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Content Tagged with Asay + 451
Open source: assimilate and thrive
Matt Asay writes today about the prospects for open source vendors going public or, more likely, being acquired, and wonders whether open source vendors should “hold out for an IPO” or “capitulate” and be acquired.
The latter seems far more likely, especially in the current economic climate. We have written before about the open source vendors most likely to go public in the next couple of years.
Looking at the list of contenders again it is easy to imagine that they could all be snapped up before they make it public thanks to the fact that 1) open source vendors are very attractive investments 2) it is difficult for open source vendors to build the momentum to do so.
I spoke recently with Bernard Dallé at Index Ventures, which has previously invested in the likes of MySQL and Trolltech.
Bernard made the point that while the open source distribution/subscription model is a great way of reaching potential new customers and generating predictable revenue, revenue is on average three times lower than a traditional licensing approach. The result is that it takes more time to build the momentum required to go public.
I previously wrote that for open source vendors patience is a virtue, noting that it took MySQL 12 years to grow to the a position where it was preparing to go public - and even it couldn’t avoid the lure of Sun’s lucre. The open source vendors that have followed MySQL’s example barely get the chance to build a meaningful revenue stream.
There is also the issue that the pure play open source vendors like Red Hat do not have the financial clout to compete with the likes of IBM and Sun and Oracle when it comes to potential acquisitions. You can read a little more about our view on that here.
In his take Matt writes that “I’m coming around to the idea that everything will be a blend of open source and proprietary software or services, at least for the foreseeable future.”
I can’t go in to too much detail but I’m doing some research on this right now and the fact is that the future is now. There is very little money being made out of open source software that doesn’t involve proprietary software and services.
Which is not to say that open source won’t survive and thrive, but if you’re waiting to see pure play open source vendors replace the current crop of industry giants you’re going to be waiting a long time.
Red Hat?s other open source management project
Matt Asay is excited about Red Hat’s Spacewalk project to release the code behind its Red Hat Network Satellite product under an open source license (as he should be, he’s been waiting over a year for it). As well as anticipation, Matt’s excitement can also be attributed to the potential for Spacewalk to become the default management platform for open source software.
As he writes:
“What is the first thing that MySQL and JBoss did to add value to their support subscriptions? Build networks. What, presumably, will be the first things that other open-source companies do? Build networks.
What is the result? A swamp of incompatible service-delivery networks.
Now consider the power for Red Hat if its Spacewalk actually served as a gathering point - an integration point - for the commercial open-source community? Powerful.”
It is a powerful opportunity, but is Spacewalk (a Linux management platform) the right tool for the job? As Bob Bickel notes in the comments to Matt’s post, Red Hat’s RHQ project with Hyperic is a broader project that is possibly more suited to operational management. Indeed he reveals that Ringside Networks is using it for an upcoming release of Ringside Networks Social Application Server.
Of course now both RHQ and Spacewalk are open source projects there may the opportunity for cross-pollination and, as is stated on the RHQ website: “The new project will provide a common set of management services, which will be incorporated into future editions of Red Hat products such as JBoss Operations Network and Red Hat Network, as well as Hyperic HQ.”
It will be interesting to see if and how the two projects align. Watch this space(walk).
