The Developing World Values

By John Pallatto  |  Posted 2005-10-21 Print this article Print

Open Source"> Open-source software "is rapidly maturing as part of the overall enterprise applications market and it is becoming more integrated" with an overall market "that used to be just focused on Linux and development tools," said Stuart Williams, an analyst with Technology Business Research Inc. in Hampton, N.H. "Thats why the VC money is willing to start jumping in," Williams said.
But the quality of the technology is not the only factor that is attracting venture capitalists, Williams said.
"The number one criterion in venture funding decisions is not necessarily the product but the team of people that are bringing that product to the market and their market," he said, echoing Sandells view. Additional evidence the software industry is taking open-source technology seriously lies in the fact that the biggest technology companies, including IBM, Oracle Corp. and SAP AG, are "investing in and supporting the open-source movements or community as part of defining their entire ecosystem," he said. Click here to read about how BitTorrent, the peer-to-peer file sharing company, received its first infusion of venture capital money. IBMs involvement with the Eclipse development tools community and Oracles decision to buy the InnoDB Oy Inc. open-source database engine shows that the big companies understand both the opportunities and challenges that the open-source technology poses to their own business models, Williams said. It was clear that Oracle acquired the InnoDB technology to have some access and control over a technology that threatens to encroach on its own proprietary database technology, he said. However, open source "also becomes a gap filler" for large companies looking for ways to augment their own software technology stacks without spending extra money on their own research and development, he said. SugarCRM itself plans to use the money to fund application and infrastructure enhancements to its Sugar On Demand online CRM service and to expand its product support and services organizations, according to John Roberts, SugarCRM CEO. To read more about why companies are factoring open source into their business models, click here. Roberts said the company wasnt actively looking for additional venture capital funding when it was approached by NEA. However, it will "enable us to make more strategic engineering investments and solidify the company in terms of just the financial foundation" for future growth, he said. What sealed the deal was the experience that Sandell and NEA will bring to SugarCRMs board of directors, Roberts said. The cash "certainly gives us the runway to make deeper investments in our product road map," Roberts said. "As a young start-up it is nice to have as strong a capital base as some larger corporations," he said. Check out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.

John Pallatto John Pallatto is's Managing Editor News/West Coast. He directs eWEEK's news coverage in Silicon Valley and throughout the West Coast region. He has more than 35 years of experience as a professional journalist, which began as a report with the Hartford Courant daily newspaper in Connecticut. He was also a member of the founding staff of PC Week in March 1984. Pallatto was PC Week's West Coast bureau chief, a senior editor at Ziff Davis' Internet Computing magazine and the West Coast bureau chief at Internet World magazine.

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