OSBC: Professional open source grows up

Consolidation threatens to consume more established companies that led the first-wave of open source

Once a concept thought to be oxymoronic, the business of open-source software is now working its way through adolescence to full-blown maturity. And the Open Source Business Conference (OSBC) in San Francisco this week proved that like the teen years, the transition brings growing pains.

As a new wave of applications vendors begin to take center stage in the open-source market -- replacing software infrastructure vendors such as JBoss and MySQL as the industry's up-and-comers -- consolidation threatens to consume some of those more established companies that led the first-wave of making a viable business model out of open source.

In fact, Atlanta-based JBoss itself was rumored to be a target of acquisition by Oracle as the OSBC opened on Tuesday. Instead, the Redwood Shores, California, company announced it would purchase embedded open-source database maker Sleepycat Software, another early entrant into the professional open-source market.

While market pioneers go to bed at night wondering which technology powerhouse may own them in the morning, startup applications vendors are chomping at the bit to make their mark using the business model that MySQL and JBoss made popular, and which now has the backing of more established companies like IBM  and Sun Microsystems. That model is to offer open-source software with a free license, while using professional services, maintenance and support for these products to derive revenue.

Once a niche play, this model has become completely acceptable in big deployments as part of software infrastructure -- the plumbing layer that includes an OS, application server, database and other software on which end-user applications are built. This stack of software has become credible enough to have its own name -- the LAMP (Linux, Apache, MySQL, Perl/PHP/Python) stack -- and its establishment has made way for applications vendors to jockey for position higher up the open-source food chain.

"As predicted, open-source is moving up the stack," said Richard Daley, chief executive officer (CEO) of Pentaho Corp., during a demonstration at the OSBC of his company's open-source business intelligence application.

Daley's company was one of a host of other upstart applications vendors that were invited to showcase their wares at OSBC. Among them was the new darling of professional open-source, SugarCRM Inc., which offers CRM (customer relationship management) software. Another was Project.net, a company with a project portfolio management tool that recently decided to open-source its software because selling software licenses was no longer cost-effective, said its CEO Peter Windston.

"We realized we can drive this [company] a lot faster with an open-source model rather than a commercial model," he said.

This cost-effectiveness and the support of major players has made open-source software more generally accepted in an industry that five years ago scoffed at the idea of using it for major IT deployments, said Andrew Updegrove, an open-source advocate and attorney with Gesmer Updegrove LLP in Boston.

Because of this trend, startups in this market face no special hurdles coming out of the gate just because they use a professional open-source model, as they might have before big companies like IBM and Sun jumped on board, he said.

"I think we've gotten through a major knothole," Updegrove said. "When a company like IBM makes [open source] a strategy, you see a major company betting their future on the validity of this model."

Even with all the activity around open-source applications, the professional open-source model isn't mainstream yet, according to Bob Sutor, IBM's vice president of standards and open source. He said the real test of customers' "comfort level" will come when major vertical-market companies begin to embrace it as the standard for their industries. "I think we're a little ways off," he said.

One roadblock to more mainstream adoption of applications above the LAMP stack is that vertical industries still haven't decided on technology standards, Sutor said. Once that happens, the stage is set for open-source applications to flood those markets, he said.

As the business of professional open-source becomes more mature, one question on everyone's mind is when Microsoft Corp. will move to capitalize on the trend. While the company has what it considers a version of open-source licensing, called the Shared Source Initiative, the company has never embraced the community in general or licensed software under community-driven licenses such as the GNU General Public License, the Mozilla Public License or the Berkeley Software Distribution License.

If companies continue to make money by offering open-source software, Updegrove thinks it's only a matter of time before the folks in Redmond, Washington, join the party. "Microsoft is too smart a company to not think that if other people are making money on open source, they should, too," he said.

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