Recession: A Boon for Open Source?

by Sam Dean - Mar. 07, 2008Comments (7)

Sun Microsystems executives, speaking at last week's Sun Tech Days in Hyderabad, India, were quoted as saying that a widely expected recession in the United States would boost open source, instead of negatively impacting it. They also made the point that since Sun went predominantly open source, the company has fared much better financially than it did before. I don't doubt either of these points, but there's more to say.

Whether the United States runs into an extended enough period of negative real economic growth (two or more successive quarters, according to the classical definition) or if the country simply sees a noticeable slowdown in economic growth, IT budgets are guaranteed to be restricted--possibly dramatically. "During an economic slowdown, not everything slows down [and] IT projects will continue to be undertaken," Rich Green, Sun's executive vice president of software was quoted as saying. "But IT budgets will be reduced," and he noted that lower cost options, including open source, would get a boost. Green was also quoted as saying that FOSS is changing the world, although he stopped short of saying that proprietary software would go away.

Not long ago, it would have been unthinkable to run an entire company of any size on open source software, but that's not true anymore. Enterprise-class database applications such as MySQL, customer relationship management applications such as SplendidCRM that can compete with paid offerings such as Salesforce.com, and growing numbers of useful, free on-demand web applications are all combining to make it a serious proposition for some companies to have software licensing budgets equal to zero--or nearly so. The drive to achieve that, for lots of companies, would be accelerated by a recession.

Green was also quoted as saying that Sun's revenues have increased by 13 percent year-on-year since it went predominantly open source. That strikes me as the first leg in a number of open source-related events that could benefit Sun in a big way. As Reuven astutely pointed out one of the big boons of Sun's ownership of MySQL is that it can offer the classic combination of hardware, operating system and enterprise-class database to companies at a fraction of what IBM and Oracle will charge. In fact, IBM and Oracle may be forced to come up with a good answer to Sun on that front.

Do you think a recession would accelerate open source adoption?


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7 Comments
 

I cannot see how it would not. First of all, the sales cycles for traditional software companies would only grow longer. Executives, not wanting to put off implementations, but not getting budget, would, of course, go on to look at 'cost-effective' options. Plus, the flexibility and maturity that several of the top apps continue to provide would be too good to pass up, even in good times.


0 Votes

While it is appealing to try to tie a slowdown in the overall economy to the uptick in the usage of Open Source software, I don't think that's the entire story. I do believe Open Source software will continue to be adopted increasingly within the Enterprise (both large and small), not only because of tighter IT budgets, but because there are companies like Sun (and IBM and HP) that are trusted partners of IT and stand behind these solutions. At the end of the day, it comes down to solving a problem with the best solution (for that particular situation, customer, timing, etc.) in a given time and budget constraint with the least amount of risk. Open Source is increasingly seen as "less risky" and thus savvy IT buyers are using it more (but not always!) instead of feature-laden (read that bloated) software.


0 Votes

I think as you look at smaller enterprises, and especially the smb market, there seems to be a natural proclivity to using OS Software, mainly because of feature-rich product at little-to-no direct cost. Unfortunately not all Open Source software is easy to use, and hence the adoption is not as rampant as it quite easily could be. Ease of use implies good documentation and good support on the web. These things are still, for the most part, lacking in pure-play OS Software apps. Until that changes, the growth will remain hampered.


0 Votes

I agree that support is a big reason why open source applications aren't chosen in favor of standard commercial applications that offer support. Support is a huge cost center for commercial software companies--and it's not an accident. However, the quality of many core open source applications has gotten to the point where, say, one smart IT person serving a staff of 100 in supporting an open source app can definitely do so. And, if that one smart person needs help, his link to support for many open source apps isn't expensive.


0 Votes

Of all the projects to mention when referencing open source why would you mention SplendidCRM? Splendid is just a fork rip off of SugarCRM that was ported over to the MS stack.


I dont fully think it will be a boon just for open source but for SaaS in general. Any solution that will reduce cost in any way shape or form.


0 Votes

Absolutely. There are three outsourcing giants who will gain the maximum out of it.


Infosys

TCS

Wipro


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0 Votes

A lot of enormous companies got their humble beginnings during lean times, like the Great Depression or the Long Depression (1873 – 1896) before it – back when there were definitely no payday loans online. During the Long Depression, two companies got their starts: General Electric started by Thomas Edison; and two guys named Proctor and Gamble opened up a household goods store. Today, these companies are mammoths, and unlike the supposed financial whizzes on Wall Street, don't need payday loans online to bail them out.


0 Votes
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