The Packet Scoop

As noted on a blog post by John Foley at Information Week, there clearly is a debate about the long term viability of the commercial open source business model. He mentioned at least one venture capitalist who said that commercial open source companies were having a hard time figuring out how to make money.

A highly regarded venture capitalist in the valley recently told me that he believes that over time commercial open source companies will start to look like traditional software companies. Ultimately, they will use the term “open source” more for marketing than anything, but the large large percentage of their code base will be developed by in-house engineering resources. I couldn’t agree more. That’s because the commercial open source business model is fundamentally flawed. The good news is that there are a lot of smart people in the commercial open source space, and at some point they’ll recognize that shareholder return drives venture backed companies, and they’ll be forced to slowly morph into something that looks like traditional software companies.

The lions share of end user IT departments won’t be duped to believe that using a commercial open source vendor’s version of their own open source effort will be any better than just using a traditional software vendor with a strong product and who has released an SDK and APIs to call into. Ultimately, if there is no difference in end result, than the only difference between the two is marketing yourself as ‘open source.’ That is, the commercial open source effort will turn into more marketing than anything.

But marketing yourself as something you’re not is transparent. Kind of like putting lipstick on a pig.

Steve