The World’s Worst Kept Secret

Hostile takeovers aside, usually acquisitions are supposed to be closely guarded secrets. So what are we supposed to make of the mating dance between Oracle and JBoss that’s playing out in the media and blogs?

There’s no question that Oracle is serious about open source. They’ve already snapped up a couple of open source storage engines that threaten to rob open source database rival MySQL of its oxygen. There’s also little question about JBoss being in play.

As we’ve mentioned previously, it’s not unusual for vendors to open source orphaned products, or technologies that are on-ramps for their core platforms. But this is different.

Larry Ellison is not reverting to form in trying to take out a couple potential rivals. He — and IBM actually — are buying real products.

Does mean that open source has finally become a viable business?

According to a Forbes online filing, the answer’s no. Likening the open source rush to the dot com bubble, Forbes says that this time around, customers are also placing themselves at risk. According to an eWeek account of an elite CIO panel last fall, few considered open source technology or business models adequately proven.

The Forbes article added that open source wasn’t such a great deal for vendors either. “Problem is, most people just take the free stuff and run.” Exhibit A? Barely 3% to 5% of JBoss customers buy support contracts.

If the upside is limited, why are adults like IBM and Oracle buying? If it’s so risky for customers, why are they downloading open source like crazy?

It first helps to understand what kind of open source we’re talking about, because there are several different go to market models.

The first is the spontaneous community, made famous by Linus Torvalds of Linux. A moral authority gently governs the chaos over a technology that, arguably, nobody owns.

Excluding Red Hat, the only vendors making money are those for which Linux is not their core business.

Then there’s the foundation model, a more formalized version of the spontaneous community, where a third party non-profit like Apache, ObjectWeb, or Eclipse (which morphed into one) acts as arbiter. Similar to the community model, except that vendors forgo ownership or royalty potential because they feel it can help build their core business (which is usually something else).

Finally, there’s the captive model, like JBoss, where the vendor still controls all or most of the open source project, charging only for support. The main difference here is that the open sourced technology usually constitutes the vendor’s core livelihood.

Once you understand what kind of open source model is being used, you can better understand the risks and rewards for customers and vendors alike. For the community and foundation models, risk is inverse to critical mass. When more household brands support the technology, vendors face the normal risks of competition, while customers have less worry over the safety of their investments.

The captive model is where the issues get more interesting because either there’s something unique about the technology, or the vendor is in poor position to spread the risk. And if the vendor is at risk, so is the customer.

A subset of these cases is where the technology is mature, like Postgres, but the market isn’t. In that instance, you’re relying on more typical dynamics of startup markets, where the issue is the vendor’s ability to execute. At least the vendor doesn’t have to add heavy product development costs to the equation.

So if there’s all this risk, what’s in it for customers? In a word: price. While high-end platforms like WebSphere or Oracle pack plenty of punch for mission critical back ends, when it comes to exposing your business to the web, you’re not going to pay a lot for this muffler. You just want a product that does its job and that’s that. And if the technology is pretty standard – like Linux or J2EE – there’s relatively little downside if you have to switch vendors.

As we noted a couple weeks back, some trends are simply too important for vendors to ignore. If you’re a vendor and you see commodity platforms like Linux, JBoss, or Ajax snowball out of nowhere, you’ve got to get in on the action. You want the hearts and minds of renegade developers because down the pike, they’ll be the establishment. And that’s when you’ve got to ask, how much is the future really worth to you?