Could Microsoft acquire an open source software vendor? Yes, is the answer, according to Steve Ballmer’s comments from the Web 2.0 Summit. However, I think there’s some reading between the lines to be done here. Microsoft could certainly buy an open source user, but at this stage an open source software vendor might be a step too far.

Here’s what Ballmer had to say, according to CNET:

“We will buy smaller companies. We will buy smaller companies that make some use of open source software,” he said. “We don’t want to discourage people who would talk with us just because they do some open source.”

It’s worth considering that Ballmer was speaking at a Web 2.0 event. As CRN points out, his comment is “a tacit acknowledgment of how thoroughly open-source development has reshaped the software market”.

This is especially true when it comes to Web 2.0 sites, many of which rely on open source infrastructure software at the back end and have created the front-end with open source tools and languages. (Or, as Mark Radcliffe puts it: “The statement is the business equivalent of stating that Microsoft will buy companies that are subject to the law of gravity.”)
So was Ballmer talking about acquiring open source software vendors, or SaaS/content providers that rely on open source? The difference is significant.

As Glyn Moody points out, for Microsoft to make a significant open source software acquisition it will have to not just buy a company but also buy into a culture - one where the value of software does not lie in its license but in support and services subscriptions.

Is Microsoft prepared to deliver software code that does not drive revenue directly? The answer to that, I think, is that it depends on the deployment model.

Clearly Microsoft has realized that there is big business to be made from ad-supported content and applications. If software-as-a-service (be it for corporate or consumer applications) is the distribution model of a potential acquisition target, then Microsoft would be churlish to dismiss that target because it happens to have been built on MySQL.

It would be a big leap from that to actually buying MySQL.

As Matt Asay notes, “I suspect Microsoft’s first open-source acquisition won’t be of a pure-play open-source vendor. Rather, it will necessarily be of a company that uses open-source as a tertiary yet still important aspect of its business.” Asay even provides a couple of potential targets, such as Atlassian and 37 Signals.

Could Microsoft acquire an open source software vendor? One day perhaps, and Ballmer’s comments, combined with other recent pro-open source moves, are a step in that direction, but it still has a lot of barriers to overcome first, many of which are of its own making.