A blog for the enterprise open source community
Commercial licensing is a double-edged swordMatthew Aslett, August 19, 2008 @ 10:40 am ET
Larry Dignan reports on a coming revolution in software support and maintenance contracts, prompted by Dennis Howlett’s excellent analysis of why the reliance of enterprise software vendors on maintenance revenue is unsustainable.
Noting the negative response to recent price rises from Oracle and SAP, Dennis maintains that increasing maintenance costs is unsustainable as it reduces the opportunities for customers to invest in the innovation that provides them with real value. As maintenance fees go up, less value is delivered, and less budget is available for new software.
“There will come the day, whether locked into the vendor or not, that customers will come together and say ‘no more.’ I absolutely believe that to be a reality,” writes Dennis.
Larry continues the discussion by listing a number of factors that he believes indicate that the time is ripe for disruption:
This would appear to be playing into the hands of open source vendors. But maybe not. Consider the recent discussion on open source business models. I wrote yesterday that “most open source vendors have some kind of ‘unique, must-have technology’ that is only available via commercial license or subscription.”
This is perfectly understandable given that many open source vendors are searching for the hook that will reel in enterprise customers and ensure that they convert enterprise open source users into commercial open source customers. Savio Rodrigues has been talking up this strategy for some time, while Matt Asay agrees that “any business must figure out a ‘proprietary’ differentiator”.
Deciding what that differentiator should be is, as Matt puts it “the nettlesome question” and many vendors have fallen back on the tried and tested enterprise software models and decided that commercial licensing, whether it be for proprietary extensions or a full blown proprietary ‘Enterprise Edition’ is the answer.
This would appear to contradict one of the claimed benefits of open source software, however. The promise of the commercial open source is that it eliminates the upfront licensing cost while replacing the ongoing maintenance cost with a subscription-based support contract.
Commercially licensed ‘Enterprise Edition’ packages might be easier for customers to consume given the familiarity, but if Dennis is right and customers turn against enterprise software support and maintenance models then how many customers are going to be able to distinguish ‘commercial license plus support subscription’ from ‘commercial license plus maintenance contract’?
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