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 Demandware's criticism of Magento largely falls flat, however, because it uses outdated descriptions of open source.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.
Magento, the leading open-source e-commerce platform, has just notched a new honor: Forrester Research has named it an "Emerging Player to Watch" in its Forrester Wave: B2C eCommerce Platforms, Q1 2009 report.
This is an exceptional testament to the growing momentum of Magento. Varien's Magento is the only open-source e-commerce platform named in the report, alongside industry leaders IBM and ATG.
But it's not what Varien has done with Magento that Forrester deems exciting. Rather, it is Magento's momentum, and implicit room to grow, that Forrester calls this out in its report:
Magento is a very exciting open-source e-commerce solution and...is typically delivered at the enterprise level through the professional services of the company that developed and launched the product, Varien....Enterprise-level e-commerce organizations should view Magento as an opportunity to launch small-scale side projects and experiments, but for larger companies with limited e-commerce needs, it may prove to be a very attractive solution.
Product maturity, proof of the product's scalability, and further development of SIs and Varien's own professional services may place Magento as an enterprise-class solution in the future.
This is precisely where most successful open-source products start: departmental deployments in the enterprise with more extensive applicability in the small-to-midsize enterprise market. However, as with Hyperic, MindTouch, and other open-source offerings, Magento is unlikely to reserve itself for these more limited deployments.
Forrester forecasts online retailers to upgrade their platforms over the next two years, and I suspect that Magento will increasingly get the nod as online retailers seek the flexibility, cost profile, and embeddability that an open-source solution like Magento can provide.
Follow me on Twitter at mjasay.
I've written before about one of my favorite open-source companies, ad-server company OpenX. However, since I first covered the company, a lot has happened, all seemingly positive.
For one thing, OpenX now tops 300 billion ad impressions per month, 150,000 publishers, and 2,500 paid customers using its hosted offering. This impressive growth, however, belies a big challenge for OpenX:
Next comes the more difficult process of converting the free products and services into revenue-generating operations. The vast majority of the ads served by the installed software were from freely downloaded versions, and few of those using the hosted service are premium customers.
In effort to better understand how OpenX plans to address this opportunity (or problem), I called company founder Scott Switzer on Thursday to get the scoop.
Much of what OpenX is planning is currently not yet public information, so we'll have to wait until January to give a more detailed explanation. Let's just say that a fair amount involves the nascent OpenX Market, currently in alpha, as well as an e-commerce play, which probably counts as pre-alpha. TechCrunch has hinted at the importance of OpenX Market, essentially a place for advertisers and publishers to congregate and do business.
OpenX Market is the latest service from OpenX. The Market is a place where publishers can easily make their advertising space available to large numbers of buyers (including ad networks and agencies). Those buyers get the opportunity to bid for each impression, with the highest bidder displaying their ad, if their bid beats a floor price set by the publisher.
It's not hard to connect the dots and see OpenX taking some percentage of the business generated on its Market. But for the Market to be interesting, OpenX needs to continue to drive adoption of its platform, something Switzer pointed out that its open application programming interface and six months of efforts to make it highly extensible, Mozilla Firefox-style, could help do:
We've spent a lot of time over the last six months, developing two major things. One is a full-blown API to give "developers a way to control the ad server so they can automate common tasks, and integrate with other applications in a stable and reliable way."
The more interesting thing is a full-blown plug-in framework. Almost a year ago, our road map was pages and pages long, but we decided that instead of being the only company to develop new OpenX features, we'd spend the majority of our time building infrastructure to open up the OpenX framework to let others build it out.
OpenX traditionally has been the "light" version of a "real" ad server. But what this does is that it helps us to leapfrog bigger, better-financed competitors, in terms of features and functionality that we can offer, similar to how Firefox competes with Internet Explorer. Within a year, Firefox was able to eclipse IE in terms of functionality, much of that due to its community.
This move puts control of the OpenX road map back in the hands of our publisher community. This means no lock-in, but lots of network effects that drive benefit for us and for our customers. We want to ensure we have a platform that manages the needs of all publishers, not simply the big (or little) publishers. We want "our" platform to be a true community platform.
This might sound like wishful thinking, but OpenX is already well down this road, as its developer wiki demonstrates. Over 100 plug-ins have already been built for OpenX. Historically, developers have hacked together extensions to OpenX, but in the new version of OpenX the company has rebuilt these plug-ins to make them easily installed and upgraded.
OpenX got to 300 billion ad impressions per month through open source and a low price tag (i.e., "free"). But it's going to get to 3 trillion ad impressions by enabling publishers to claim control of the OpenX ad-serving platform, then monetizing all that interest with a marketplace that brings together high-quality publishers with high-quality advertisers (or buyers).
OpenX is taking on big incumbents like Google with a model that looks like it just might work. Why? Because OpenX isn't trying to do it alone. It's enlisting the publishers on the OpenX team, treating them as partners to help augment value rather than as customers from which to extract value.
That sounds like a winning strategy to me.
A friend pointed me to news that Magento, a leading open-source commerce platform, has cracked 500,000 downloads, not to mention its 44,000 community members that have translated the project into over 60 languages. That is progress that money can't buy, or at least not cheaply.
But that's only half the story. It has been said that "imitation is the sincerest form of flattery," and the real story behind Magento's success is that it's breeding copycats. Several proprietary competitors, like Oxid eShop, are throwing in the towel and open sourcing their code, too.
The Magento project, founded by Varien in 2001, hasn't been around long, but it's already disrupting the e-commerce market. It's also getting attention from The Wall Street Journal, among others.
Earlier this year I talked up Varien/Magento as a company and project to watch. I was speculating at that time, but today its success seems relatively sure. It's now a question of "how big?" for Magento, not "will it take off?"
Nick Carr asks today, "Is eBay a fad?" Nick's source of inspiration is a BusinessWeek article noting that more and more sales on eBay are through fixed-price sales, rather than auctions.
"If I really want something I'm not going to goof around [in auctions] for a small savings," says Dave Dribin, a 34-year-old Chicago resident who used to bid on eBay items, but now only buys retail.
I think the larger problem is that the "savings" have been somewhat nonexistent for some time. It used to be that you could find deals on eBay. Today, those are fewer and farther between as eBay has become a haven for "real" merchants rather than Aunt Louise selling her handmade doilies.
This, coupled with the amount of effort that goes into eBay's auctions - first you have to dig through the site to find what you want, and then you have to sit around waiting for the auction to close, only to be outbid by software set up to win the auction in the final few seconds - make eBay a raw deal.
I personally feel like the right model will be one where sellers find buyers, not buyers finding sellers.
... Read moreWant to sell online? Not Your Average Geeks blog has reviewed nine of the best, including Magento which I reviewed last year.
On Magento, the review notes:
...[M]y what a fantastic job they have done on this product. It's by far one of the more exciting e-commerce platforms available for free on the market today. Dripping with features, they really have thought of everything. Wishlists, shop by price and category, item comparison - all the things we've come to expect from professional web stores. It's software as good as this that really keeps licensed software on their toes...
Indeed. Take a look at the other reviews. A good collection of great software.
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).
... Read more
Jack Aboutboul at Red Hat clued me into an interesting open-source ecommerce platform today. Called Magento, it's built by Varien and is "a feature-rich, professional open-source eCommerce solution offering merchants complete flexibility and control over the look, content, and functionality of their online store."
Put in English, Magento is an open-source solution for setting up and managing an online store. The product appears to be pretty robust already, but the roadmap looks even better.
If you need to set up an online store, why pay the six- to seven-figures to do so when you can use Magento for free and then pay when you want support going into production?
Those open sourcerors. Why won't they stay in the limited boxes/categories where the 20th-century proprietary vendors want them to remain? Marketcetera, OpenAds, etc. Darned pesky open source kids!
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