Up to 24 percent of software purchases now open source

Open source has become big business, suggests an article in the Investors Business Daily, but it has done so by becoming more like the proprietary-software world it purports to leave behind.

The article cites recent research from IDC indicating that CIOs allocated up to 24 percent of their budgets to open-source software in 2008, up from 10 percent in 2007--a finding that jibes with recent data from Forrester. This open-source growth is propelling Red Hat to grow "at two to three times the rate of the broader software industry over a multiyear horizon," according to research from Piper Jaffray.

Red Hat is an example of "free done right," following analysis from TechDirt. We've moved beyond the business models that insist that every line of software be open source: they couldn't scale and tended to treat openness as an end in and of itself, rather than as a means to an end.

Today, if you look at the most successful open-source businesses, none of them pass the ideologues' unrealistic and counterproductive "100-percent freedom" litmus test. Not a single one of them.

And that's OK. Google does a tremendous amount of good in the open-source world, yet took a beating last week for not being open source "enough" on the Open Source Initiative's osi-discuss mailing list. Google's open-source program manager, Chris DiBona, responded:

Yes, I can see how people would think that Android and Chrome aren't 'real' open source. *rolls eyes* Damn foolish assertion, if you ask me.

DiBona is right to refuse to be goaded into a walk down an inaccurate and ill-conceived open-source memory lane. That "give-away-the-software-and-sell-support" model was always doomed to scale poorly and consign its adherents to minimal relevance to the wider software market.

Fortunately, the software industry has been embracing a broader definition for "open-source business" that includes many different ways to contribute to and profit from this interesting development and distribution model.

Those who persist in trying to shove the genie back into a crippled container are doomed to fail.

Follow me on Twitter @mjasay.

[vikinzer]

To be fair though you do need idealogical purists in the world. If not for Stallman to provide a counterpoint to what was current practice we never would have found the middle ground we are now enjoying. Extremes are almost never the most desirable ends, but they give us good points to navigate by. The fact is business is about business and will never really do what is right if it exists in a vacuum. Pure ideology will not generally result in anything sustainable, but when you look at pure ideology and try to truly understand it then you can generally create something that primarily holds to the philosophy of the ideology while still providing practical benefit. Without a sound business sense AND a moral compass to guide you all that is left is wandering in the wilderness. So don't dismiss the hard liners so quickly, even when you disagree with them.

[Pishkado]

"CIOs allocated UP TO 24 percent of their budgets ..." Does this mean that one open-source-fan CIO allocated that much (i.e., even s/he spent over three-quarters on proprietary stuff), and the rest got no open-source software at all? Or does it mean that the range was 22 to 24 percent? I'm guessing it was somewhere between these extremes, but WHERE? The statistic as quoted is meaningless. Any conclusions "derived" from it, without the supporting data, are pure speculation. (The rest of the post makes sense, but only because, having used this data point as a hook to get us to read, it proceeds to ignore it from the third paragraph on. Didn't think we'd notice, Matt?)

[CDubber]

Are businesses finally starting to realize that they don't need a $300 copy of Microsoft Office to type up simple memos?

Me and all my coworkers have Office. I would bet none of us use more than 10% of its functionality. Microsoft has been bloating this thing for years simply to perpetuate the irrational desire to upgrade. Microsoft's cash cow's milk is starting to run dry.

I'm sure the Microsoft astroturfers will have something to say here though...

[CTO_Dude]

@CDubber OK I'll bite.

Just because you dont use 90% of the software doesnt mean it's not valuable. I have trained my employees on things they didnt know where inside Office 2007 and with a few clicks (much less effort than in Office 2003) they are now producing more professional and accurate content. Excel is a great example. I can create extremely powerful pivot data in far less time than I could with Office 2003 and couldnt even do properly in Open Office. To me, your comment reads more like an end user training and education problem than anything else. Now, before you go off on a rant about training, Microsoft gives Office training away for free on its website and also includes tools that you can load directly into Office that show you how to do things. Does Open Office provide training natively?

[monkeyfun14]

They're damned if they don't add things and damned if they don't what do you people want exactly.

[shusseina2]

Well said, I couldn't agree more! I use NeoOffice on the Mac and have found it a great alternative to Office.

"That "give-away-the-software-and-sell-support" model was always doomed to scale poorly and consign its adherents to minimal relevance to the wider software market."

Doesn't open source imply the source code, and therefore the software, is available for free?

The use of the term open source is used in interesting ways. Ingres describes itself as "the leading business open source database", yet when downloading the latest version of Ingres you have the choice of a 60 days evaluation copy or the community edition. How open source is it?

For the record, I'm a great fan of the Ingres database.

[Andres_Garcia]

>> Red Hat is an example of "free done right," following analysis from TechDirt. We've moved beyond the
>> business models that insist that every line of software be open source

So, which software made by Red Hat has lines of code that aren't open source?

[Sortova]

I was just going to ask the same thing (and not just because Matt and I often don't see eye to eye, plus I was going to ask nicely).

It appears that Red Hat passes what I'm calling the "CentOS Test". If I can take your code, remove trademarked images and references, recompile it (with or without changes) and distribute it, it's open source. I don't know of a single product where Red Hat distributes code that you can't also get the source.

[henrikingo]

Right. It is a funny contradiction even, in that it is unnecessary. Because you could indeed make the argument that many successful Open Source business models today have become succesful by compromising (MySQL, Alfresco...), just that Red Hat didn't compromise, they are 100% "pure", unlike this article claims.

(Ok, so for years Red Hat did not Open Source the Red Hat Satellite management component, but also that is now Open Source.)

But looking at the Open Source business landscape at a whole, Matt is correct. Many businesses are succeeding with a model of including non-open components in their offering.

[henrikingo]

Ok, so in the end Matt actually shoots himself in the foot by insisting too much on his false claim:

"Those who persist in trying to shove the genie back into a crippled container are doomed to fail."

So Red Hat is doomed to fail?

Btw, also the criticism about Android is a bit poor. It is clearly the most open mass market phone in the world, and the simplicity/complexity of building it is not bad compared to how proprietary phones are done, and in general the amount of openness corresponds well with an early 90's Linux distribution. It is an enourmos step forward in openness.

[Arthur Belle Dent]

PJ has a little rebuttal in her links section at Groklaw to Matt's 4th paragraph:

[PJ: Actually, this is misinformation. Red Hat is open source, as you can see in their mention of the GPL on this license page, and while they distribute 3rd-party software under other licenses, it's as a convenience only.
No one has to use Adobe Acrobat, after all, in Linux, as there are many other choices. Or Monotype fonts.
Use it if you agree. Use something else if you don't. And the only proprietary stuff otherwise from Red Hat that I could find would be things like some smart card drivers, as you can see for yourself on their copyright and 3rd party acknowledgements page. Red Hat flourishes despite never compromising. It is *why* it has community support, which is a huge business plus.
Asay is simply wrong on this.
Companies can compromise if they want to, but it's not unrealistic to build your business on the GPL and openness. Red Hat proved it can be done. And they are doing extremely well.]

Oh, snap!!

[Police_States_of_America]

"Today, if you look at the most successful open-source businesses, none of them pass the ideologues' unrealistic and counterproductive "100-percent freedom" litmus test. Not a single one of them."

linux desktop will never be mainstream until closed is embraced to some degree or another. the question is would you rather have a general population that uses a completely closed source model (Windows) or a mostly-open operating system with proprietary features that give it a unique selling point.

[fazalmajid]

"Are businesses finally starting to realize that they don't need a $300 copy of Microsoft Office to type up simple memos?"

Perhaps they are realizing they should not be typing memos in the first place, just emails without useless frills or baggage from the paper-pushing 20th century like routing slips.

[levander404]

The whole reason I started reading CNet blogs instead of Ars Technica is because Ars has too much sensationalized claims that aren't soundly supported by facts in their articles. But, this article reeks of sensationalism.

No, I don't know of any companies making good money off supporting open source software. But, (as a quick example - I'm not being paid, so going off vague memory), how long have companies been investing in internet television? You're starting to see things pop up like Amazon and Netflix's broadband services, but those aren't widely used yet. Oracle was investing long time ago (15 years) in their Liberty Media (I know it was Liberty something) to get internet television making money. But, no one's making real money yet. Is internet television dead or has it just not happened yet?

If you want to make these rash generalizations about how supporting open source as a business model is dead, you need to at least provide a clear link to the rational behind that statement. I looked at that Tech Dirt article that was linked to. It's about how a lot of free Danish papers popped up then all died. It doesn't make the case you're assuming, without backing up, in this article.

How can you purchase Open Source software? Isn't it free?

[pentest]

Cost has nothing to do with open source software. You can charge for it and still be open source.

[gggg sssss]

@pentest Only a total twit woudl pay for the actual software when you can legally download it free. Would you?

[gggg sssss]

error
does not compute
open source = free = $0
therefor if 24% of something is $0, then 100% of something is still $0
does this mean that 100% of people's software budget is zero?

[pentest]

Cost has nothing to do with open source software. You can charge for it and still be open source.

The only thing that doesn't compute is your ignorance.

[gggg sssss]

@pentest who in their right mind would indeed pay for it? Name 3 examples of open source software you paid for. Being too lazy to recompile/ learn / install / debug something yourself does not imply that you paid for the software - just the service.

[mattflaschen]

"DiBona is right to refuse to be goaded into a walk down an inaccurate and ill-conceived open-source memory lane. That "give-away-the-software-and-sell-support" model was always doomed to scale poorly and consign its adherents to minimal relevance to the wider software market."

I fundamentally disagree. The first company to successfully do this (Cygwin) is still alive and well in Red Hat. And yes, there are some minor exceptions to Red Hat's general "All free software with paid support". But those /are/ the exception, not the rule, and minor compared to other companies in the industry.

I am not ready to write this model off.

[pentest]

Yeah, it is not dead. The problem is that sleazy companies such as Alfresco use the term open source for marketing purposes but generally are not open source companies.

[BrucePerens]

"Fortunately, the software industry has been embracing a broader definition for "open-source business" that includes many different ways to contribute to and profit from this interesting development and distribution model."

Yes, Matt. We're all embracing proprietary software companies that fake us out that they are really Open Source. Since you repeat it almost every day in your blog, it must be true.

Funny, why, then, are the companies failing?