Further Evaluating Commercial Open Source
Posted on July 29, 2009 |
Guest blogging today is John Powell, CEO of Alfresco Software, a company that makes open source enterprise content management software. The following post is a rebuttal to yesterday's guest blog by Peter Yared.
As we all know measures of success are subjective. I believe commercial open source is proving to be a viable and successful model based on its ability to deliver real value to both customers and investors.
It has moved from the first phase of evangelism to mass market adoption. Supporting evidence can be found in the growth rate of Alfresco, Jaspersoft, Red Hat, MySQL, OpenBravo, SpringSource, Atlassian. All are growing double digit and are close to or already profitable. A recent IDC study reveals that worldwide revenue from open source software will grow at a 22.4% to reach $8.1 billion by 2013.
There have been significant exit events – XenSource was bought by Citrix for $500 million; Yahoo! Acquired Zimbra for $360 million, Oracle got Sleepycat for $60 million. Any recent slow-down simply reflects the fact that the credit crunch has reduced technology company exits to virtually zero.
It is true that commercial open source works well when software is a commodity - e.g. web browsers, operating systems. Alfresco was created because of the increasing difficulty in differentiating one enterprise content management system from another. Is this a bad thing? I suspect it is not from the perspective of enterprise consumers.
It is also misleading to think that every commercial open source vendor sought to displace existing market leaders; on the contrary the potential un-tapped market is where the true opportunity for commercial open source vendors lies. The model can enable organizations such as non-government organizations (NGOs) and small-to-medium sized businesses (SMBs) that would not have been able to afford a solution based on proprietary licensing and maintenance models to access the required technology. MySQL found a market not by replacing Oracle but in the fast growing web space with no dominant database software player.
So we are constantly asked about why we put our software out as open source. The advantages of the commercial open source approach for the vendor, users and business community have become clear and include:
• Users can try the product before buying, eliminating much of the sales activities of ordinary enterprise software
• Lower cost of development through use of other open source components and contributions
• Much broader testing and code review of products
• Vendors provide support for users delivering SLAs, fixes, advice, warranty or indemnity
• Open source vendors are more accountable than the proprietary vendors since there is always the possibility to switch to the free version
• The lower cost of product is passed on to customers
• The transparency of open source means that there is greater visibility of product roadmaps
Looking to the future, the technology market relies on a combination of agility and innovation. From our experience of both proprietary software and commercial open source models, I believe open source has the greater ability to drive innovation and ultimately influence the technology we will be using and more importantly the technology we want to use. Perhaps this will be a better measure of the ultimate success of commercial open source.
