Software Companies Resorting to Open Source More and More

With the economy as lousy as it is, it seems there’s never a shortage of companies adopting open source-like business models to increase market share and customer bases. This WSJ article from today’s paper is yet another.

I’m not surprised. Software vendors are finding it’s simply a more efficient way to market and upsell their product offerings. That said, many of the quotes point to a degree of insecurity and skepticism from many of these predominately proprietary-based vendors. Truth be told, many of our own Community Edition customers haven’t made the leap to Professional or Enterprise, though the shear volume of qualified leads that the open source model generates will guarantee at least a percentage will eventually make the job. The other key is having the utmost confidence in your product’s value proposition, which it seems many of these companies are now doubting in the light of giving away their products for free.

But that aside, another point in the article caught my attention:

To persuade customers to upgrade, software makers generally try one of two approaches: limit the number of people who can use the free product or limit the features on the giveaway version.

I see open source and cloud computing being a catalyst for the eventually evaporation of business models such as these. Why shouldn’t businesses look to open source and cloud computing to cut costs rather then upgrading existing software packages or implement new ones? I’ve spoken with and seen plenty of companies that are doing exactly that by skipping product upgrades and turning to cloud computing and/or open source.

With more and more functionality being inherently imbedded within Web 2.0 technologies, the ability to virtualize the end user desktop has never been greater.

Rather then making costly upgrades, companies will consider implementing key services and/or functionality via cloud computing platforms and open source, custom developing functionality or integrations; cherry picking the most needed functionality rather than overhauling the entire engine, and thus leaving them the option to upgrade at their own prudence, as opposed to the vendor’s.

4 thoughts on “Software Companies Resorting to Open Source More and More

  1. Colin…I see it this way. Commercial open source companies like Sugar have proven that this is a great manufacturing model, and these old-school firms are “discovering” the value of open source – not “resorting” to open source. I think they “get it” as a competitive advantage, not as a way to keep the lights on…

  2. I wouldn’t necessarily say that these vendors are “discovering” open source. I think it’s more a reaction to the economy.

    The quotes from the article clearly show a great deal of skepticism and uncertainty about the idea, which leads me to believe they’re pulling all the strings in reaction to the economy. I’m assuming once times get better many of these will resort back to their old selling ways.

    I think it’s the right strings though. There’s a lot of upsell to taking an approach like this and getting the most mileage out of time, money and resources spent. Open source is a great way to “virally market” your products and services when dollars are tight, or I guess in your guy’s case, even when it’s not.

  3. An open source -like business model has always been a gamble at best. Adopters of Java weren’t driven to upgrade to a Sun server. But, if developing your product in an open source environment helps it become what everyone wants, rather than what you think they want, then you may have a chance to sell further implementations or upgrades that you have developed yourself.

    Open source is a great way to advance a technology without one person or entity taking all of the burden of development.

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