August 14, 2006 4:00 AM PDT

Open source grows beyond its roots

One of a growing cadre of open-source companies, Zimbra will add joint document creation and sharing to its messaging and collaboration software at the LinuxWorld conference on Monday.

The company, founded three years ago, will release Zimbra Collaboration Suite 4.0, which will allow people to create documents, such as spreadsheets and text files, from the company's Web-based e-mail client.

The expanding product breadth of companies like Zimbra underscores the growing popularity of open-source software as it expands into categories traditionally dominated by commercial companies. Likewise, the LinuxWorld Conference and Expo has stretched beyond its Linux roots to a wide variety of topics, from mobile phones to business intelligence tools.

Several start-ups have adopted open-source business models in an attempt to unseat incumbent business software providers. In such models, some products are typically given away for free and customers pay for support.

Open-source challengers, from database to desktop software vendors, usually promise lower costs than closed-source software. But some open-source companies, including Zimbra, are seeking to outrace established vendors on features as well.

"Ultimately, open-source communities are at their best when they innovate and try to redefine a (technology) space," said Scott Dietzen, Zimbra's president and chief technology officer. "If we set existing products as the target, we cast the proprietary solution perpetually in the leadership role."

With Zimbra Collaboration Suite 4.0, the San Mateo, Calif., company is seeking to expand its product beyond e-mail and calendaring into shared Web documents, or wikis. For "ad hoc collaborations" in a small group, users can share Web documents with people in their e-mail address book. Or documents can be shared and authored by people in company-defined groups, Dietzen said.

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Zimbra has embraced AJAX-style Web development extensively in an effort to combine the benefits of Web-based software, such as mobile clients and mashups, with the look and feel of traditional desktop software.

The latest release takes advantage of AJAX Linking and Embedding (ALE), open-source software developed by Zimbra that lets people include objects, such as a spreadsheet, within other documents.

"In this release, there's significant overlap with Microsoft's SharePoint, and that's no accident," Dietzen said.

The Kmart of software?
In general, open-source products in areas such as databases and packaged applications lack the sophistication of higher-end proprietary products from larger vendors IBM, Microsoft and Oracle.

But they continue to grow in usage because "good enough" products fit the bill for many tasks, according to vendors and analysts. Now, with venture dollars behind them, some open-source startups are seeking to shed that commodity label for their software.

John Roberts, CEO of SugarCRM, said the open-source application company competes directly with vendors with similar products, be they open-source or not.

Writing software in an open-source process gives the company regular feedback from customers. And because end-users can try a version of the application for free, SugarCRM does not need to commit as much money to sales and marketing as traditional enterprise software companies do.

"There's a better way. If you don't have to spend 70 percent of your revenue on sales and marketing, why would you?" he asked.

Drawing an analogy to fuel-efficient vehicles, Roberts said that SugarCRM's own sales and marketing are more efficient, compared with traditional enterprise software companies. SugarCRM's spend is about 15 percent to 25 percent of revenue, he said.

"Most proprietary software companies are like big gas-guzzling SUVs, throwing CO2 into the atmosphere," he said.

Two-year-old company Pentaho, staffed with refugees from incumbent business intelligence vendors, late last year introduced an open-source business intelligence tool.

The product, which will be updated next month, still lags behind the established vendors on features, said Lance Walter, Pentaho's vice president of marketing. But the company has the advantage of having architected its product around standards, which is typical of open-source software.

"We can snap into a standards-based, componentized, services-oriented architecture, where customers can use as much or little software as they want," Walter said. "Versus the proprietary vendors, who have big stacks where their stuff works well with their stuff."

CONTINUED: Business model innovation…
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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

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Posted by SqlserverCode (165 comments )
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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.
Posted by maverick_nick (205 comments )
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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.
Posted by Savio.Rodrigues (67 comments )
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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.

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Posted by DavesTechShop (7 comments )
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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.
Posted by t8 (3716 comments )
Link Flag
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
Posted by teddy_be (1 comment )
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Capitalism Drives Open Source
In each iteration of open source the business models get more sophisticated. No initial SW cost and no M&#38;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 ( 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 ( providing certified stacks of different open source solutions. All in all, we are seeing the next big technology wave!
Posted by shongelolo (1 comment )
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This is all I'm saying,the addition will do good to their site if users would find it interesting!

Posted by margies12 (4 comments )
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