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Is Open-Source A Business Model? $500 Million Says It Is

There has long been a school of thought that says there's no business model for open source -- in fact, that open source is the opposite of a business model. Citrix's acquisition of XenSource, a business that rests on open-source software, is one more piece of evidence to the contrary.

If you hadn't heard of a hypervisor before this week you certainly have by now: VMware, maker of the ESX Server hypervisor, hit the jackpot on Tuesday with the biggest IPO since Google's. So yesterday Citrix paid $500 million for XenSource, a company that builds its XenEnterprise virtualization technology on the open-source Xen hypervisor, a project that began at the University of Cambridge. (There's a third hypervisor lurking in the wings, too -- Microsoft's Veridian, due in beta later this year.)

To make this even more interesting, Novell uses the Xen open source hypervisor in its SUSE Linux Enterprise and OpenSUSE Linux distributions. So what's the net effect of Citrix swooping in? Smiles all around, judging from an Internetnews.com article.

Xen project leader and XenSource founder, the suddenly much richer Ian Pratt, is quoted to the effect that "there are over 20 major corporations, as well as plenty more individuals and smaller companies, that regularly contribute to the Xen open source software project." Citrix's new interest is seen as a rising tide that will lift all the boats in the Xen community.

In that sense the XenSource acquisition follows the Red Hat model, which has built a business on open source, as well as Novell's SUSE Linux acquisition -- which is something Microsoft must be thinking deeply about as it prepares to launch Veridian.

Does it mean the Redmond software company will have to fight on another front in its war against open source? And how many fronts can it fight on as technology advances?

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