We had a brief technical glitch earlier today which has now been resolved. I’m catching up on the last few sessions now.

The last session before lunch was between David Skok of Matrix Partners, Michael Tiemann of Red Hat, and Paul Weinstein of MySQL (sitting in for Marten Mickos), moderated by Tim O’Reilly and Matt Asay. The topic was Asymmetric competition - that is, competition between players using different rules. Think David vs. Goliath. The questions were all about competing as small, commercial open source company against a large conventional software company.

A brief aside: I guess the days of being able to talk about commercial companies vs open source companies is officially dead, as all the panelists work for commercial companies.

My favorite topic was all about how disruptive is open source, really? David Skok claims that it is disruptive, since a traditional software vendor’s biggest expenses are sales and marketing. Open source cuts these costs out IF you have a large enough community. Matt disagreed, pointing out that even with open source you end up doing a “push” to sell - its not a case of “if you publish it they will buy”. (Matt has written about this several times on his blog.)

I have to agree with Matt. Open source, at least when dealing with software aimed at businesses, is at the end of a day a distribution channel. It allows people to try out your software in a stress free environment, but price alone isn’t a sufficient reason to buy it. Junk is junk, and cheap junk is still junk. At the end of the day your product has to solve a real problem, have real value or people won’t pay you for it.

Matt asked a related question that I loved. He asked all the panelists why do people buy you and guessed that none of them would say “because of the price”. He also asked if that was true, why don’t they charge as much as the closed source companies. The answers were surprising.

• David Skok, speaking about JBoss, said it IS cost. They pitch that JBoss’ application based support pricing (vs server based) means that as you scale by adding servers, your software costs don’t go up. They emphasize that their (JBoss’) support costs are cheaper than the other guy’s maintenance fees.
• Michael Tiemann, Red Hat, said it was about value, not cost. Its about both increasing revenue and decreasing costs.
• Paul Weinstein, MySQL, said its about being different than the established closed source players. There are things that MySQL does better than Oracle, and people who need those features will choose MySQL. He also said that some of their competitor’s business practices (mandatory maintenance fees, etc) drive people to MySQL simply to feel that they, the customer, are still in control.

I like Paul’s answer the best. Open source companies need to focus on doing something better than anybody else, not just being cheaper.

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This entry was posted on Tuesday, July 25th, 2006 at 11:21 pm and is filed under Open Source Software. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.