Is BusinessWeek out to Get the Enterprise Software Business?

Dennis Byron

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.

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Add Comment      Leave a comment on this blog post
Jul 29, 2009 6:07 PM Rachael King Rachael King  says:

Hi Dennis, You make some interesting points and I certainly appreciate your feedback. You're right, of course, that open source is not a business or a business model. But there are companies that try to make money selling services or by giving away the basic software and selling special features. So, yes, open source as a movement is alive and well. In fact, I wrote a story six months ago about how some IT departments are turning to open source during the recession as a way to cut costs.

But I think Peter Yared makes an interesting point about commercial open source. Many enterprise users do need the support packages that are sold with commercial open source software. Just like when investing with any other software provider, IT departments need to think about the stability and viability of the software provider. If a commercial open source provider fails, you will still have access to the source code but may need to scramble to find someone to support it.

Thanks again for taking time to read, and to give feedback on my blog. I've left you my e-mail address, so you can reach me directly anytime.

Rachael King



Aug 4, 2009 8:47 AM Arthur Clancy Arthur Clancy  says:

Follow the breadcrumbs.  All major media are organized around controlling the interests of big business.  This is not an isolated incident.  Just an expansion.  And it is not the idea of BuseinssWeek.  If you chase these stories on an individual basis, you will accomplish nothing.  Major Media will just continue to roll over you.  Continuing to crush independent business interests.

No, I'm not some loon.  I have been accurately tracking, and predicting, this from Feb 2008 in the Financial sector (seeing obvious current control having started in 2003)

All I ask is for you to start tracking your industry in this context.  Maybe map it to the bigger picture.  Decide for yourself what is going on.  You can see the same dis-information by the major TV Media in covering major issues.  They are quite unified.

When you see it in your industry.  Put it together.  You are smart.  Don't dissipate your energies.  Figure out what to do.  And act.  It's not a game.  Look to who owns Big Business, and who they own.

Check out http://en.wikipedia.org/wiki/Deconstruction  You need to know this.  This is what Bill Gates learned during the Harvard years.  It is how he built Microsoft.  Along with his tight integration with government.  Sorry for the digression.  Just trying to inform.

Aug 4, 2009 7:51 PM chrish chrish  says: in response to Rachael King

just an example of the frequent use of 'non-statements' in this type of argument: 'If a commercial open source provider fails, you will still have access to the source code but may need to scramble to find someone to support it.'

Would you, Rachael, care to educate me as to how this is any different for any software provider, open sourced or not?

The only difference I can think of (perhaps exposing my ignorance) is that with open source i will not have to tangle with lawyers to get release of the source code, should i need it, whereas even if i have an agreement in place with regard to closed/proprietary commercialised software for, it can be a tedious and slow process to obtain the code.

Aug 31, 2009 9:04 AM Cafe Marly Cafe Marly  says:

I think there are a lot of open source ware can be use to the business especially small business. But incase, mid and big business they are prefer using special paid software to get any maintainance support.


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