July 21, 2008 3:18 PM PDT
IDC survey proves open-source software as viable business model
Matt Lawton, program director, Software Business Strategies at IDC, sent over a few choice tidbits from their survey of open-source software (OSS) vendors, covering their experience selling OSS in 2007.
- The majority of average company revenue (63 percent) is from software products, with 30 percent from services; revenue from hardware and the resale of third-party products and services is negligible. These vendors are truly software vendors.
- The majority of revenue from OSS (59 percent on average) is from subscriptions. In fact, 10 of 21 respondents generated 100 percent of their OSS revenue from subscriptions.
I was definitely pleased (and a bit surprised) to see that the subscription model has become so successful. This also proves the professional services provide a nice uptick but are not the core revenue stream.
- Almost 80 percent of OSS revenue on average is generated directly by the vendor as opposed to selling through partners.
- The average OSS revenue from Windows-based products (35 percent) is less than OSS revenue from Linux-based products (54 percent), which is not reflective of the installed base in mainstream enterprises.
- On average, revenue from North America represents 62 percent of total OSS revenue, while Europe represents 23 percent.
- Financial services and the public sector represent the top two vertical sectors by revenue for the respondents, with 34 percent and 20 percent of total OSS revenue on average, respectively.
On the last two bullets, this shows that there is a huge available market outside the U.S. and that financial services and government remain great opportunities for open source.
Dave Rosenberg dishes up "Software, Interrupted" with nearly 15 years of technology and marketing experience that spans from Bell Labs to multiple start-up IPOs to open-source enterprise software companies. He is co-founder of MuleSource and currently serves as the general manager of Hardy Way. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. You can contact Dave via e-mail at softwareinterrupted@gmail.com or follow him on Twitter @daveofdoom. 
