Michael Dolan Dot Com

Monday, August 18th, 2008

BusinessWeek “Open Source: An Open Question for Red Hat and Others”

Wow, some great quotes are included in this BusinessWeek article on Red Hat and open source software. It’s great to see Jim taking control at the helm. Certainly I agree with much of his views, however, I also see Red Hat in a business that needs to continue contributing to community efforts. While I know he’s guiding that as well, it does not really come out in these comments.

I definitely agree with Aaron about the bleak future for those open source companies who “don’t get it”. I talk about the blunders I see all the time, but I suspect over the next couple years we’ll finally see them go under. I was less inclined to buy into Aaron’s comments inferring that having a free version hurts the market opportunity for selling. That “free version” running on a server the customer deamed not necessary to support is exactly why Red Hat is in the position it is today.

http://www.businessweek.com/technology/content/aug2008/tc20080815_938079.htm

Meantime, life has been rough for many of the companies that have bet their business more specifically on open source.

“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.

Many investors won’t wait that long. Venture capitalists invested $196 million in U.S. open-source software companies last year, after pouring in $265 million in 2006, according to market researcher Dow Jones VentureSource.

…

Whitehurst, [..] is shifting engineers and marketers away from nice-to-have projects toward areas where Red Hat gets paid. He’s pulling resources out of consumer desktop Linux, and he shuttered an online store that sold other companies’ open-source programs. “I took a look at that and said, ‘We’re not eBay,’” he says. “Red Hat is open source, but that doesn’t mean we do everything in open source.”

…

“A pure service business is not particularly defensible,” says Whitehurst. “Some open-source companies have not truly figured that out.” If the open-source movement, now in its second decade, is to realize its promise for vendors and investors, more of its purveyors will need to get the message soon.