The Future of Open Source - 2010
A new survey suggests open source solutions may have reached a "tipping point" based on increased private and public sector adoption and a reputation for delivering business impact.
By Michael J. Skok, North Bridge Venture Partners
May 26, 2010
The 2010 Future of Open Source Survey gathered insight on the opportunities and challenges of today's open source market based on 551 executive respondents from customer and vendor organizations. The study found increasing confidence in open source's ability to drive business value and signs that the technology may have passed its "tipping point" and be on its way to mainstream enterprise adoption.
In a recent interview, Michael Skok, General Partner at North Bridge and founder of the survey, explains the new role of innovation as an adoption driver, the power of the White House as a customer, the new money-making strategies being used by vendors and investors, and an outlook on the future of open source.
SandHill.com: What factors are driving the usage of open source today?
Michael Skok: We started the survey four years ago because of the lack of understanding of open source - both in the industry and in the marketplace. It's fair to say that while people now recognize the importance of open source software, many still wrestle with where to use it and how to derive value and make money from it.
Certainly low cost has helped open source endure the economic downturn and emerge even healthier. For the third year, survey respondents said that low costs are the most attractive aspect of open source technology. And more than 95 percent of respondents say the turbulent economy was actually good for open source vendors.
To me what's interesting is that you can actually measure it in both big and small companies. For example, Red Hat reported annual revenue of $748 million for its fiscal year ending in February - a 15 percent increase over the prior year. The same recession-era expansion took place in private companies: in North Bridge's five open source portfolio companies, top line revenue doubled last year, as did the number of employees. This year, revenue is on track to double yet again after a strong Q1.
There are also new drivers of open source software adoption. Enterprise buyers now recognize open source as a high quality solution. Respondents cite better quality, superior security, freedom from vendor lock-in and rapid innovation as key factors which are driving open source adoption (see graphic).
To me, "rapid innovation" is perhaps the most exciting new driver we identified. Buyers now specifically recognize that open source delivers innovation faster than proprietary software - a significant competitive advantage in a today's challenging business environment.
The not so "secret sauce" at work is that open source users are the developers. This creates a fundamental difference in terms of both the philosophy, pace and process that makes it impossible for traditional software companies to keep up. Without the burden of a long product development cycle, open source software can create and release new features immediately by the people and organizations that need them.
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In a recent interview, Michael Skok, General Partner at North Bridge and founder of the survey, explains the new role of innovation as an adoption driver, the power of the White House as a customer, the new money-making strategies being used by vendors and investors, and an outlook on the future of open source.
SandHill.com: What factors are driving the usage of open source today?
Michael Skok: We started the survey four years ago because of the lack of understanding of open source - both in the industry and in the marketplace. It's fair to say that while people now recognize the importance of open source software, many still wrestle with where to use it and how to derive value and make money from it.
Certainly low cost has helped open source endure the economic downturn and emerge even healthier. For the third year, survey respondents said that low costs are the most attractive aspect of open source technology. And more than 95 percent of respondents say the turbulent economy was actually good for open source vendors.
To me what's interesting is that you can actually measure it in both big and small companies. For example, Red Hat reported annual revenue of $748 million for its fiscal year ending in February - a 15 percent increase over the prior year. The same recession-era expansion took place in private companies: in North Bridge's five open source portfolio companies, top line revenue doubled last year, as did the number of employees. This year, revenue is on track to double yet again after a strong Q1.
There are also new drivers of open source software adoption. Enterprise buyers now recognize open source as a high quality solution. Respondents cite better quality, superior security, freedom from vendor lock-in and rapid innovation as key factors which are driving open source adoption (see graphic).
To me, "rapid innovation" is perhaps the most exciting new driver we identified. Buyers now specifically recognize that open source delivers innovation faster than proprietary software - a significant competitive advantage in a today's challenging business environment.
The not so "secret sauce" at work is that open source users are the developers. This creates a fundamental difference in terms of both the philosophy, pace and process that makes it impossible for traditional software companies to keep up. Without the burden of a long product development cycle, open source software can create and release new features immediately by the people and organizations that need them.
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