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Proprietary software is a...services business
Interwoven, a leading web content management vendor, just announced really good financial results. Vignette, another competitor, did not.
In both cases, however, I was fascinated to see how little of their revenue stemmed from license sales. License sales are supposed to be the lifeblood of the proprietary software model: Write the software once, monetize forever. Yet in Interwoven's case, license revenue accounted for only 37 percent of the company's revenue. For Vignette, it was even worse: 21.6 percent.
Compare this to a recent IDC survey of open-source vendors, which found that 63 percent of open-source vendor revenue stems from software, not services. In Alfresco's case, an open-source competitor to Vignette and Interwoven (and my employer), the percentage of software revenue is much higher. Much higher.
This would imply that open-source vendors spend much more time writing great software, thereby creating room for a healthy ecosystem of value-added resellers and system integrators to grow up around them. Proprietary vendors may increasingly be competing with their partners in an attempt to goose revenue upward as license revenue deflates (as Oracle's recent earnings suggest may be in full swing).… Read more
