A few weeks ago, we released our fifth 451 Commercial Adoption of Open Source (CAOS) Research Report entitled ‘The SMB Market Opportunity - How big are SMBs for open source?.’ In this report, we explore the challenges and conditions that must be met in order for open source software and its vendors to succeed in the SMB market. In addition to providing guidance for SMBs contemplating open source, it also examines the future trends and opportunities taking shape for open source in this very different market.

Open source software is being widely adopted by large enterprises, but what about the much larger market of small and medium-sized businesses? Many vendors talk about SMBs as the ‘hot market,’ but how do open source vendors, open-source-enabled systems integrators (SIs), other resellers and consultants actually break into this difficult market, which is heavily dominated by Microsoft and other proprietary vendors? Among SMBs, the prospect of converting free downloaders and open source users into paying customers is in many cases more daunting than with enterprises. Margins are limited, and reaching customers through sales and marketing or channels is an expensive proposition. Yet open source software has some of the key characteristics – free or lower cost, easy accessibility, and freedom from vendor lock-in and license nightmares – to draw significant SMB business.

Matt Asay over at The Open Road blog on CNET wrote up a blog entry on the report release a few days ago entitled “Not much SMB dollars today for open-source vendors, the 451 Group finds,” which includes some of the survey findings from the open source vendor community that are included in the full report.

The report is now available for download - clients can grab a copy by logging in. If you are not a client and would like to purchase a copy of the report, we have recently added the ability to purchase reports directly from the site. Take a look at the CAOS Report 5 page.

UPDATE 1 (12/11/07): You can also grab a copy of the press release, which includes more details on our findings.