Open Source – The Times They Are A Changing

Three very interesting little open source stories passed my desk recently that I found shone facets on open source issues.

Last week, the Industrial Commercial Bank of China has signed a deal with Unix-clone Turbolinux to run open-source software in all of the bank’s operations. “Linux deployment is growing in China, with software makers targeting segments such as banking, insurance and wireless applications. Intel last year began a program to boost sales in China of desktop computers based on Linux.” Perhaps Microsoft shouldn’t look to China for much market growth.

Meanwhile, domestic open source companies have also been pursuing revenue through maintanance fees. According to Martin LaMonica of Cnet “In the absence of software license fees, open-source companies are adopting a services-intensive business model, accelerating an industrywide shift toward ongoing, rather than up-front, revenue.” Why would anyone want to pay up-front for software, when you can try it out and pay as you go?

Finally, open source companies, the pariahs of venture capitalists, are finally beginning to get some respect. When William Jolitz and I released to the public after 3 years of work in 1992, there was no serious business model for open source companies – especially an operating system. Companies bundled Unix on their brand of hardware, like Sun or Symmetric Computer Systems. Microsoft had the X86 desktop “locked up”. No one could compete with Microsoft by “giving away software”!

But the times, they are a changing. According to Gary Rivlin of the New York Times, “The first time Marc Fleury tried to raise money for his technology start-up company, in mid-2000, a venture capitalist told him that he didn’t have merely a bad business plan but a terrible one. Not only was Fleury planning to compete against the likes of IBM, but his product was open-source software, which he would give away. Four years later, he tried again. His business was still based on the free distribution of code, yet now there was a dogfight among venture capitalists competing to finance his company, called JBoss.In February 2004, JBoss received a combined $10 million from two prominent venture capital firms: Accel Partners in Palo Alto, Calif., and Matrix Partners in Waltham, Mass.”

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