BusinessWeek continues its string of misleading articles when it comes to IT and enterprise software. I posted about a wildly inaccurate user-generated post about SAP’s Software as a Service (SaaS) strategy on June 16.

Yesterday, BusinessWeek ran a post from a "guest blogger" with the headline “The Failure of Commercial Open Source Software.” The headline’s clearly designed to get the open source blogosphere up in arms, but has so much bad information that both McGraw and Hill must be doing somersaults rather than just rolling over. And the problem with such misinformation at mainstream media outlets like BusinessWeek is that, unfortunately, business executives read them.

The blog post begins by asking:

“So what happened to open source as a business?”

Well, actually nothing happened to it as a business because open source is not a business or a "business model," as the phrase usually is expressed or a market, if that's what the "guest blogger," the CEO of a Bay Area social media start-up, means. Open source is a culture and a set of license terms and conditions (Ts&Cs). As the latter two, what open source really is, the movement is doing fine. Probably the best example of the success of the culture and the Ts&Cs is that MySQL as a product effectively continues no matter what happens to the original 2008 version of the code within Sun (JAVA) and likely Oracle (ORCL).

The blogger claims:

“It’s been over six years, and no commercial open source companies other than Red Hat, MySQL, and JBoss have had liquidity events.”

Well that’s not true, although I don’t think the point means anything. Liquidity events help the investors and founders of open source projects, not enterprise software users like yourself. But for the record, there has been Yahoo’s (YHOO) acquisition of Zimbra, IBM’s acquisition of Gluecode, Iona’s (since acquired itself by Progress) acquisition of LogicBlaze, and many more such “liquidity events.” If 20-year-old Linux distributor Red Hat (RHAT) can be mentioned in a sentence that begins “It’s been over six years,” you can add Novell’s (NVLL) acquisition of SuSE and many other such "liquidity events."

The blog post implies that the fact that “Oracle and IBM, which derive the vast majority of their software revenue from proprietary software, have an increasing share of the software market” has something to do with open source culture and Ts&Cs. Oracle and IBM are among the leading supporters of the culture and increasingly use the Ts&Cs. Even Microsoft (MSFT) got the religion starting three years ago (if you read the mainstream media, you might think Microsoft embraced open source sometime in mid 2009 but that's another example of how bad BusinessWeek and its peers have been is when it comes to covering enterprise software and IT).

It says:

“Customers are switching to SaaS…”

as if software licensed under open source Ts&Cs or developed by a community cannot be delivered as a service. Now SaaS is a business model, but this blogger does not understand the distinction.

With these and similar statements (in this article and elsewhere), BusinessWeek is exhibiting incredible ignorance about IT market dynamics,or at least incredible laxness in who it lets comment on these critical issues. Tell your managers how inaccurate this blog post really is. If you need specifics about other open source projects not mentioned above (or simply want to set the record straight on any IT issue), drop me an e-mail.