A blog for the enterprise open source community
If it ain’t broke…Matthew Aslett, December 3, 2008 @ 9:27 am ET
In was trying to avoid getting involved in the discussion surrounding Stuart Cohen’s article Open Source: The Model Is Broken in BusinessWeek, but I just can’t help myself. There has been a lot of negative reaction to the article, most of which, in my view, is wide of the mark.
Stuart’s article basically makes the point that the idea that open source vendors would overthrow the software industry establishment based on business strategies that rely on support and service revenue is wrong, but that open source development is a successful way for vendors to collaborate and reduce costs while improving the quality of underlying code.
This, to me, is not controversial. In fact, as Zack Urlocker points out, it is actually fairly obvious. It is essentially the underlying conclusion we came to with our recent report Open Source is Not a Business Model (mind you, I didn’t think the title of that report was controversial so maybe I can’t see the wood for the trees).
The important factor in understanding Stuart’s article, as Serdar Yegulalp points out, is to read the sub-head: “The open-source business model that relies solely on support and service revenue streams is failing to meet the expectations of investors.”
Apart from the unfortunate use of the word “model” where “strategy” would have been more appropriate, it is important to bear in mind that Stuart is writing from the perspective of investors, not developers. The article is in BusinessWeek after all, not OpenSourceWeek.
That explains why, in my opinion, his article does not contradict the Cost-Conscious Companies Turn to Open-Source Software and Open Source: A Silver Lining in the Economic Slump articles that make up the BusinessWeek special.
Open source software is being deployed by an increasing number of enterprise customers, as profiled in the first article, but that doesn’t mean they are doing so in enough numbers to provide substantial support and service revenue (of course that depends on how substantial your support revenue needs to be).
Meanwhile all of the vendors bar one mentioned in the second report (JasperSoft, Digium, Zenoss, MuleSource, SugarCRM) use some form of commercial licensing to generate revenue from open source software. The other is Red Hat, which comes as close as you can get to commercial licensing without crossing the line and is quickly becoming the exception rather than the rule when it comes to open source business strategies.
While Stuart nods in that direction towards the end of his article it is unfortunate, as Zack notes, that he didn’t make the link between the failings of the support and service strategy and the successes seen by vendors using other strategies.
Since open source is not a business model, the business model cannot be broken. As a business strategy it is thriving, however. As Matt Asay notes:
“This is a marathon, not a sprint. We just need to stop thinking sprint in terms of open-source business models, and think more like longer-term plays like SaaS, Google-like data aggregation plays, etc. The money isn’t in support, and it’s arguably not in the software, either. Rather, it’s in the services that surround the software, some of which may be created from software, and some from people. But none of it looks like a pureplay support model, to Cohen’s point.”
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