OStatic

This post from ZDNet and this one from Matt Asay provide some good angles on the momentous changes we've seen on the open source front this week. The fallout and immense industry changes that we're likely to see as Oracle digests Sun Microsystems are staggering to consider. As Dana Blankenhorn says, Oracle is going to control three crown jewels of open source in the form of Java, OpenOffice, and MySQL--among the most widely used projects and among those with the largest developer communities outside Linux itself. Meanwhile Matt points out that only Red Hat is thriving as a public, pure open source company, which I would agree with. So what has Red Hat done right?

At the end of last year, I made the prediction that we'll see substantially more mergers and acquisitions on the open source front this year. Researchers at the 451 Group have also made that prediction, and provided some good data to back it up.
? When I wrote about the topic, I concentrated mainly on the low market capitalizations for public open source companies and how the valuations make them acquisition targets. Now, there are signs appearing that at least one of the big, public open source companies may in fact go on the acquisition hunt itself. As PCWorld reports, Novell's president and CEO Ron Hovsepian confirmed in India today that Novell is looking for acquisitions to fill out its product line.

Reports came in from the blogsphere earlier this morning concerning layoffs at Novell. The news immediately follows Sun Microsystems' announcement that it is laying off about 18 percent of its employees, which leaves only Red Hat as the major public open source company not to announce layoffs. Matt Asay got the skinny from Novell officials, and apparently the layoffs affect fewer than 100 people. (This post was updated after earlier reports that the layoffs affected many more people.)

As the final days of 2008 drew to a close and predictions about open source in 2009 began to spread around the web, I predicted that this year will bring many more mergers and acquisitions among commercial open source companies. I based this primarily on extremely low valuations. So far I haven't been proven right, but researchers at The 451 Group are backing the concept up. Interestingly, two of the public open source companies that I mentioned as possible acquisition targets--Red Hat and Sun--are seen as potential acquirers in The 451 Group report. Here are some thoughts on their report and some notable data from them.

From the Bleak Predictions Department, ChannelInsider has a slideshow up of 12 tech companies that may not survive 2009. The list of companies comes from solution providers that ChannelInsider surveyed, and includes some surprisingly big and powerful players. It also includes two leading, public open source companies. Who made the list?

Today there are quite a lot of lists of predictions for 2009 appearing. This list of 10 predictions for Linux has some ideas that I agree with, including bright futures for embedded Linux, virtualization, Linux-based gadgets and more. (I'm not so sure Linux-based game consoles have a bright future.) It's the first prediction on the list, though, that I think will have a big impact on open source next year: More buyouts and mergers. We are in a business environment right now where people are lulled into believing that very abnormal things are normal. The unwinding of this will be a huge 2009 story in open source and in the technology industry overall.

Red Hat reported its third quarter earnings after the close of the stock market today, and the news was rosy, especially given these economic times. The earnings were up nearly 20 percent, although the company did have to contend with unfavorable exchange rates. For the quarter ended November 30th, net income was $24.3 million or 12 cents per share, compared to $20.3 million, or 10 cents per share for last year's third quarter. Revenue grew 22 percent year-over-year to $165.3 million. The profit? performance also topped analysts' expectations. Here are some of the details and what this means.

The other day, in the post How Low Can Public Open Source Companies Go? I mentioned that Red Hat, Novell and Sun Microsystems now have such incredibly low market capitalizations that the independent existence of these open source leaders is threatened. The situation is substantially worse a few days later, with Red Hat's share price more than 20 percent lower than it was when I wrote the original post, starting to look like a penny stock. Some readers have suggested that Red Hat, in particular, is a nebulous entity that represents nothing in the end. Really?

While I remain in agreement with many observers who see the economic downturn as potentially very positive for open source, I have to wonder whether we're going to see some of the leadership open source companies swallowed up in all the financial carnage. Red Hat, Novell, and Sun Microsystems are all companies that I'd like to see continue their open source leadership without the meddling of huge corporate parents, but one has to wonder how cheap these companies can get in the public market before their independence is threatened.