Open for Business

Wednesday, February 08, 2006

Is this where OSS is going?

When I saw this deal today I thought it summarized pretty well where open source seems to be going. The news in itself is not very exciting but it’s yet another open source startup raising a pretty good round from top tier VCs. In a nutshell, Alfresco which offers a document management platform raised an $8M series B investment round from Mayfield and Accel (which had already led round A). This confirms that:

- Open source is more professional. Open source developers are not what they used to be (midnight hackers working from their garage). More often than not, open source developers today are professional developers employed by large vendors (like Oracle or IBM) or well-funded startups like Alfresco or Spikesource (backed by Kleiner Perkins). Additionally large vendors offer professional support for open source projects (for example Oracle, IBM, Novell and HP support Linux).

- Open source is (slowly but surely) moving up the stack. First, the debate is not limited to Linux vs. Windows anymore. Also, the target open source end user profile is changing as open source moves up the stack. With Linux and Eclipse, typical users are system administrators and developers. Open source is moving beyond infrastructure software and tools into different areas with various degrees of success. Alfresco seems to be doing a good job in document management and Asterisk seems to offer a very popular PBX/VoIP telephony system (I am a happy Asterisk user without knowing much about PBX systems).

Is open source ready for ERP or CRM? Those of us who have been around a while in this industry know full well that VCs are not always right but in the last 18 months they have been very active investors in open source based startups with services-based business models. Time will tell if they were on the money! Let's not get too excited for now I don’t see traditional commercial software going anywhere anytime soon.


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