Open for Business

Friday, April 08, 2005

IBM: Open up or else...

Speaking at the Open Source Business Conference today, IBM's VP of technology and strategy Irving Wladawsky-Berger confirmed IBM's strong support for open source.
"A big part of your power is to have your people work with the communities and donate some of your intellectual property to those communities so they can get better. Then you build proprietary offerings on top of the open-source platform," said Wladawsky-Berger. The best example is IBM's commitment to promote Linux for years. IBM assigned hundreds of programmers to improve it. Also, IBM donated the very popular Eclipse development platform to the community. At the same time, IBM sells loads of proprietary software, including its WebSphere and DB2. Obviously IBM is not in this for charity, the push for Linux is not for the love of the community but to hurt their Redmond-based competitor. To show their commitment to OSS, IBM is willing to go even further, they announced earlier this year that were going to donate 500 software patents to the OSS community. To keep things in perspective, IBM owns 10,000 software patents in the United States.

Perhaps the strongest statement made by IBM's Wladawsky-Berger at OSBC was that vendors who fail to adapt to open source won't be around five years from now.

I think that IBM has been the most aggressive of the big companies supporting OSS and turning it into an asset and a competitive weapon against competitors such as Microsoft, Oracle or Sun. Most of those competitors have been very quiet about their open source strategy and are still perceived in the open source industry as late comers at best.

Thursday, April 07, 2005

Commercial open source: a magnet for venture money

Not so long ago Venture Capitalist would not even consider meeting entrepreneurs with business plans based on open source. Waste of their valuable time, right? It was all about your "secret sauce", a.k.a. your intellectual property. No IP, no funding.

Well, evidently, times have changed!

According to Matt Asay, VCs have invested more than $150M in open source startups since March 2004. I can easily believe this number. Off the top of my head I can mention a few recent deals that make that number seem plausible:

$10M for JBoss (first round) led Matrix Partners with the participation of Accel Partners, $8.5M for Groundwork (second round) led by Mayfield, $7M for Optaros led by Charles River Ventures, $5.75M for SugarCRM (second round) led by Draper Fisher Jurvetson (DFJ), $4M for OpenLogic led by Appian Ventures and Red Rock Ventures, and $3.5M for SourceLabs led by Ignition. There are other rising names in the space including SpikeSource funded by Kleiner Perkins with stars involved like Kim Polese and Ray Lane.

That's some serious change!

The challenge until recently has been monetizing open source. The reality is that open source has truly crossed the chasm; new business models based on open source services have emerged and changed the software business for good. Today, open source startups are clearly attracting the best names in the venture community. Furthermore, I heard that most of the deals listed above were dog fights where some VCs had to be very flexible and generous to get in.
The takeaway is that commercial open source clearly represents a disruptive shift in the software industry.

Wednesday, April 06, 2005

OSBC 2005

As an entrepreneur running a company that helps IT organizations solve business problems by providing services and solutions based on open source software, I wanted to check out OSBC 2005 and listen to a couple or speakers I usually enjoy listening to (like Geoffrey Moore). But looking at the registration page of this event, I realized I had to pony up $1495 (but you get ONE lunch). Call me cheap or crazy but I think it's pretty steep, especially for busy people who can only attend a couple of sessions. I guess IDG has no reason to lower the registration fee if they have enough people attending. I will just wait and listen to the sessions I am interested in on ITConversations. That's how I virtually attended OSBC 2004. One positive thought comes out of all this: If OSBC can charge that kind of registration fee and attract prestigious sponsors for a short event, it goes to confirm that Open Source is no free beer and that it is a becoming a real business.

If you have any thoughts about this, do not hesitate to share them with me (post a comment).

Tuesday, April 05, 2005

Is it too little too late?

I read several articles recently about Sun's efforts to promote OpenSolaris and build a credible rival to Linux. Sun's President and COO Jonathan Schwartz often claims on his Blog (and elsewhere) Sun's position as the #1 contributor in open source: "Sun is by far the single largest contributor to the open source marketplace, having recently dwarfed even UC Berkeley's contributions". Sun has also added Roy Fielding, a founder of the successful open-source Apache Software Foundation, as the 5th member of the OpenSolaris Community Advisory Board.

In an open letter to IBM’s CEO Sam Palmisano, Sun's COO touts Solaris 10 as the best Operating System out there offering incredible opportunities for IBM's business. It may be true but I cannot blame IBM for betting on Linux even after the news about OpenSolaris came out. Linux might not be the best OS out there (it's getting there fast), but there is a huge momentum behind it and a ton of IT organizations using it on cheap machines. You cannot reverse all this even when you're Sun by simply announcing that you are open sourcing "the most secure OS the world has ever seen".

I may be wrong but I think it's too little too late and I even wonder if Sun’s move serves the Operating System open source community. It was doing just fine focusing its resources on the thriving Linux, sometimes more is less. Somebody must be happy up in Redmond.