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Why No Billion-Dollar Open Source Companies?
Glyn Moody writes "If open source is such a success, why aren't there any billion-dollar turnover open source companies? A recent briefing by Red Hat's CEO, Jim Whitehurst, to a group of journalists may provide an answer. Asked why Red Hat wasn't yet a $5 billion company, as he suggested it would be one day, he said getting Red Hat to $5 billion meant 'replacing $50 billion of revenue' currently enjoyed by traditional computer companies. If, as is likely, that's generally true for open source companies, it means they will need to displace around $10 billion of proprietary business in order to achieve a billion-dollar turnover. Few are likely to do that. Perhaps it's time for managers of open source startups to stop chasing the billion-dollar dream. If they don't, they will set unrealistic ambitions for themselves, disappoint their investors, and allow opponents of free software to paint one of its defining successes — saving money — as a failure."
There are almost too many to count when it comes to billion dollar companies involved in open source. They are the main motivator in new Linux kernel development and amongst 100's of other projects including Apache, Perl, MySQL etc you will find @email's from dozens of billion dollar companies in the dev-lists. O'Reilly himself squashed some of these rumors about open source himself over 11 years ago now, so why discuss this? It is just going to turn into a flame war about licenses and corporate responsibility.
An Education is the Font of All Liberty
You mean the same multiple open-source side projects that add little to nothing to their bottom line? Google gets it's money from it's proprietary search engine and ad platform.
Why no building dollar bicycle-pump manufacturers? Why no billion-dollar indie record labels? Why no billion-dollar oil companies that have not polluted? Why are there no billion-dollar hockey franchises?
Asking why there are no "billion-dollar" open source companies is kind of stupid. Considering how much of the very fabric of the Internet and the web are open source, I'd suggest that if "open source" disappeared tomorrow, a lot of "billion-dollar" companies wouldn't be worth anywhere near a billion dollars.
This story is the Slashdot equivalent of "If you're so smart, why ain't you rich?"
You are welcome on my lawn.
A quick search on the Internet revealed that a lot of them get bought out.
http://royal.pingdom.com/2008/02/06/the-seven-largest-open-source-deals/
Sun buys MySQL, $1 billion, 2008
Sun now has their hands on the world’s most widely used open source database.
Red Hat buys Cygnus Solutions, $675 million, 1999
Red Hat started the open source acquisition race early when they bought Cygnus Solutions, providers of open source software support.
Citrix buys XenSource, $500 million, 2007
Considering how hot virtualization is right now, we can see why Citrix bought XenSource, the company behind the Xen virtualization software.
Yahoo buys Zimbra, $350 million, 2007
Yahoo already have their own email services, and with Zimbra they got an integrated email, messaging and collaboration software.
Red Hat buys JBoss, $350 million, 2006
Red Hat strengthened their SOA offerings by buying the JBoss Java application server.
Novell buys SUSE, $210 million, 2003
Novell got their own Linux distribution by buying SUSE.
Nokia buys Trolltech, $153 million, 2008
Trolltech is the company behind the Qt GUI framework which is used by the popular Linux desktop environment KDE.
Try asking why are there no billion-dollar companies using 100% CLOSED source software?
The answer is simply because billion dollar companies dabble in a bit of everything. Oracle has a lot of open source products. It also has a lot of closed source products. Same with IBM, Microsoft, Google, Apple, etc etc. If you don't consider these billion dollar companies to be open source companies then you can't consider them to be a closed source companies either. They all dabble in a bit of both because they are all really big.
And the advantage of this is that customers who call with a problem actually get a useful answer. They're paying for that support, rather than for the license.
Open Source is only 90% cheaper if your time is worth 10%.
Best joke ever.
If I had to rate difficulty of OS maintenance and setup, it would be:
Microsoft (Any), Most difficult
Solaris
Mac OS X
Linux (Any except gentoo), easiest
>>>the software is free, and the company pays for support.
What if I don't need support? That's why Red Hat and other liberated software companies will probably never see 1 billion. Bottom Line: A lot of us are cheapasses. ;-)
"I disapprove of what you say, but I will defend to the death your right to say it." - historian Evelyn Beatrice Hall
All you have to do is pop-in a CD and install. After that the system usually has everything the user needs (web browser, Microsoft Office, etc).
I don't know where you're getting your Windows CD's but I've never seen one that came with a preinstalled copy of Office. However, practically every copy of Linux comes with OpenOffice.org.
my Linux laptop refuses to execute flash websites (like disney.com or tv.com)
Which Linux? Which Browser? I've never seen Ubuntu fail to install and run Flash and version 6 of the Chrome Browser comes with Flash nowadays.
And I can't get it to talk to my Netscape ISP.
I can't get Windows 7 to talk to my scanner. I'll talk to my scanner manufacturer and you talk to your ISP.
The soylentnews experiment has been a dismal failure.
Very large companies need to have a disaster recovery plan in place, and contacts to call when downtime is costing money. Especially outsourcing or service providers. If you run linux in this environment, "my team knows linux" is not going to cut it. You want to be able to place the blame on the "vendor" as opposed to being responsible yourself. So you don't modify the code, and you buy the support package.
Red Hat should be very profitable, given that, except Microsoft makes sweetheart deals with the big companies to keep them using microsoft tools. I have a full MSDN subscription, which would cost me piles of money but most likely costs my employer very little per head. I can download and use and develop with anything I want, for free. It only costs money because the production servers have to be fully licensed and legit.
Microsoft is everywhere, so they can afford to give away freebies, charge for just the production installs, and still make boatloads of cash. If you take a look at the revenue compared to actual software usage, I wouldn't be surprised to find that Microsoft is giving away as much or more software than Red Hat. Direct end-user sales are just the icing on the cake - someone paying full price for Windows is very rare, it's usually OEM cost, which is approximately 10% of the cost. So Red Hat's numbers are probably not far off Microsoft's numbers, it's just reported as software sales vs. support costs. And even that difference is a technicality - Microsoft still charges for support depending on what you need and where you got the software.
Fundamentally, it's the same business model. Give lots of software away and make up for the sales losses with support charges - but with OEMs in the middle it's not transparent to the end users. Only the businesses see how the model truly works.