Open source continues to move beyond its original confines of infrastructure software. Open-source application adoption is booming, while even the curmudgeonly router market is getting some open-source polish from Vyatta.
One area, in particular, that is getting an open-source makeover is e-commerce, with Magento apparently leading the pack with more than 750,000 downloads and a roster of great customers, albeit with strong competition from Oxid and Apache's OFBiz project.
I've written about Magento before but wanted to dive in a bit deeper, so I contacted Roy Rubin, CEO and founder of Varien, the company behind Magento, for an update on the open-source e-commerce platform.
Q: Tell me about Magento. Where do you make your money and who is your typical customer? Can you give any data or statistics on how the company is doing?
Rubin: Magento is an open-source e-commerce platform that provides merchants with a sophisticated software platform to manage their online sales. Magento enables online businesses to develop and rapidly deploy multiple types of e-commerce sites from a single instance of the platform--globally.
Magento is available in two editions: Community and Enterprise. The business model is focused on our Enterprise Edition Subscription which provides additional set of features as well as product support, SLA (service level agreement), PA-DSS certification (soon) and warranties.
Magento is currently used by tens of thousands of merchants conducting billions of dollars in online transactions. We'll be reaching 1 million downloads by the end June 2009. In the first eight weeks since launching the Enterprise Edition Subscription, we've had over 7,000 merchants get in touch to learn more about our new product. We have closed a double-digit number of deals and now have a strong pipeline of merchants and solution providers that we are talking to.
A typical customer for us is an organization that recognizes the mission-critical nature of an e-commerce platform and expects a strong support/warranty/SLA as well as access to advanced enterprise features. Our customers today include Fortune 500s, midmarket brick and mortar retailers, pure-play Internet focused merchants, and smaller organizations.
What is your business/licensing model? Pure support (plus open source) or do you use an "open core" model, or something else? If so, how do you draw the line between open-source components and proprietary components? What determines whether something will be open or closed?
Rubin: We recently launched an "open core" model with the release of our Enterprise Edition Subscription. We've transitioned to this model after the first 12 months of business under a support model. With the Enterprise release, we've targeted the product towards a different market segment and the decision regarding the components available is primarily driven by our customers and partners. Our Community Edition road map and feature development will be determined by our Community Advisory Board, which we've recently formed to lead such initiatives.
Does Magento do particularly well in certain industries/geographies? If so, which ones?
Rubin: Our product today is primarily focused on the business-to-consumer (B2C) market. In terms of geography, we are doing exceptionally well in the North American and European markets, with the United States, France, and Germany being the most active and strategically important.
How has the recession affected your business?
Rubin: The economic climate has had a hugely positive impact on our business as medium and large-sized companies start to focus more on cost, flexibility, and time-to-market. Magento offers the same functionality as leading enterprise-class proprietary software providers in the e-commerce market but at 10 percent to 20 percent of the cost and much faster time to market. For online retailers, this is very important as every day offline is lost revenue.
Who are your top competitors, both open source and proprietary? Why should a prospect choose you over them?
Rubin: In the proprietary market, we compete against IBM, Microsoft, and a number of other players. In the open-source world, the competition is very limited, especially in the commercial open source market. There are some great open-source projects such as Apache's OFBiz.
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