451 CAOS Theory 
A blog for the enterprise open source community
ASPs have it both ways
Martin Schneider, April 4, 2006 @ 9:22 am ETAfter an interesting talk with RightNow’s Greg Gianforte, I realized just how good hosted app vendors can have it.
Greg has been a big evangelist for open source, and his company uses a lot of open source components in their operations, The cost savings are obvious and the ability to cost-effectively scale (a key need for hosted application delivery infrastructures) is another huge benefit. So, basically RightNow gets to demand closed-source prices for a product that relies heavily on open source for its delivery. Its cost model versus Salesforce.com, which uses Oracle databases and other proprietary tools is much more profit friendly.
But all this made me wonder how much traditional, on-premise closed source vendors are using Linux and other open source products in house. We might be surprised by the statistics.
Another point to ponder: How much do closed-source vendors lose muscle when it comes to light that they are relying on open source?
Sure, open source has crept into nearly every facet of the tech universe. But for the closed-source stalwarts, can they leverage Linux without conceding that LAMP-based versions of their products are on equal footing? Will the ‘Fud Factor’ inevitably disappear?
Categories: Software
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On your first point, I seriously wonder whether there are actually any ‘pure play’ closed source vendors left; after all, even Microsoft has made good use of open source components when needed; it’s TCP/IP stack is the most cited case, which goes back to Win 95/98?
As long as the components in question use a BSD-style license, grabbing them and using them is pretty much a no-brainer. So consequently, I’d like to turn your second question on its head - how much muscle would a software company lose if it comes to light that they don’t use any open source code?
My argument has always been that the lack of use (or serious evaluation) of open source code should be something that investors in a company should get cross about - why is the company reinventing the wheel, why is it looking so many gift horses in the mouth?
But luckily embracing some elements of open source is not the same as admitting that “that LAMP-based versions of their products are on equal footing”. There’s plenty of secret sauce that can be spread around the open source layer cake… a rather unappetising metaphor, on reflection.
Is there really an issue here at all? I have employed ASP services on occasion…and though I might appear to be an idiot…I’ve never asked, even once, if the ASP is utilizing open source software.
As a user, I’m interested in the price, efficacy, and functional applicability of the product. Whether it’s open source or not is largely irrelevant (unless that fact has some indirect pricing impact for me).
Ultimately, if I’m protected by performance, scalability, serviceability, and throughput SLAs from my ASP vendor, I’m unlikely to be concerned about where their code came from…just that they meet my expectations.
All that said, I DO agree with Christopher’s suggestion to VCs. Enterprises and software vendors should actively be using open source code as well as licensing closed source code…time to market is usually a critical issue and there’s nothing wrong with borrowing what’s out there (though, as a product manager, required to legally track and note third party software, I find it to be a real hassle).
Our own experience parallels that of RightNow and Salesforce.com, by the way. The 451 Group started life with a big, commercial, three-tier architecture, and spent quite a lot of money ripping it out and replacing it with commodity open source. Of course we’re not hosting real applications, but we live or die on whether our site is up. That’s why we made the switch.