Further thoughts on the decline of ‘open source’ as a competitive differentiator

This week’s post on the decreased use of the term ‘open source’ as an identifying differentiator in some companies’ marketing material generated a lot of attention and comment, with numerous industry watchers pitching in their perspectives on the reasons for the decline.

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

Various explanations were offered, any and all of which I agree are partly responsible for the observed decline in our sample. Here’s a selection:

* These vendors are trying to drive the focus of potential users to the commercial version.

* It is happening because companies are focusing on functional value rather than licensing.

* For come companies open source is just a means to an end, while for others it is part of their DNA.

* The proliferation of open source software means that open source licensing is no longer a differentiator.

* Open source is not a business model, and never has been. It remains a differentiating development model.

* These companies are increasingly targeting business decision makers, rather than developers/users, and open source does not resonate as well with that audience.

* Open source remains a differentiator if a product is functionally competitive, but will not overcome a lack of functionality.

* The increased acceptance of open source means these vendors are in a better position to focus on other competitive differentiators.

* The vendors now have ambitions beyond “just” being the leading open source player in their sector.

* Some of these vendors are effectively admitting that their primary products are not aligned with open source/software freedom.

* Some of these companies were never truly open source companies in the first place. They tried to re-brand ‘open source’ and they failed.

While I agree with all of these to some extent, I also believe that the focus on the vendors in my admittedly small and unscientific sample has distracted attention away from the wider trend.

For instance, if we accept that the nine vendors changing their use of ‘open source’ did so because they in particular have matured/learned from experience/failed then we would expect most of the more recent market entrants to be going through the same learning curve/repeating the same mistake.

Let’s take a look at another small and unscientific sample of more recent commercial open source-related vendors (which means we are now dealing with a slightly larger unscientific sample)#:

While all of the vendors in our previous sample had, at some point used ‘open source’ as an identifying differentiator, only eight of this more recent sample have ever done so, and three of those quickly stopped doing so.

This suggests that the trend is not specific to the experiences of the companies in our first sample, but has more to do with the wider industry perception of open source as a competitive differentiator and the changing business strategies around open source software.

Macneil Shonle put it very nicely with his comment that “OSS was once “hot” and appeared to be taking over the world. Companies joined the bandwagon. Cooler heads prevail now.”

This is fundamentally what I have been saying since early 2009, such as this post, which included the first ever mention of Open Source 4.0 and this graphic illustration of the four ages of open source-related business strategies:

The concept of Open Source 4.0 was picked up again late last year in the run up to our Control and Community report, which included an update to the language used to describe the four ages, as well as the opportunity to group the 300 vendors assessed in that report into three groups representing the three vendor-related ages.

Updating the graphic above to include the new language and remove Open Source 1.0 – Traditional Open Source, developed by communities of individuals – we get the following:

Which explains, in theory, why we might be seeing a decline in ‘open source’ as a competitive differentiator: the growth of vendor-dominated open source projects has slowed while the growth of multi-vendor open source and proprietary distributors is accelerating. We have moved beyond the era of the ‘open source vendor’.

That’s the theory anyway. Having recently updated the results of our analysis to the end of 2010 and 321 vendors, we can also see what is happening in practice:

So I wasn’t far off…

#Of course there is still an inherent bias in our sample. The only way to avoid that would be to look at all 320+ companies we cover but – believe it or not – I have better things to do.

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…

LinuxWorld 2008 – nobody cares

There are certain phrases that we tend to hear a lot from vendors — ‘enterprise-class, best of breed, customer choice,’ etc. However, I was repeatedly hearing somewhat surprising phrases as I made the rounds at LinuxWorld this year: ‘We don’t care, customers don’t care, no one cares …”

Don’t get me wrong. Linux and open source have not reached the point where the software is so good, vendors and customers don’t have to care about it. The point seems to be this: there is less concern or ‘care’ about whether the operating system is Linux, Windows, Solaris or other; fewer customers care whether the software in use is open source or not; and there seems to be a general recognition that the fact a product or vendor is open source does not matter as much.

Sure, open source is still a significant differentiator. It allows vendors to get software and products into customer hands more quickly and broadly. It typically provides significant cost savings to customers. However, it is far less exotic and foreign in the enterprise, both for vendors and customers, who seem to be viewing open source not as religion, philosophy or idealism, but as just another option.

Vendors supporting various operating systems indicated there is less care about the underlying OS. Part of this can be attributed to virtualization, which allows servers and VMs running different operating systems to be managed in a unified manner. Still, even the difference between virtual and physical servers seems to be of less care to vendors, which are now moving to support and include both in their products and plans. Other vendors discussed how the use of virtual appliances and cloud computing were minimizing how much care centers on the OS, since it is becoming less visible to partners and users.

As for those users and customers, who are playing an increasingly significant role in Linux and open source, there also appears to be less care about whether software is open source. Instead, customers have come to expect comparable or superior features and functionality at less cost. Open source is often the way vendors and their products get there, but customers don’t really care.

So does all this lack of care mean that open source is in danger of losing its edge? I don’t think so. Rather, it is further testament to the continued enterprise maturation and acceptance of Linux and other open source software.