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06.27.07
Money - A Good Measure Of OSS Success?
 By Savio Rodrigues
This comment from Stacey (Hyperic) got me thinking…is money a good measure of OSS success?
Before I go on, let me clear something up. My 1.8% comment was not meant to minimize the importance of OSS to the software market or to customers. I disagree with the "world view" that OSS is going to completely revolutionize the software market and lead to the death of Traditional software as we know it. I'm an advocate of OSS & Traditional software living happily together to meet the varying needs of customers. I completely believe that all major software vendors will have an OSS story and a Traditional software story. It's not a "them vs. us" situation. It's a "we are them" situation. I'll fall back on Marten Mickos' comments from OSBC claiming that there is no OSS business model. That we are all participants in the software market.
Is money a good measure of OSS success? In our free market society, I believe it is. This does not minimize the importance of other measures of success.
Let's look a little deeper at OSS impact on software spending. I can think of 3 situations:
1. OSS vendor revenue from using OSS with support/license
2. OSS usage erodes Traditional software revenue
3. OSS usage creates new users because of minimized barriers to adoption
Clearly, software revenue shifts from Traditional software to OSS when customers decide to use OSS with support/license. This spending would be counted in the 1.8%.
Next, I accept Stacey's point about the importance of market spending that OSS erodes from the Traditional software market. But if you ask CIOs about their IT budgets over the past 5 years, most will tell you that they've grown. Few will tell you that their budgets have decreased by 26% (i.e. in line with OSS vendor revenue growth predicted by IDC). When a customer decides to use, say MySQL for free over Oracle DB, the savings are generally spent somewhere else in the IT department. In the above example, Oracle loses some revenue, but a large portion of those savings are spent on the backlog of projects that haven't been funded to date. As a result, another vendor, maybe an OSS vendor, but more than likely (as the size of the software market will attest), a Traditional vendor gets new revenue. This could actually be a situation where the use of OSS drives further spending on Traditional software. I can tell you that we've seen this in spades with WebSphere Application Server revenue. Customers like choice, a one size fits all model is really only for sock vendors.
Now, let's deal with the situation of OSS creating new users who have access to software they previously didn't have. Again, MySQL users are a great example. Heck, I'm a great example. I would never have used Oracle or DB2 (b/c of complexity, fear, costs - remember, I'm a "hello world" programmer at best), but I do use MySQL for pet projects. Does my use of MySQL represent revenue loss to Oracle, DB2 or SQLServer? One can make the argument that my familiarity with MySQL represents a potential future customer for MySQL. I doubt that is the case, but if I play along, then my potential future spending with MySQL would be represented in the 1.8% also. (Hey, don't ask me how IDC or other analysts can predict what I, or others, will do in 5 years!)
What's my point? OSS is very important to users, customers and software vendors. It is however, one component of the software market. Software vendors that accept this reality and build strategies to leverage OSS and Traditional software are the "future" (p=0.8). Gartner customers will recognize this form of pontification :-)
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About the Author:
I am taking a semi-break from IBM life as I return to finish a PhD in Industrial Engineering. I've held roles in market intelligence, strategy and product management. I'm ex-product manager of IBM WAS Community Edition, and blog about enterprise open source topics.
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