Early Inertia

By Darryl K. Taft  |  Posted 2005-10-03 Print this article Print

Indeed it is. Customers agree. Despite early inertia in the open-source world as big and small companies begin to fight it out, customers say the advent of open-source alternatives gives them choice.
Charles Brenner, senior vice president of the FCAT (Fidelity Center for Applied Technology), a unit of Fidelity Investments, said Fidelity began adopting open-source components a couple of years ago and will not turn back because of the savings the company has realized.
Although Fidelity went through some issues over who would support the open-source technologies, they created an Open Source Support Center, and later signed on with SpikeSource, an open-source start-up that delivers customized stacks of tested and proven open-source components. "Weve concentrated on development tools and platforms," Brenner said. Despite any consolidation that might occur in the open-source space, just having the alternatives gives users choice, he said. "The alternatives are going to be out there because the barriers to entry are so low." However, Bill Hilf, lead program manager of Platform Strategy at Microsoft, who is tasked with exploring open-source technologies and business models for the software giant, said he doubts many of the open-source start-ups will make it to become high flyers, particularly those with a services model. "They move away from the software costs and they put the costs in a different part of the value chain in services and support," Hilf said. "The fundamental problem there is its human labor intensive, and its very difficult to scale a services-based model. So the question I pose is how many customers can you really have? All these guys, SpikeSource, etc. Theyre all just selling these certified stacks. Not just selling, theyre going to support them. "So literally, unless youre an IBM with 7,000 or 10,000 people who can jump on this issue, how many customers can you really scale to without going out of business and trying to bill more people?" However, John Roberts, CEO of SugarCRM, said he thinks his model is more of a sure thing. Roberts said SugarCRM can be the next SAP. "There are different types of open-source business models," Roberts said. "JBoss is based around services. They sell service and support. I think youre starting to see now different business models like ours, which is you take your engineering organization and everything about engineering work, you open-source license 75 percent of what they do, and you keep 25 percent of what they do. And those figures usually apply to large organizations. That business model is more sustainable." Meanwhile, Kim Polese, CEO of the aforementioned SpikeSource Inc., spelled out her companys strategy. "Our whole focus as a company is on testing and certifying open-source software and proprietary as well—solving the problem of interoperability by providing a trusted, certified stack," Polese said. "And we see this market at the very beginning of what we expect will be incredible acceleration and growth over the next few years... We see ourselves becoming sort of an Underwriters Labs for open-source interoperability. "The business model here is subscription; its an ongoing service—software as a service delivered in the form of these configurations with ongoing updates. And thats a very scalable model. Its a software business, not a traditional services business." Mike Milinkovich, executive director of the Eclipse Foundation, which oversees development of the Eclipse open-source development platform, said he expects to see more established companies move into the space now filled by companies such as SpikeSource. "The barriers to entry are not that high, so I can imagine lots of big companies getting in that space if these venture-funded startups prove that that space is viable," Milinkovich said. "So for example, if the SpikeSource and SourceLabs of the world show there is money to be made doing this, I wouldnt be surprised to see HP or IBM or another company like that getting involved in the mix." Moreover, other open-source players said that as the field of open-source software vendors expands, the market will flourish as new vendors catch on and create their own ecosystems. Zack Urlocker, vice president of marketing at MySQL AB, said building an ecosystem is critical to survival of any company, particularly an open-source company. "We have tried to build an ecosystem of companies who use or support MySQL and the whole LAMP [Linux/Apache/MySQL/PHP, Perl, Python] stack," Urlocker said. "This new crop of companies, like Zimbra, SugarCRM, ActiveGrid, Emic, they will help open source continue to grow into new areas and expand." All of those companies leverage MySQL and are part of its ecosystem, Urlocker said. And although MySQL is "still a small company," it is out of the start-up phase, Urlocker said. "We now have 200 employees in 21 countries, and we are growing steadily with over 6 million active installations and over 6,000 customers," he said. "We have a good business model based on selling both to corporate enterprise end users and to software ISVs and hardware companies who embed MySQL." Moreover, Urlocker noted: "The key thing, though, is for companies to thrive, and for open source ultimately to be successful, they need to have viable business models and large communities behind them. In open source both or those elements are necessary. "Without a large and active community, its hard to ever get traction. And you cant create a community over night." Next Page: Investing in open source.

Darryl K. Taft covers the development tools and developer-related issues beat from his office in Baltimore. He has more than 10 years of experience in the business and is always looking for the next scoop. Taft is a member of the Association for Computing Machinery (ACM) and was named 'one of the most active middleware reporters in the world' by The Middleware Co. He also has his own card in the 'Who's Who in Enterprise Java' deck.

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