Who said there’s no money in software development tools?

One of the aphorisms in the tech industry is that there’s no money in software development tools. There is usually a grain of truth in conventional wisdom, but after the past couple of days, I am beginning to believe the opposite.

My colleague, Rachel Chalmers and I just attended EclipseCon in Santa Clara, CA. I wasn’t an analyst last year, but Rachel tells me that the show is nearly twice its size last year. There were a number of themes we picked up on in the conference that will come through in upcoming coverage from The 451 Group, but what really struck me was the energy and the sheer diversity of the ecosystem around Eclipse. There were all sorts of vendors from areas of application lifecycle management as diverse as code analysis and search, build and test automation and special-purpose IDEs based on Eclipse. Several of these companies are run by former developers and have minimal sales forces. Recognizing the increasing influence of software developers within a technology heavy organization, they have chosen to pursue a decidedly low-key approach to increasing adoption of their products: target the message towards developers. This has enabled them to build up substantial user bases and revenue with very low overhead, thus making them juicy acquisition targets. (I am not naming names here. I’m merely stating my general impression.)

There has been some discussion previously on this blog about what an open source organization is. We believe we can comfortably deem the Eclipse Foundation an open source organization, charged as it is with the stewardship of what we see as a very visible and significant open source project. Several of the vendors we spoke with were already members of the Eclipse Foundation, whereas a few large companies, notably Oracle, announced their accession to membership of the Eclipse Foundation. Members of the Eclipse Foundation promise to release a commercial offering of projects they sponsor within twelve months of joining the Foundation. Business models around open source continue to evolve as they are tested in the field; here though, we are looking at a membership committed to producing software that is free as in speech, but not necessarily devoid of commercial value.

We were also quite impressed by Eclipse’s emergence as a fighting alternative to the island of developer tools from Microsoft. Not only is it a diverse tooling environment as evidenced by the number of vendors at EclipseCon, it’s making inroads (via OSGi) as a componentized runtime environment as well. If the Eclipse ecosystem is able to gain
mindshare beyond just developer’s desktops, it would be foolish to ignore the goldmine that prospect could be.

Conventional wisdom enables us to form a coherent picture of the world, but most of it began as unconventional wisdom. It may have taken decades for the theories of Copernicus and Galileo to gain universal acceptance, but in a fast changing world like software, we actually stand a chance to watch commercial recogniton of tools jump the gap from uncommon sense to common sense. So, think again!


#1 Sriram Bala on 03.10.07 at 10:38 am

Eclipse continues to dominate and permeate the enterprise developer desktop. The key to the success of the Eclipse platform is the rate at which plugins and extensions are being developed. Combine that with a truly open tooling platform, and you have a winner. And the licensing and support infrastructure is just right. I’m continuing to see more enterprise deals. Wonder where that leaves RAD (Rational Application Developer)…

#2 Vishwanath Venugopalan on 03.11.07 at 10:10 pm

Hi Sriram,

Being Eclipse-based, RAD is going to be just another vendor product competing in the Eclipse ecosystem. As always, the market will decide its fate. Any product in the Eclipse ecosystem will survive or perish depending on its functionality, how well it integrates into the IDE (and so into a developer’s coding experience) and interoperability with other tools in the development lifecycle.

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