Open Source Becomes Key Player in Business Models

Marc Fleury, of JBoss, has realized that his time at the top faces a serious challenge from IBM; customers say the advent of open-source alternatives gives them choice.

What will become of open-source companies when they grow up? Will there be an open-source dot bomb, or is the investment going into open source leading the way for a whole new kind of software company?

Although the jury is still out, it is evident open-source software has and will continue to impact the software industry and the business models of new and existing companies, as both start-ups and large entrenched players vie to keep ahead of open-source projects.

For instance, Marc Fleurys JBoss came out of the blocks as a poster child for the open-source movement.

Fleurys "professional open source" initiative quickly made its mark and began eating away at both BEA Systems Inc.s and IBMs low-end Java application server business to the point where JBoss became the app server market leader by some analysts measures.

Fleury often led his company through its quick rise with a brash tone and mocking demeanor, claiming BEA as his prime target and thumbing his nose at IBM.

However, he woke up to a shock last May when IBM announced its acquisition of Gluecode, an El Segundo, Calif., company founded and run by some JBoss castoffs, whose services model, built around the competing Geronimo application server, competed directly with JBoss.

Despite the fact that the Geronimo core technology is still being finalized, Fleury realized his time at the top suddenly faced a serious challenge as IBM set its sights on him.

Steve Mills, senior vice president and group executive of IBM Software Group, said open-source companies need to realize they will face opposition as they walk into battle with entrenched players.

"Some of these guys get way full of themselves and way out in front, and that creates a set of expectations that go unfulfilled," Mills said.

In an interview at the LinuxWorld conference in San Francisco, Mills said open source is something IBM will leverage as it does many new technologies and business models.

He said the move to acquire Gluecode was not a defensive one.

"We dont generally think that defensive plays are all that satisfying, because they tend to be somewhat short-lived," Mills said. "You get myopic when you decide you have to do something thats purely defensive in nature."

Indeed, "Our perspective on Geronimo and Gluecode is that there were very legitimate buyer groups out there—some very centered around open source-based implementations, others just in market segments in places around the world that we could reach through having Gluecode as part of IBMs portfolio."

But leading companies will face increasing pressure from open-source projects that tend to commoditize entire technologies and portions of companies business, such as application servers, Web servers, operating systems and databases.

The question for big companies becomes whether to open-source their own technologies to get out ahead of the curve and hold some influence on how things turn out, said Cliff Schmidt, vice president of legal strategy for the Apache Foundation and a consultant who advises large companies on how to interact with the open-source community.

/zimages/6/28571.gifClick here to read more about JBoss and Microsofts plans to broaden interoperability between the JBoss Enterprise Middleware System (JEMS) and Microsoft Windows Server.

IBMs move in acquiring Gluecode was "very Art of War-ish," said Fleury, who also called himself "the P-Diddy of software" because of the way he came up through the ranks by his bootstraps, making his own hype, berated by competitors and driven by a Bad Boy-like mantra of "cant stop, wont stop."

"I think this is a case where this company, when open source graduates from the state where everybody loves open source to the point where its a force in the market, they dont like it as much," Fleury said.

"And were going through that maturation in the industry. And were fine. Were still in inertia. I didnt think it was going to come that fast and that brutal—everybody going open source and trying to copy our model. I know that copying is the sincerest form of flattery, but its kind of early."

Next Page: Early inertia.