It's increasingly difficult to separate "open-source vendors" from "proprietary vendors," but Demandware, a proprietary software-as-a-service (SaaS) vendor, is attempting to do so in an effort to stem the rising tide of Magento, an open-source e-commerce project. Demandware's criticism of Magento largely falls flat, however, because it uses outdated descriptions of open source.
Demandware walks through a litany of complaints about open source--requires too many developers! forces you to upgrade your software all by yourself! forking and fragmentation!--but none hit the mark. Why? Because each is only somewhat accurate of the state of open source 10 years ago. As a critique of open source today, and specifically of Magento, Demandware's criticisms fall short.
There is a big difference between community open source and commercial open source, not to mention a diverse array of quality even within the "community" or "commercial" open-source areas. Some of Demandware's critiques might be true of certain community-led open-source projects, but they seem wildly off-base for any of the more popular projects, including Magento.
Unfortunately for Demandware, it turns out that open-source vendors care just as much about quality, stability, performance, etc. as proprietary vendors do. The difference is that open-source vendors shift the risk of deployment onto themselves rather than foisting it onto customers.
Equally unfortunate for Demandware, most of the leading open-source projects are increasingly under vendor guidance and control, as Gartner finds. This means that Demandware's complaints are relevant only to a dwindling population of open-source projects.
What's particularly ironic (and a bit galling) is that Demandware, after spending so much time criticizing open source, then goes on to describe its own software as...open source:
Much of our software stack--operating system, application servers, etc.--is open source. But we build a commercial SaaS platform on top of it and do all the heavy lifting for our customers.
How interesting. This sounds much like the model that Varien, the company behind Magento, uses. In fact, it describes the commercial open-source business model: give away a free and open-source version of the software but then charge customers for additional packaging, support, etc.
Fortunately, prospective customers of Demandware don't need to take the company's word for it on Magento. As open source, they can download it for free to see if it works for them. The same cannot be said for Demandware. If you're interested in evaluating Demandware, it appears that you've got just one choice: contact the company and let it start the sales machine:
Demandware sales model: Heavy on people
Apparently Magento is good enough to sell itself. But you won't hear that from the Demandware sales representative.
Follow me on Twitter @mjasay.
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.
Roy Rubin, CEO of Varien
(Credit: Varien)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.
Follow me on Twitter @mjasay.
The web offers businesses almost unlimited commercial potential. The primary thing limiting that potential, however, is trust (or, rather, a lack of it). How do I do business with a stranger online? eBay has come up with its own answer, but it hasn't worked out as well as hoped, as Nick Carr notes:
By providing buyers and sellers with a simple means for rating one another, eBay has been able, we've been told, to avoid lots of rules and regulations and other top-down controls. The community, built on trust and fellow-feeling, essentially manages itself. Tom Friedman, in his book The World Is Flat, voiced the common opinion when he called eBay a "self-governing nation-state."
Nice story. Too bad it didn't work out.
The reason is self-interest, which doesn't always mesh well with other-interest. This is absolutely a problem with impersonal systems like eBay. It is not, however, a problem with true social networks (which map one's social graph, rather than promiscuously adding "friends" Facebook-style).
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