Commercial Open Source: Price Matters
by Mike Gunderloy - Jul. 28, 2008Comments (1)- Related Blog Posts
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 The Open Solutions Alliance (which you might recall as one of the sponsors of the Open Source Census) has released the results of a survey it did recently looking at business trends in commercial open source. The results paint a picture of an industry segment doing well, with a few challenges looming but easy continued growth.
Although most open source proponents probably think of the code's openness as its best feature, that was not the #1 driver for adoption of open source in the survey participants' customers. Rather, 79% cited price as the most important reason for choosing open source solutions. While lower prices are a consequece of open source code (at least, if you can get a strong contributor community to write a good portion of your code for you), this answer does point up one threat for commercial open source: if you're selling because you're cheaper, there's a limit to how much you can charge your customers. You're also vulnerable to price cutting from larger competitors.
Of course, price isn't the only reason to choose open source solutions; 60% cited access to source code and reduced lock-in, and 52% cited customizability. Still, that does leave room for a lot of open source software being sold on the basis of price alone.
Also interesting are the statistics on whether open source software is mainstream: 88% of the respondents said that open source infrastructure and systems software was almost or definitely mainstream, but the number for applications software was 73% (and weighted heavily towards "amost mainstream"). The picture emerges of scrappy vendors selling software based on price and (to a lesser extent open code) even though they're facing resistance. I'd love to know how the respondents interpreted "mainstream": were they judging on the basis of feature, or the basis of customer acceptance, or something else?
The best news perhaps is the economic outlook here: 83% of respondents expect a year-over-year revenue increase in 2008 from open source sales and services. Again, some of this may be price-driven: 78% think the poor state of the economy is helping drive sales.
Finally, a caveat for those who want to depend on these numbers: the full survey involved only 45 responses, and they were apparently self-selected (with the survey available online). This is a small enough sample that one should be hesitant about drawing industry-wide conclusions from it, though the numbers reported do seem reasonable.
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