of conversation ever since Red Hat acquired JBoss in April 2006. Many of us in the software industry thought that one or two large companies would snap up and consolidate several open-source companies in attempt to offer a complete open-source stack. But an open-source consolidator has yet to materialize.
In recent conversations with a number of open-source executives, it's come to light that many potential acquirers are less attracted to open-source companies that require more investment before generating revenue.
Considering that there are few private open-source companies generating beyond $15 million in annual revenue, an acquisition of an open-source company could certainly be tough for a public company to explain to Wall Street.
While a focus on the bottom line makes sense, product investment comes from many angles, not the least of which are users and developers, key drivers in VMware's acquisition of SpringSource.
If you follow the way Oracle and IBM acquire others, you see them expand portfolios--sometimes to the point where they own several similar product offerings. But from a competitive perspective, this is not necessarily a bad thing.
IBM already offered BPM, or business process management, products but acquired Lombardi to gather the revenue streams under their umbrella. Oracle, on the other hand, offered a whole suite of middleware before it acquired BEA Software but did so to achieve the economy of scale and single-source purchasing power that buyers seem to want. Oracle also acquired and immediately shut down Virtual Iron to get the product out of the market.
They may not be pretty, but these are smart tactics.
... Read MoreOver the last several months I've changed my opinions on open source any number of times. I like to think I'm not just being fickle and instead it's market dynamics that are shifting focus and opinion.
I was recently quoted in an article about open-source "leeches", and in many situations I stand behind the comments. As it turns out, one of the companies I mentioned is now paying, though many others are still not. Freeloaders will always be part of the open-source game, and I think we all accept that, even if it gets under your skin occasionally. At this point, I don't really care--I'd rather see more unpaid open source than expensive proprietary software in use.
In the past I've had bewildering conversations with CIOs and VPs where they told me that they wouldn't contribute code back because they had "created IP--why would we give it to you for free?" while generating hundreds of millions of dollars on top of open-source software that someone, somewhere had given to them for free. I guess that's the sticking point. Not the freeloading, but the assumption that what they created is somehow more valuable than the product that they built on top of.
This brings up a whole world of issues for those trying to build open source companies. Lately, I'm becoming less convinced that you can build a pure-play open source company if you don't fall into two broad categories: direct replacements or inventions.
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Red Hat announced a new JBoss Open Choice program today that gives developers the ability to employ and deploy more Java frameworks and applications than had previously been available.
With JBoss Open Choice, Red Hat says it "plans to provide application developers with the ability to choose the framework, language and programming technologies that best fit the application requirements they are trying to achieve without sacrificing reliability, availability, scalability or manageability across their projects."
Basically, this means that JBoss will interoperate more readily with popular programming models such as Spring, Seam, Struts, and Google Web Toolkit, all of which can be viewed as competitors to the JBoss app server.
While not earth-shaking, this announcement provides insight into the Java application server market--which is being supplanted in many situations by simple programming models. It also shows that a strategy of open-ness and integration, even with competitive products, is an inevitable path.
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The Series B round was led by Accel Partners. Benchmark Capital, the lead investor in SpringSource's first round of financing, also participated. Word on the street is that the valuation was very pleasing to the team there.
I didn't think much about the Covalent acquisition when it happened but now that Iona is going away, SpringSource is the one-stop shop for Spring, Tomcat and ActiveMQ along with their new Spring Application Platform.
Good for the Spring guys for figuring out how to monetize Apache-licensed projects while building in secret sauce to sell their products. The subtle shift from free software to open source shouldn't be underestimated. Just selling support is not a sustainable business model.
John M. Willis has put together a matrix of the major players in the cloud right now including some of the companies that enable and others that are just offerings.
It's an interesting exercise to figure out how all these parts fit together and considering that the SaaS providers don't have a reason to disclose what's going on behind the scenes I bet there is a ton of other software that is not represented here.
Just knowing what I know about Mule's adoption in SaaS companies I can tell you that we are enabling several businesses already. It would also be interesting to know how many of these cloud companies are using open source--especially MySQL and Spring as part of their environments
Disclosure: I work for MuleSource, an open source software vendor.
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