This article in the New York Times (”Open Source As A Model For Business Is Elusive“) suffers from the same blinkered viewpoint and desire to create a story out of thin air as the recent WSJ article on Wikipedia (”Volunteers Log Off as Wikipedia Ages“). Doc Searls today hammered at the WSJ article, and now I’ll take my shot at the Times piece.
Ashlee Vance writes in the Times:
…there is an open-source alternative, and usually a pretty good one, to just about every major commercial software product. In the last decade, these open-source wares have put tremendous pricing pressure on their proprietary rivals. Governments and corporations have welcomed this competition.
Whether open-source firms are practical as long-term businesses, however, is a much murkier question.
“There’s only one company making real money out of open source, and that’s Red Hat,” said Simon Crosby, the chief technology officer at Citrix Systems, which acquired the open-source software maker XenSource for $500 million in 2007. “Everyone else is in trouble.”
Many of the top open-source developers are anything but volunteers tinkering in their spare time. Companies like I.B.M., Google, Oracle and Intel pay these developers top salaries to work on open-source projects and further the companies’ strategic objectives.
The larger technology companies have tended to buy these one-trick ponies for strategic purposes. With its core server business declining, Sun hoped it could piggy-back on MySQL’s momentum with Internet companies. In SpringSource, VMware acquired a company that had cultivated deep interest with software developers and helped VMware diversify beyond its virtualization roots.
The story’s lede says that open-source business success is elusive. Yet over and over again in the text Vance states that large companies viewed open-source providers as strategic – strategic enough to pay hundreds of millions of dollars to own them.
If I were lucky enough to build a business that a company would pay several hundred million to buy from me, I would consider that successful.
What Vance may be saying is that building a long-term standalone business atop one open source product is difficult – hence, companies like MySQL, SpringSource and XenSource selling out. I would counter that building a long-term standalone business with one product of any kind is also difficult. Open source has little or nothing to do with it.
Furthermore, the value of open source platforms (apart from, of course, the value to end-users) is the economic value to the platform’s ecosystem of developers, integrators, etc. Part of the benefit of open source is that it breaks down barriers of scale, by allowing small developers to build big products using open source as a basis.
If Vance would like to calculate the profitability of corporate ventures dependent on open source products (such as those from IBM, Accenture and countless other companies), that’s a story I’d like to read.