This article in Forbes is quite upsetting, because it shows a real misunderstanding of what the Open Source world and Open Source business world is about. It shows a real misunderstanding of the benefits for Open Source Companies and even more for the customers.
Here is an open letter than I've written to the author of this article. Note that I'm not defending JBoss Inc. in particular. The author is using Marc Fleury and JBoss Inc. in multiple examples but do generalize what he think he understood about JBoss Inc. to Open Source Businesses and to Open Source in general:
Hello Mr Lyons,
I'm quite dissapointed by your article 'Open Source Smack-down' where you seem to imply that open source companies cannot make money to sustain themselves.
I believe you are very wrong on this and there are a few incoherencies in your article.
First one thing that doesn't show up in your article is that Open Source itself is making progress with IBM's Gluecode acquisition. If IBM feels the need to sastisfy their customers with an Open Source offering based on the same model as JBoss, then it tends to validate that this model is good. So either:
1/ the OSS business model is good
2/ they want to kill JBoss because it's a nail in their toe
If it's case 2, then it's also a validation that JBoss's way is good. Maybe IBM will succeed in killing this competitor and then move back to closed source model. But if they do move back to closed source then a new competitor will start again and this competitor will be able to do it on the same previous open source code. So if they don't want to have other competitors coming up with this GOOD model, then they will stick to it.
In any case Open Source is a winner. Wether it is JBoss Open Source or IBM Open Source who cares ?
The fact that small software companies are getting a hard time staying independent when they start to have something that's working is nothing new. Remember the years when startup creators where asked what was their plan until they would get acquired by Microsoft ? Open Source or not does not change this (except maybe M$ is not yet ready to play with these new rules).
There are other things I don't understand. Why would JBoss business model of selling for a dime what the big guys are selling for a dollar necessarly doomed when some people are coming and are ready to sell for a penny ? Doesn't that mean that the price should not be a dollar, and that JBoss is right when looking to find ways to reduce the costs and have great products at a lower price. You say JBoss operates at a loss (which one ? they are usually saying they are not loosing money and growing). RedHat is not loosing money. Isn't that great for the whole industry and their customers that they manage to not or nearly not loose money and have much lower price points ? Isn't there a lot of value on the customers side that can make many many many more things with the free or low price software. Many great things that have value are done based on Open Source software. Google runs on Linux. Yahoo runs on FreeBSD. How many companies are using Apache and Tomcat ? How many service companies are selling services based on Open Source Software ?
Commercial Open Sources companies are not the only ones participating to Open Source products. Customers themselves are participating to Apache or JBoss code. Novell for example participates to the JBoss Portal development. You have to value the whole eco-system, not just the commercial open source companies.
Sure in this model it's not a "winner takes it all" model a la Microsoft. The open source business model is about making business but also about sharing. People using Open Source software participate to the testing, development, marketing of the product, the brand and the services. They get the software for free and only pay for the services if they need it. The open source companies get the chance to exist and develop, but they will be limited by the fact that they don't have all rights on the software so they will not be able to play it the way Microsoft does which is charging more and more and competing with the partners they have the year before.
These are all things that are beneficial to the customer and the companies themselves are sustainable.. Maybe they won't be companies like Microsoft, but this is actually a good thing.
The sharing amont industry actors and with customers is also something that has so much more value. Maybe a Forbes editor does not value that as much as the EBIDTA but for many of us is does have a lot of value.
So if you can make a sustainable business while sharing, even if it means not making a billion dollar company then it's fine we me and it's fine with many people in this industry.
Ludovic
Disclaimer: I'm running an Open Source Business based on XWiki (http://www.xwiki.com) the open source software I wrote and I'm starting to make money out of that work. It would not have been easier by making it closed source.
PS: Maybe Dan Lyons wrote this article because Marc Fleury responded to a previous article.
