Open source grows beyond its roots

(continued from previous page)

The open-source process, where code is typically released publicly on a regular basis, favors more rapid development, said Kim Polese, the CEO of open-source services company SpikeSource.

"Open-source applications are becoming more feature-rich all the time...Users and VARs (value-added resellers) are adding extensions and making them more rich," Polese said, adding that smaller open-source companies tend to be more nimble.

"With the proprietary software model, you have an entrenched model of having major releases every 12 to 18 months, where everything is bundled into that release," she said. "In contrast, open source puts control in with the customer and the VARs, because they can add those features easily. They don't have to wait for the vendors."

Competitive highs and lows
Existing closed-source software companies are not sitting idly by as the open-source wave goes by. The largest infrastructure software vendors--IBM, Microsoft, Oracle, BEA Systems and Sun Microsystems--have embraced open-source products and development practices to varying degrees.

In terms of competition, open-source is still mainly a concern at the low-end, said Robert Shimp, vice president of technology marketing at Oracle. Surveys taken by the database giant indicate that customers are most concerned about high-end features to do with performance, reliability and security, and price is less important, he said.

"Open-source technology and community processes are complementary to commercial software. A lot of people, unfortunately, wrongly paint them as opposing forces," Shimp said.

Oracle has stepped up its involvement in open-source projects in the past year. It also acquired Sleepycat, which sells support for the open-source Berkeley embedded database.

"The open-source community deserves a lot of credit for developing some innovative business models and some interesting technology," he said. "The notion of making a product free to use and contribute to and you pay for support is an interesting business model we're certainly looking at closely."

Zimbra's Dietzen said that Linux distributor Red Hat has demonstrated that an open-source company selling support around freely available software can grow to a substantial size.

A significant difference with Red Hat and the round of open-source companies in formed in the last three or four years is that many incomers to the industry have developed their software from scratch, he noted.

"We're following in the footsteps of Red Hat, which has a nice growing business," Dietzen said. "The stunning part is that they don't own the IP (intellectual property). This next generation, like Zimbra, does own our IP, and that gives us an inherent advantage in capturing value in the market."

[SqlserverCode]

Waiting for IBM

Waiting for Oracle/IBM to buy some of these companies
That's what happens when you are a small and succesful open source company

http://otherthingsnow.blogspot.com

[maverick_nick]

Why buy?

Why would any company want to buy an open source vendor? The reason any company is purchased, is for their market share. Buying a company for it proprietary products makes sense, but you can simply repackage an open source product without having to buy their company.

Case in point: Oracle and Redhat. Larry said that he wouldn't buy Redhat, but would distribute and provide support on their products. Oracle can spend less money on gaining Redhat's market share in direct competition, than buying the company.

[Savio.Rodrigues]

Forget free, how about community?

This article glosses over maybe the key reason that open source succeeds, community. Being free is great, but a free product that I can't find a forum to get help or google to find helpful information from tons of others using the product isn't all that helpful.

[DavesTechShop]

Wouldn't it be ironic if the next Microsoft emerged out of this?

Martin, I have enjoyed reading all your articles on the business of open source software. Keep up the good work.

http://blog.davestechshop.net
http://blog.davestechshop.net/archive/2006/08/14/OpenSourceNeedsMoreInnovation.aspx

[t8]

The next Microsoft is already here.

They are called Google.

Google uses Linux on their supercomputer that enables their search services.

They use other open source products and give away their products too.

[teddy_be]

New shape to same old Business model...

Let's not forget that when you buy so called "Closed source" SW license, you are actually financing the next wave of feature being fuelled in the subsequent release because the version you just bought as been financed by the initial creator of the SW.
So FREE in Open Source worl just means that this initial financing come from somewhere else (selling services/HW!? See RedHat or Digium in VOIP).
Making a community work around OS code is just bringing back the value to where it is to be created, not in the IPR of the code but on the service that is created on-line. Software in the end is just another way (and maybe the only) to store a Service ! ;-)
Br, Luc

[shongelolo]

Capitalism Drives Open Source

In each iteration of open source the business models get more sophisticated. No initial SW cost and no M&S costs make sense. There are still a lot of issues for the general business user (i.e. non-techie) somebody has to do buy the HW, do the installation, configuration, patch management, backups and monitoring that must still be done. It is interesting to see capitalism at work - in response to these hurdles companies such as Appitas (www.appitas.com) are offering hosted versions of the open source products at costs significantly lower than SaaS or Licensed SW. We are also seeing companies like SpikeSource (www.spikesource.com) providing certified stacks of different open source solutions. All in all, we are seeing the next big technology wave!