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.
Like begets like, and in the software world, open-source purchasing begets even more open-source purchases.
At least, that's the lesson I take from a recent Piper Jaffray report that suggests JBoss customers plan to invest heavily in Red Hat technology.
Independent software vendors that are gaining/losing IT budget share
(Credit: Piper Jaffray Research)Not only are JBoss customers more likely to buy deeply into Red Hat, which is not surprising (though for Red Hat, it must be gratifying), but they're also more likely to buy MySQL and less likely to buy from Microsoft.
This can't be good news for Microsoft, and it probably is one reason the company has become so aggressive with its intellectual-property portfolio.
The data also underscores IT's natural inclination to buy into open source in ever-increasing degrees. Once an enterprise has one good experience with open source, it wants to have many more, as this chart from IDC suggests:
This corroborates Forrester's more recent data, which suggests that widespread plans to adopt open source within enterprises.
Back to Red Hat. It appears particularly well-positioned to benefit from increasing interest in open source, as Piper Jaffray notes:
The strong showing of support for Red Hat from a broad sample of large, sophisticated IT vendors is highly noteworthy....Red Hat's unique ability to leverage advancements from the open-source community creates a superior price-performance equation for customers. In turn, this superior price-performance experience drives Red Hat's ability to become an increasingly pervasive layer of enterprise-computing infrastructure.
We believe that Red Hat's message is resonating well across its core Linux operating system, its JBoss middleware offerings, and its early-stage virtualization capabilities. Finally, the survey results show existing customers plan to spend more with Red Hat, and in combination with recent Q4 customer deal metrics, (all top 25 deals renewed at 132 percent of prior year's value, and 2 of the top 30 deals involved free to paid migrations) support our thesis that Red Hat is gaining market share during this downturn.
It's a good time to be Red Hat, or to be affiliated with Red Hat's open-source ecosystem. I've talked before about the possibility of an industry duopoly between Microsoft and open source. Perhaps that duopoly really will be between Red Hat and Microsoft.
Follow me on Twitter @mjasay.
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