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Number of Proprietary Software Vendors Adopting Open Source Is Increasing Significantly, Says The 451 Group
The 451 Group - February 15, 2007
An overall trend among proprietary software vendors to adopt open source software approaches is increasing significantly, according to a study by The 451 Group. The analysts say the trend includes companies making a major change to their business model -- such as shifting away from traditional proprietary software license fees -- as well as companies "going open" in more limited ways, such as releasing some code using an open source license.


The majority of software vendors that have made a move to open source have only done so in the past year or two. The results of these early cases will influence the future direction of proprietary software vendors' selling practices and end users' buying preferences.

"Open source is changing the relationships between software vendors and their customers. This is not only the case for the level of participation from a software vendor's customer base in the software development process, but also in the level of risk incurred by an end-user organization in doing business with a software vendor, especially a startup," said Raven Zachary, Senior Analyst and Practice Head for Open Source at The 451 Group. "Open source has become the new form of code escrow, allowing smaller software vendors and startups to compete more effectively for large enterprise customers by providing the code and a community for ensured long-term viability."

451 analysts found that the justification for a vendor going open varies, but in most cases it relates to competitive pressure in one form or another -- the desire to retain or grow market share, the perceived value of first-mover advantage, entering an existing and mature market or, in the case of a distressed business model, where open source provides a final alternative to generate demand.

"Although services are often considered the most likely path for software vendors looking to generate revenue from open source, almost half of the 31 vendors we interacted with for this report indicated that the greatest revenue opportunity was in commercial licensing," said Zachary.

About the market research report

The 451 Group 80-page CAOS report, "Going open – software vendors in transition" by Raven Zachary with Martin Schneider and Lee Bruno, focuses on the emerging trend of proprietary software vendors transitioning to an open source business model -- including the elimination of software licensing fees as a requirement, public source code availability and a greater reliance on services as the revenue engine. It covers the impact on proprietary software vendors and end users alike, and includes a primer on 'going open' and best practices from a number of software vendors that have already made the transition.

This report also includes indepth competitive assessments of the following companies: Covalent Technologies, Hyperic, Ingres, Intalio, JasperSoft, Laszlo Systems, OpenClovis and Qlusters. It also includes information on more than 25 vendors that The 451 Group classifies as having "gone open