Open Source: An 'Advertisement On Steroids' - InformationWeek

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12/2/2009
11:17 AM
Serdar Yegulalp
Serdar Yegulalp
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Open Source: An 'Advertisement On Steroids'

That's one of the many analogies and observations drawn by Vyatta CEO Kelly Herrell in a blog post about the economics of open source. The open source business model is tremendously effective, in his eyes -- it's just that its effects are not always measured in dollar values, and that can drive the money

That's one of the many analogies and observations drawn by Vyatta CEO Kelly Herrell in a blog post about the economics of open source. The open source business model is tremendously effective, in his eyes -- it's just that its effects are not always measured in dollar values, and that can drive the money men crazy.

It's tempting to dismiss this with a line like "you don't miss what you can't measure", since any business has to eventually talk dollars and cents and bottom lines. But there's a lot of truth to this: open source can often remake a market for a given kind of software when your back's turned. By the time you turn around ....

Kelly cites a New York Times piece about open source as further evidence. The article in question deal with MySQL and its uncertain fate between the EU's Scylla and Oracle's Charybdis. (You choose which one's the monster on the rock and which one's the whirpool.) From that piece Kelly extracted an observation that many people outside of open source often make: why is it that a company like MySQL can be bought for such money (in this case, $1bn), when their total sales are so small compared to other people in the same space?

Those of us who have spent enough time inside, or near, such things will know why. What they're buying is it's not the software itself, not the developer community, not the user base, not even just the dev team -- it's all of those things together, which is what the pricetag really reflects. A good chunk of MySQL's market capitalization isn't reflected by sales alone, and so a prospective buyer for such a company can ask a price that often seems to be pulled out of thin air. They know that everyone who has ever come near the software in question can speak on their behalf for it.

Kelly's conclusion: "The open source business model works.  It's just measured very, very differently." What I further wonder about is how sustainable the business model will be amongst those doing the buying of open source companies -- whether they, too, see something that must be measured differently on principle, or just something they can assign a dollar value to and be done with it.

The former is less splashy, but a better long-term strategy. The latter is just business as usual. Too usual.

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