Open Source Is Showing Its Value

Opinion: It's no longer a question of if Linux and open source will catch on, nor when, nor why.

When you think of value in the computing world, what names first pop up? If youre like me, the usual suspects such as Dell, Symantec, Cisco and Apple come to mind.

They meet the standard criteria: They are large corporations with solid reputations whose products are known to solve business problems without disrupting business plans. Apple products have always been pricey, but they cant be beat in specialty applications such as graphic design.

It shouldnt be surprising, then, that all four companies scored in the top five in a recent vendor value research study conducted by our sister Ziff Davis publication, CIO Insight. But which was the top-rated company? Would you believe Red Hat?

Indeed, the Linux distributor, whose revenue is dwarfed by the others in the top five, was the top scorer overall in the survey of 1,050 IT executives, more than half of whom came from companies that earn more than $1 billion in revenue. Red Hat also scored first in two key categories: meeting expectations for lowering costs and meeting ROI expectations. For the complete study, visit

Red Hat was, naturally, not found in nearly as many IT shops as were heavy hitters such as Microsoft, Dell and Cisco. But Red Hat did have the most satisfied customer base. The reason? Linux, which can deliver value to customers business in ways other software platforms cant. Simply, Linux is proving itself to be more reliable and less expensive.

Even more significant is the business model that has evolved around Linux. Red Hat saw early on that it cannot compete by putting boxes of software on store shelves. Instead, its real value, and consistent growth, would come from a subscription business model. Happily, it helps the customers, too, because they get what they are after: value.

That this value comes from what is at its core open-source software is the clearest indication yet that open software and the service business models built around it are working. Despite all of IBMs technological muscle, the same survey ranked it 13th. Sun was 19th; Microsoft, 36th, down from 33 the previous year. Its no coincidence that Microsoft and Sun are trying like mad to add similar value-added subscription services to their platforms—and, as it turns out, struggling to do so.

The impact of open source in the enterprise is undeniable. And as the LinuxWorld Conference & Expo kicks off this week in Boston, this value proposition will be a key issue with attendees. Its no longer a question of if Linux and open source will catch on, nor when, nor why. Instead, IT pros are asking, "Am I costing my company money by not deploying open software somewhere, anywhere, in my enterprise?"

Another question: If Red Hat can beat the giants on a value study, will other open-software projects and companies be able to follow suit? You are not likely to see it from Sun or Microsoft. Sun, for instance, is still maddeningly frustrating for those who want open source running on Sun hardware but who must also comply with Suns "open" CDDL (Common Development and Distribution License), which is not really open in the way most other GPL-licensed open software is.

/zimages/6/28571.gifClick here to read more about how Sun is fielding criticism for limiting the use of Sun patents to projects under the CDDL.

Although it allows select users and partners to see its code, Microsoft, for its part, will never adopt an open-source business model. And, in most cases, Microsofts value proposition is hard to find—outside Microsoft-funded studies, that is.

Yet, everywhere you turn, open source continues to make business sense by creating value, and business and government clients are starting to demand it.

Microsoft and Sun should be more honest with themselves. Who are they trying to benefit with their open-source "alternatives"? Their customers or themselves? Do they still believe that the customer is always right?

Scot Petersen can be reached at

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Scot Petersen

Scot Petersen

Scot Petersen is a technology analyst at Ziff Brothers Investments, a private investment firm. Prior to joining Ziff Brothers, Scot was the editorial director, Business Applications & Architecture,...