Is Open Source Just a Brand Name for Cheap Software?

I recently attended the Red Herring East conference and sat in on a panel discussion on Open Source.  Most of the panelists and many of the audience were critical of Open Source companies for their failure to deliver against many of the promises of Open Source.  The two top complaints were:

• Open Source companies that incorporate little or no code from the community. JBoss was held up as an extreme example of this behavior.
• Open Source companies do not provide support to customers who modify the source code.

I can certainly see how these types of behaviors could be seen as troubling.  Open Source code was going to be better than traditional software because it would be enhanced by the collective wisdom of the community.  It would also offer its users the flexibility to customize and modify it as they needed.  Shutting out external developers and eliminating support for people who modify it flies in the face of those ideals.  I'd like to take these criticisms one step further and make the following claim:  What Open Source has evolved into is just a brand name for cheap software. 

In our interviews with hundreds of users of Open Source, we consistently hear the same feedback:

• "I didn't have a big budget so I took a look at what was available in Open Source."
• "I have never modified the source code."
• "I have never contributed anything back to a project."

The net net: the overwhelming majority of Open Source users are interested in Open Source software just because it is cheap.

Is this a problem?  No! 

The history of the technology industry is replete with examples of technology movements that fell short of their original goals.  Unix was going to enable applications to be easily ported from hardware platform to hardware platform and free companies from vendor lock in.  XML was going to make integration quick and easy.  Object oriented programming was going to make software development into a snap by creating libraries of reusable objects.  While all of these technology movements fell short of their original visions, they all have created tremendous value. 

Open Source is the same.  While Open Source has not lived up to all of its early hype, it has reduced the cost of certain types of software by 80%, 90% or even 100% for users who do not need any value added services.  It has freed hundreds of millions or even billions of dollars in IT budgets and it has made software available to millions of users who otherwise could not have afforded it.  Instead of lamenting Open Source's shortcomings, let's celebrate its successes and move on to the next big software revolution.

Welcome to TopBlog

When I started my career in high tech back in the early 1990s, Geoffrey Moore and Crossing the Chasm reigned supreme.  Whether or not companies used the term Crossing the Chasm or even knew that what they were doing was Crossing the Chasm, practically every company that walked through a venture capital firm's door based their strategy on its tenets:

• Focus on a vertical market
• Target visionaries
• Use an enterprise selling model
• Market the ROI generated by the visionaries to sell to the mainstream

There was a good reason why Crossing the Chasm was so popular - it worked!

The first cracks in this view of the world surfaced in 1994 when Netscape was founded.  Rather than hire enterprise sales reps to sell seven figure solutions to visionaries, the company gave away its browser for free.   When trading closed on August 9, 1995, the day Netscape IPO’d, its market cap was $2.2 billion. While Netscape itself would meet an ignoble end, divvied up between AOL and Sun, technology strategy would never be the same. 

Today, companies are pursuing an ever wider array of business strategies supported by countless packaging, pricing, sales, and marketing approaches.  While every one of these strategies has its own set of champions who will claim that the whole world is going (pick one) open source, appliance, SaaS, etc., our view is that choice is here to stay. 

This means that managers in emerging technology companies face an infinitely more complex set of strategic choices than their peers did a decade ago.  Should they be an open source company (like RedHat) or a SaaS company (like Salesforce.com) or an appliance company (like Reactivity) or an open source appliance company (like Sourcefire) or a software and appliance company (Riverbed Solutions) or an open source SaaS and appliance company (like SugarCRM)? 

Along with these choices come new sales, marketing, financing, and operational challenges.  My goal for this blog is to help companies sort all of this out.