The decline of ‘open source’ as an identifying differentiator

I’ve been examining the trend of open source-related vendors disengaging from open source development and licensing as part of my research for the next CAOS research report.

One of the things that I have observed in relation to open source-related business strategies in recent months is the decreased use of the term ‘open source’ as an identifying differentiator in some companies’ marketing material, either to describe the company or its software.

The way in which a company identifies itself in the opening lines of a press release may not necessarily describe accurately what the company does, but it is a clear indicator of how the company wants to be perceived.

It seemed to me that a significant number of high profile open source-related vendors had stopped using the term open source as an identifying differentiator.

The list below represents a small and unscientific sample, but these are among the highest profile open source-related vendors, so the fact that half of them have dropped ‘open source’ as an identifying differentiator in the last 12 months (and another two long before that) is not insignificant.

Whether it is because open source has become so in-grained in the industry that it is no longer a primary differentiator or because the vendor in question has become less focused on open source is another question, however.

Certainly Jaspersoft remains committed to an open source strategy despite discarding its ‘open source’ identifier as long ago as 2008, while Cloudera has never used the term in its description as far as I am aware but is clearly committed to an open source-related strategy – it chooses instead to focus on its relationship with Apache Hadoop.

Another vendor worth assessing in greater detail is SugarCRM. The company has increased the number and nature of closed source editions of its customer relationship management software in recent years, and dropped its use of open source as an identifying differentiator in November 2010.

However, the company continues to see the SugarCRM community edition as a significant differentiator in the market, enabling it to reach an estimated 800,000 end users and punch above its weight in terms of profile.

While the company’s commercial focus is on the various closed source editions, many of its channel partners, which deliver the vast majority of SugarCRM’s revenue, have based their offerings around Community Edition, and SugarCRM has taken steps to encourage greater community engagement with the open source version, moving it from an internal forge to GitHub twelve months ago.

Just because a company no longer uses the term ‘open source’ as an identifier does not necessarily indicate that the company is moving away from open source. However, the fact that so many of these vendors have dropped the term open source from their descriptions does indicate that open source is decreasingly seen as a differentiator and a term that vendors choose to identify themselves with.

Another indicator of decreased emphasis on open source is a delay in updating the open source code base. The table below therefore includes details on both the date of the last open source update (according to the relevant forge data) and the date of the last use of open source as a differentiating identifier.

Two of the companies below will be profiled in detail in our forthcoming report, which examines in much greater detail the relationship between vendors and open source licensing and development, as examples of companies that have decreased their engagement with open source as their business strategies have matured.

You can probably guess which two…

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23 comments ↓

#1 Peter Weyant on 06.27.11 at 10:40 pm

I see this increasing, to the extent that I am finding myself seeing weak references to “open solutions” etc…I think this is a negative trend, driven by the desire to block review of the underlying open source solution to drive focus and sales instead on the commercial product.

#2 Hen on 06.28.11 at 12:15 am

Very happy to hear that companies are quitting the ‘open source company’ marketing speak. It’s never made any sense – hopefully we can start focusing on products as ‘Hadoop-based product’ and discussing the value-add, instead of a vague rebadging of the open source brand.

#3 Matthew Aslett on 06.28.11 at 1:33 am

Thanks for those comments. Clearly it can be seen as both a negative and positive trend 🙂

While I agree that it indicates a desire from the vendors involved to focus attention on commercial products I do not think this is inherently negative for the underlying open source project – there is still a lot of value in having a vibrant open source user/developer community and no vendor is going to damage/give up on that lightly

#4 John Fandl on 06.28.11 at 9:54 am

For some companies, open source is a “means to an end”, i.e. an early stage catalyst to help “cross the chasm” from technology enthusiasts / early adopters, over to the mainstream. In this case, when that end is achieved, the moniker loses its value (not relevant to the new mainstream target market), and is no longer a focus of the marketing message.

For other companies (e.g. Red Hat as the most well-known example), open source is an essential part of the DNA and the core value proposition, so will never be discarded–even as the company grows very large and becomes increasingly mainstream.

From this perspective, the “trend” may be viewed as a normal process of companies growing, maturing, and catering to their naturally shifting target markets. And as you say Matthew, just because a company is no longer vigorously waving the open source flag, that doesn’t mean open source is still not core to their product strategy.

Thanks for an interesting piece!

#5 Phil Marshall on 06.28.11 at 1:07 pm

Great discussion points. I agree that because of the proliferation of open source solutions, using the term open source in company and product statements to enhance the likelihood of selling products has become less effective. As to its proliferation, plenty of studies show that its use has become mainstream.

As the purveyors of open source solutions have matured, they want to be differentiated by specific feature/benefits and a unique selling proposition. They want to be perceived as the best solution regardless of whether they are closed sourced or open. Further, in order to emphasize/promote a product attribute it ought to be distinctive, and as an attribute, calling out a product’s being open-sourced no longer qualifies.

This is of course good news for all things open source. As John Fandi points out, just because it’s not something companies are marketing, it does not mean that open source isn’t core to an ever-growing list of companies’ product strategies.

#6 Roland Benedetti on 06.28.11 at 1:13 pm

Hi Matt,

Interesting post indeed.
I really think there are two independent topics raised here. One is the use in the Marketing profile of the company of the “Open Source” term, the other one is more how the company diverge form an Open Source development model.

When it comes to the first, to me it definitely makes sens to have “Open Source” less and less a marketing differentiator. Open Source tends to be the way to use to MAKE software (and imho not a way to SELL software), more and more company using it, the differentiator effect is diminishing, and companies might want to use more their software specificities as a differentiator. So far so good, I think it is a good sign for the Open Source aficionados!

When it comes to the second, there is indeed two clearly different paths now with some traditionally Open Source companies closing more and more some parts of their software, and some other sticking to a very Open development model.

When it comes to http://www.nuxeo.com, I’d like to comment on your last column: “Date of last Open Source update”. I don’t really understand this indicator, at least for Nuxeo: the Open Source code being the source, the code base is updated daily and all changes that Nuxeo engineering team bring to the software is instantly available in the open code base repository. My guess is that your are looking in a secondary repository (like sourceforge) but ALL Nuxeo Platform software is developed Open Sourced so the last column should show “today”, or “a few minutes ago” …

#7 Matthew Aslett on 06.29.11 at 1:58 am

Hi Roland,

Good point with regard to Nuxeo.

Matt

#8 Daniel Chalef on 06.28.11 at 3:19 pm

Matt, interesting post.

It may be useful to detail a vendor’s market (small business, mid, enterprise) and your thoughts on who they’re selling to (i.e. line of business, IT).

Business users are now driving the purchase of many classes of software and open source messaging rarely resonates here. This may be a different story for products lower in the stack (OS, middleware etc), or where IT is the gatekeeper to business users.

Daniel

#9 Matthew Aslett on 06.29.11 at 1:59 am

Hi Daniel,

Of ourse in the report I am writing we dig a lot deeper into the context for each individual company we examine.

Matt

#10 JasperForge > Blogs on 06.28.11 at 6:02 pm

[…] this week, analyst Matt Aslett posted a blog about this phenomenon and the decline of open source as an identifying differentiator among top […]

#11 Boris Kraft on 06.29.11 at 3:39 am

I have been discussing this topic internally at least for the last two years… and we made the decision to change the communication, and currently work on defining a new tagline (away from “Simple Open Source Content Management”).

So yes, the trend is clearly there. Open Source is neither a primary value proposition nor a primary differentiator (anymore, if it ever was). Simply put, just because software is open source doesn’t mean it works for you.

Also as a product and business models mature, realities change. When Magnolia CMS started with an “Enterprise Open Source” business model in 2006, this model was in its absolute infancy. It worked for Red Hat, but that was about it.

Today “vendor-driver Open Source” or “Commercial Open Source” or “Enterprise Open Source” have become mainstream. It has become clear that the oversight, direction and long-term view of a vendor has benefits for an Open-Source project, and for these benefits to materialize, a revenue stream that finances the product is essential. This in turn has lead to companies looking at Open Source no longer as “Free (of cost) Software” but as “Software with a lower TCO and higher flexibility”.

Once you realize this change in customer perception, dropping open source as a differentiator or value proposition is only the logical next step.

#12 links for 2011-06-29 « Wild Webmink on 06.29.11 at 8:59 am

[…] The decline of ‘open source’ as an identifying differentiator There's more to this than meets the eye. I agree with Matthew that the industry's pervasive embrace of open source has made the term less of a differentiator, but another factor is the realisation by some of these vendors that their product is not fundamentally about delivering software freedom. (tags: OpenSource FOSS Marketing) […]

#13 Ned Lilly on 06.29.11 at 12:48 pm

At xTuple, we see a distinction among different groups of users. For some people, who find us by Googling “open source ERP,” for example, that’s obviously a major part of what they’re looking for. They quickly get into the community site at http://www.xtuple.org, dive into forum discussions, documentation, and of course the actual source code. Those self-selecting open source users are a core constituency for us.

But of course, there’s a much larger group of businesspeople don’t use open source as a first cut in their selection process – be they SMBs who are looking for a compelling step up from Quickbooks, or enterprises in a traditional RFP process for selecting a full-featured ERP system.

They’re likely considering traditional vendors such as Microsoft and SAP as well, and if we don’t meet the feature/function test first, then they won’t ever care about open source. In this sense, I think, our ERP market might be a little different than other open source vendors who are more infrastructure-type players, as the decision-maker usually sits in the business side (senior management or finance), rather than IT. And that’s a good thing – if an ERP project is perceived primarily as an IT undertaking, then it’s likely not going to succeed.

All that said, once we meet the functional “ante,” we continue to find that open source is a powerful differentiator. It’s rarely a technical conversation these days; much more often, it’s a business conversation that answers the “how” question. HOW can a small company like xTuple provide a powerful, sophisticated ERP system that matches or exceeds the capabilities of products from vendors that are dozens of times its size? Because of the superior product development process that is open source. The product just happens to be business software.

#14 Jack Repenning on 06.29.11 at 1:02 pm

I agree that the open-development model is a better way to build software, and particularly that it can enable a small payroll to produce big results. But are you actually saying that the business buyers ask “how can you produce such out-sized results?” Seems perilously close to “why is your price so low” — they might wonder, but actually saying that gives away their bargaining leverage!

#15 Ned Lilly on 06.29.11 at 1:32 pm

Yes, we have that conversation all the time. And once we do, they typically get it. The business world is replete with stories of how upstarts with a better mousetrap (business model/product development process) snuck up on the incumbents and caught them napping.

I don’t think they feel like they’re giving up any leverage. You could just as easily flip and and have them say, “well, since you’re not paying 100 developers, I want a discount of X.”

At the end of the day, it just comes down to transparency in the communications process as well as everything else. Which is why we publish all our pricing, make the bug tracker public, etc. We want the potential customer to have answered as many of his own questions as possible before we engage with him, and to recognize we’ve already taken several steps to earn his trust.

#16 451 CAOS Theory » Further thoughts on the decline of ‘open source’ as a competitive differentiator on 06.30.11 at 1:12 pm

[…] you haven’t read the original post it might be worth doing so for context before continuing with this […]

#17 User contributions declining as open source reaches mainstream? « rand($thoughts); on 07.01.11 at 5:20 am

[…] by IT decision makers today. As a result, as The 451 Group’s Matt Aslett explains, the term “open source” holds less value as a differentiator for vendors. Aslett writes: “…but these are among the highest profile open source-related vendors, […]

#18 Is open source no longer a differentiator? | TechRepublic on 07.04.11 at 1:45 pm

[…] Matt Aslett at the 451 Group has an interesting analysis of commercial open source vendors, showing that they are increasingly distancing their marketing and PR messages from the label of open source. Jaspersoft’s Brian Gentile (Jaspersoft is an open source vendor that dropped the open source marketing in 2008) followed up on Matt’s comments, and added that his perception is that many people in the open source community don’t give back. First and foremost, the people who care about whether something is open source (i.e., developers who need access to the source code) are, more than likely, not the people making purchasing decisions. The truth is, open source as an adjective is only as valuable as the community around a project, other than for a developer who may need to modify or inspect the source code for that application. And open source is no guarantee of community — just look at the number of dead or abandoned projects on SourceForge (it makes the 70% failure rate of commercial projects look great). Conversely, plenty of commercial products have fantastic communities. […]

#19 Declining User Contributions to Open Source: Does It Matter? | PHP World on 07.06.11 at 12:46 pm

[…] Jaspersoft uses open source as an identifier for its business intelligence software less and less, and Matt Aslett notes: "Just because a company no longer uses the term ‘open source’ as an identifier does not […]

#20 Best Way to Play the Cloud on 07.06.11 at 4:47 pm

[…] bonafides may be subject to question, but “open source” no longer has the market power it once did and the company continues to make new offerings to the market, the most recent being vFabric5, […]

#21 Weekly Links– 2010_24 (50 for Web Devs & Other Geeks) :Misfit Geek on 07.15.11 at 3:02 pm

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#22 451 CAOS Theory » Going Open, Going Closed: best practices and lessons learned on 09.14.11 at 5:43 pm

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