No "Get-Rich-Quick Scheme"
Mon, 08/18/2008 - 09:41 — raf
BusinessWeek has a good one on making money and growing fast in the open source world, titled "Open Source: An Open Question for Red Hat and Others". The general theme is: Open Source companies have a tough time growing fast and making profits - with RedHat and Novell as examples - altough "Software supplier Red Hat is racking up growth figures that much of techdom might envy. Sales rose 32%, to $157 million, in the quarter ended May 31, and profits climbed a respectable 7%.".
What's wrong with that? The critique goes to the business models: As the new RedHat CEO (coming from Delta Airlines) puts it: "A pure service business is not particularly defensible," says Whitehurst. "Some open-source companies have not truly figured that out."
How true is that. But money is being made with Open Source. Some make spectacular money by exploiting Open Source (Google, Apple) and some things wouldn't even exist without it (Internet, Software as a Service, Cloud Computing) - so it really boils down to finding the right business model.
Open-Xchange decided 2 1/2 years ago to add the indirect Software-as-a-Service business model. Since then we have won the worlds largest hoster (1&1) and many other premier hosters as our partners, adding 8 million Open-Xchange users this year.
It took us 10 years to get there, so Marten is probably right: "Open source is not a get-rich-quick scheme," says Marten Mickos, the former CEO of MySQL and now a senior vice-president at Sun. "You have to have patience." He adds that the company was 13 years old when it sold.
But if you get it right you can be as relaxed as Marten these days.
- raf's blog
- Login to post comments
House Cam
Comments
Open Source value
The value plays in Open Source are just different and take time - and not all will require "being bought out" or "IPO" to get there - it takes some insight.
Red Hat has been successful but they are competing now with Ubuntu - and Ubuntu is making huge inroads in the consumer desktop (see the Ubuntu forums for activity). Those advocates will be pressuring business owners to upgrade to Ubuntu instead of Vista or Mac - especially when considering needs for hardware upgrades just to get those OS's running. And Ubuntu is being pre-installed on Dell and other computers now.
Businesses will always need the hand-holding of services for installs and maintenance - and be more likely to get contractors for Linux since they will be by default switching and not have good in-house expertise on anything other than Windows.
The home market now is being fought on "beauty" (see move to Mac) and Ubuntu is making headway there. In the business environment its on Cost savings, where Virtualization is very profitable right now, and client-server (LTSP.org with Ubuntu is one model) will cut great costs in the front office.
Enterprise Open Source Magazine and some additional good reads
Enterprise Open Source Magazine picked this up...
Also check out Bill Baker's intelligent and sensible article "Conversations With My Dad About Open Source".
Bill also plays the note that things may take time but still they change the industry and still they are successful. If you take RedHats numbers (10x revenues in 8 years) - this 'aint bad! Comparing 2000 stock prices with 2008 stock prices stinks for most companies that have been around then. Trade Sales are prominent for all tech companies, not only Open Source companies. There just is no IPO market at the moment, this will change I'm sure...