Posted by: Sarah Lacy on November 9, 2005
Matt Asay has an interesting posting about the Ingres spin out. He posits that a serious foray by Ingres finally gives companies a real, competitive database market again. More interesting were his comments about the need for multiple vendors providing specifically open source versions of business software. Really? Is the market there yet?
He writes, "This is a good thing, regardless of Ingres' ultimate success. It will grow MySQL's and EnterpriseDB's revenues, because it will increasingly legitimize the open source database, and it will also drive these open source companies to continuously improve and differentiate themselves. It won't be enough to coast along with the "open source" tagline and expect that, alone, to bring revenues. (Not that either company had been doing so - I'm not making that argument.)"
I will make that argument! I spent months putting together this special report for BusinessWeek Online about where the open source revolution was heading next. And although they wouldn’t come out and say it easily 90% of the young companies I talked to argued their entire value add was being "the" open source alternative to proprietary software. In fact, that's the reason most of these companies are getting funded to begin with. If we enter a world where that’s no longer enough, there are going to be a lot of disappointed VCs and abandoned companies. (Some would argue there will be anyway, but that’s a whole different blog…)
If you agree with Danny Rimer (which not everyone does) that open source startups should only try to replace commodity software at a cheaper price-- how will all these different open source companies compete with one another? Don’t they risk CIOs just throwing up their hands and saying, “Gee, I have no clue which one is better. I’m sticking with the proven proprietary winners.”
Consider Red Hat and Novell. No one wants there to be just one Linux company—well, except maybe Red Hat. But Novell is having a hard time finding its footing in a market that’s growing. OK, there are many who blame the management. But how should they compete with Red Hat in the market? You could argue that Novell is better at supporting corporate environments that have a mix of Linux and Windows. But the two technologies themselves just aren't that different. It really comes down to marketing and partnering, right?
And that's Linux-- perhaps the only truly proven big market for open source software. I'm not saying open source isn't going to revolutionize the software business. It is and has already. And I’m not saying there aren’t dozens of successful businesses to be built. But I think there are serious questions about where the next big open source company is going to come from—even if they have the market to themselves, let alone compete with a half dozen other, say, open source CRM providers.
Is there a category of software big enough, mature enough and frustrating to customers enough to give rise to the next major software powerhouse-- let alone multiple software powerhouses?