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The impact of licensing choiceMatthew Aslett, February 29, 2008 @ 12:19 pm ET
Tim Bowden published an interesting post earlier this week about the impact that the choice of open source license has on the potential valuation of an open source vendor. Taking the MySQL and PostgreSQL databases as an example, Bowden wrote:
“When it comes to takeovers and valuations, I think the role of GPL as a strategic weapon is often under appreciated. If you’re top vendor dog in a GPL project, other players have a very hard time unseating you. That may sound counter-intuitive given world + dog has the code, but I don’t believe it’s such an advantage for competitors as most assume. Your lesser competitors in the same space have to share their plum developments with you. Sure, the top dog has to share his plums too, but when you’ve got the top plum growers in your own yard (to push a metaphor too far), you get to go to market with the best solutions first. If you can keep your plum growers happy, and can do your business execution right, you’re in a very strong position.
“With BSD projects on the other hand, solution providers tend to go to market with proprietary solutions. You can’t force your competitors to share their plums. You don’t share your own (at least, not till they’re getting a bit old and withered). The competitive maneuvering follows a more traditional proprietary model. Being top dog doesn’t stop the competition accruing some distinct proprietary advantage. Sure, it’s rarely easy winning from behind, but if you’re a second tier vendor and have to give away your best produce to the market leader when you go to market (like with GPL’d projects) surely it’s so much harder again.”
If you look at the history of open source databases, there is an argument that the BSD license not only makes it easier for smaller vendors to challenge incumbents, but also for more difficult for the first-to-market to establish anything near a position that could be considered ‘top dog’. PostgreSQL is a prime example of an open source project that has never been successfully commercialized on a global basis, despite all its good qualities.
While regional support players such as Command Prompt and PostgreSQL Inc in the US, Credativ in Europe and Software Research Associates, Fujitsu and NTT Data in Asia provide support services for PostgreSQL, global players have come and gone. Illustra was subsumed into Informix, and Great Bridge failed to generate enough funding, while Pervasive and Red Hat more or less gave up (although PostgreSQL – Red Hat Edition is still available).
PostgreSQL’s success in the academic and scientific community has had something to do with the lack of global commercialization opportunities, but it does appear that the use of a license that enables proprietarization has actually reduced the opportunities for commercialization.
For more on this see Further thoughts on the impact of licensing choice.
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