The Next Wave of Open Source: Applications
Here's why the application market is ripe for Open Source offerings - and which applications will gain traction the fastest.
By Larry Augustin
Nov. 21, 2005
Open Source is drawing more attention than ever. Venture capitalists have invested $400 in 50 open source startups in the past 18 months, according to BusinessWeek. Why now?
I've been working for years with these startups, as an investor and an executive. Part of the reason for the Open Source explosion is the breakdown of the enterprise software business model. The quest for new customers and revenue growth has driven sales and marketing costs to an unsustainable level (see last week's Time for a New Software Model).
But the Open Source explosion is also being driven by a movement into applications. For many years, we heard the mantra that Open Source made sense for infrastructure (Linux, MySQL, JBoss, Zend, etc.), but that we'd never see Open Source applications. That's changed; I see three important developments that have combined to make the market ready for Open Source applications.
1. Investment by ISVs Designed to Compress the Enterprise Software Stack
There's been significant investment going into Open Source products, particularly from proprietary software vendors. Why? IT buyers are focused on optimizing their investments. By commoditizing lower layers of the stack, ISVs reduce the overall IT spend their customers need to make.
Of course, each vendor invests to their own advantage. Oracle is very supportive of Linux running on Intel because it drives down the overall cost of the Oracle solution - not the Oracle products themselves but the products they run on. Oracle keeps sales high, the customer pays less, everyone is happy. To help their customers save money, SAP supports MySQL which replaces high-cost Oracle products in SAP solutions.
The result of this investment is that infrastructure has commoditized, increasing the availability of the enterprise software stack, and increasing the target customer base for applications built on that stack.
2. A Complete Open Source Stack
Many investors and companies have been funding the build out of an Open Source ecosystem. The result is a robust and low-cost commoditized set of layers in a complete open source stack.
Now the opportunity lies atop the stack. Back in 2000, an attempt to develop and deploy an enterprise application on an Open Source stack would have been missing a lot of the underlying components. Today, no compromises are necessary to make such an application work well.
I've been working for years with these startups, as an investor and an executive. Part of the reason for the Open Source explosion is the breakdown of the enterprise software business model. The quest for new customers and revenue growth has driven sales and marketing costs to an unsustainable level (see last week's Time for a New Software Model).
But the Open Source explosion is also being driven by a movement into applications. For many years, we heard the mantra that Open Source made sense for infrastructure (Linux, MySQL, JBoss, Zend, etc.), but that we'd never see Open Source applications. That's changed; I see three important developments that have combined to make the market ready for Open Source applications.
1. Investment by ISVs Designed to Compress the Enterprise Software Stack
There's been significant investment going into Open Source products, particularly from proprietary software vendors. Why? IT buyers are focused on optimizing their investments. By commoditizing lower layers of the stack, ISVs reduce the overall IT spend their customers need to make.
Of course, each vendor invests to their own advantage. Oracle is very supportive of Linux running on Intel because it drives down the overall cost of the Oracle solution - not the Oracle products themselves but the products they run on. Oracle keeps sales high, the customer pays less, everyone is happy. To help their customers save money, SAP supports MySQL which replaces high-cost Oracle products in SAP solutions.
The result of this investment is that infrastructure has commoditized, increasing the availability of the enterprise software stack, and increasing the target customer base for applications built on that stack.
2. A Complete Open Source Stack
Many investors and companies have been funding the build out of an Open Source ecosystem. The result is a robust and low-cost commoditized set of layers in a complete open source stack.
Now the opportunity lies atop the stack. Back in 2000, an attempt to develop and deploy an enterprise application on an Open Source stack would have been missing a lot of the underlying components. Today, no compromises are necessary to make such an application work well.
Pages: 1 2
-
