And that day was yesterday. January 16, 2008.
Two big announcements happened in the world of software. Both were big and important and billion dollar deals. Both will have profound impact on software as we know it. Both will have a profound impact on organizations large and small.
But one means that open source business models are here to stay and are part of the development and community landscape of software as we know it. The other may signal that closed source models are going to continue to consolidate into the depths of a few larger companies that can reap maintenance revenues as long as their tight, proprietary reign allows them.
If you don’t know, Sun paid $1B to purchase MySQL and Oracle is paying $8.5B for BEA.
The former is more interesting - and it proves that community and installed landscape is important - if not the most important thing after great product - regardless of the distribution and licensing model.
I’m not bold enough to predict that closed source models are gone. Of course, not. That would be ludicrous. Not every business or product should be open source. And not every product should be completely free and open. There are plenty of business models where I would recommend you stay closed source, proprietary and try and get as many patents as you can.
But horizontal products which have large and wide and very diverse distributions, uses and adoption - almost can only succeed in a profound way if you pursue an open source model. Linux would not be what it is today if it wasn’t for open source. And the group at Mysql wouldn’t be worrying tonight about what Sun will do with them if they hadn’t pursued and open source model. In my opinion, products that have such horizontal impact can’t be easily developed in a closed-source model. Probably the only companies today that can successfully build large horizontal software plays which have global impact are the handful of giant technology companies - IBM, Apple, Oracle, Microsoft, etc. And even the big boys like Oracle, IBM and Apple are more and more turning quickly to open source.
Microsoft is the last major hold out but it’s only a matter of time before they’ll convert and become the biggest advocate of open source. In fact, I believe in less than 3-4 years we’ll see Microsoft starting to embrace open source in a big way. Not this shared source crap they mask as open source - we all know that’s b.s. In fact, my prediction is that if Microsoft one day woke up and decided to wholeheartedly embrace the OS model - they would become an incredibly powerful force again for developers. Microsoft still has millions of people under the trance and that’s not changing. But even those developers (save the most dedicated) are unpleased from what I see and hear.
Think about it a bit.
It will take some time to regain the trust and confidence. But, with a few major things and then some execution (and new leadership) — they could completely change the game. I mean completely change the game.
But, I digress. I could care less if Microsoft ever does that.
But why does the Mysql mean massive change?
First, Mysql represents a first generation OS business model. They are part of the proud few that started as a real open source product (not a business), created a business model years after the product was built, and successfully monetized the community and created value and a meaningful exit. Their exit represents an approximation of a little less than 20x revenue. That’s called premium. JBoss’ exit to RedHat was around 10x revenue and Marc’s kicking himself (and he shouldn’t). What the first generation OS businesses have done will be radically improved by 2nd generation companies like my own, Appcelerator. And watch out. Sometimes, the “early bird may get the worm but the 2nd mouse gets the cheese”.
Second, the Mysql acquisition signals desperation in large companies (again, Sun, et al) in how they can make the move to OS business models. IBM has actually done a really good job in blending OS and proprietary and layering services across them. HP has figured out that OS software on HP hardware represents more dollars in their pocket. Sun, a complete failure at figuring out how to open source Java, needs to make the transition to OS - and they need to do it fast and with a concerted, heart-felt effort.
Third, a billion dollars and a 20x premium means that this model is real and real money can be made - even when you give your product away. I know, I know… I’ve been telling people for well over 12 years (I first got heavily involved in OS back in 1996 as both a user and contributor) that OS models work. It’s hard for some people to understand it and I understand. But, the long tail is part of how OS works and if you don’t understand it - you might want to do a little research and get smart about it. It’s changing the world that we thought we understood.
2nd generation open source business models need to understand how to synthesize community, product, support and services. You can’t just do like some big companies continue to do and just make your source available and call it open source. Sure, technically, it’s open and it’s source code. But, that’s not open source and it’s certainly not a business model around OS. That’s called bait-n-switch and most people know that. If you’re proprietary, just be proprietary - stop trying to tease people with OS and small tidbits here-and-there. I call bullshit.
2nd generation open source business models have to understand that a principal corporate sponsor still needs outside community developers. It stills need to operate transparently. It still needs the community to survive, to thrive - hell, to make something that people want. I think that open source models work well because of this. In a closed source world, you hide everything and try and design software and requirements largely based on the best (or worst) attempts at guessing what your customer’s want and building in a vacuum. Open source models completely change that. You develop in the open — all the warts, all the bugs, all the issues. It’s open for the world to see. It’s a little scary for some — but it’s completely how you make software that actually solves other people’s problems.
2nd generation models can also understand how to better monetize their communities — in a valuable way. Some purists may not like the fact that someone is making money off their labor. Okay, maybe or maybe not that’s understandable. I believe it’s a free world — and even in the free software world, you gotta pay the bills. If you can monetize it, you can make it available to others. It’s the ultimate model where everyone wins. Sure, not everyone pays. That’s OK. Deliver something that has value - they’ll pay.
Open source is here to stay in a big way. Now the rest of the world can see that.
Tech Tags: mysql opensource appcelerator bea oracle adobe acquisitions
