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Martin Veitch from IT Week writes on consolidation in FOSS markets- SpringSource is to acquire support provider Covalent Technologies as demand for services to back up open-source software investments builds up, and as open-source companies sell up or pair off... The combination demonstrates the way in which open-source companies are being acquired to capitalise on open-source building blocks, notably the so-called Lamp stack of Linux, Apache, MySQL and PHP/Python/Perl.
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Other leading open-source firms that have sold out include Suse (to Novell), JBoss (Red Hat), Zimbra (Yahoo), Sleepycat Software and Innobase (both Oracle). While FOSS represents a more decentralized product development model than proprietary pratices, the efficiency benefits of FOSS development do not replace the need for FOSS firms to seek viable business capacity through horizontal and vertical integration. Paula Rooney from ZDNet comments on the drawbacks of avoiding consolidation in FOSS with the example of Red Hat-
Red Hat itself has made some acquisitions but at least one venture capitalist posed the company should have picked up more visible targets to grow its business – and ensure its survival.
“Will Red Hat survive as a standalone tech company? Not sure. They may have left too many open doors for Sun, Oracle, Microsoft and even Citrix,” said the VC. “If you think about how Red Hat could have been the open source Microsoft or Oracle - having the OS, JBoss, MySQL, Xensource, Zimbra and a desktop and server application strategy that could push Microsoft and Oracle to think differently about their business.
The issue with Red Hat is they breathe their own exhaust fumes and think they can engineer better than anyone else. Once you hit a certain level of critical mass within a company, you need to keep your antenna up and be on the lookout for competition that makes for good M&A targets. Instead, Red Hat believed it could out engineer the market. So far, that has proven to be a bad idea.” Organizational and technical pressures, alone, do not address FOSS consolidation. The most basic explanation is something FOSS supporters are challenged to admit- capital. FOSS firms now show limitations in the open source economics of non-monetary incentives and social vs. profit motive. FOSS firms are no different than any other business entities in needing capital.MySQL vice president Zack Urlocker said the company was sincere about doing an IPO but needed the deep pockets and resources of a large company like Sun to take on IBM DB2 and Oracle. It would have taken the small company five to 10 years to scale up sufficiently to compete against those rivals, he said. The increasing concentration in FOSS markets shows FOSS firms addressing the internal limitations of the movement. One must wonder whether FOSS would be more successful now had FOSS leaders not been blind to the fact that what has held FOSS back comes from within the movement.
posted by Noel Le @ 11:05 AM | Free Culture Movement
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