Tuesday, December 1, 2009

Pros and Cons to Open Source Business Models

I just read this NY Times article on Open Source as a Model for Business is Elusive which claims that successful open source companies have more societal and strategic value than financial and cites the effect that MySql is having on the EU's evaluation of Oracle's acquisition of Sun as an example. They worry that if Oracle acquires Sun, then they will kill MySql which is a low cost alternative to Oracle's database product.

The article lists the usual suspects in their case both for and against open source; Red Hat, XenSource, and Mozilla being the three top reference models.

They also show how open source companies are supported by large technology vendors with deep pockets in order to wage proxy wars with their competitors. Google with Mozilla and IBM with Linux against Microsoft are two examples cited. This is actually Oracle's defense against the EU's concerns in that Oracle claims that they will continue to support MySql in order to eat into Microsoft's Sql Server market.

It seems that the exit strategy for open source companies these days is in acquisition over going public. Witness the recent purchase of SpringSource by VMware in order to gain more control up the API virtualization stack as the corporate world turns towards cloud computing. The acquisition of XenSource by Citrix is another example.

Giga OM countered to this article with an article of their own with the claim that Open Source Business Models Aren't Dead End Streets. They cite Android, Acquia, and Cloudera as example companies.

No comments: