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If some of you, my readers happen to live in the Bay area, and you are either an entrepreneur, industry professional or investor - listen up!
I’m going to spend the next three days at Global Technology Symposium at Stanford University. This year the symposium will be hosting a start-up pitch competition for early stage companies looking for financing from institutional investors. Early-stage global technology start-ups will pitch their presentations to a panel of global venture capitalists.
I was told there has been over 60 companies evaluated, and 6 companies selected to present.
This is going to be a great opportunity to network with 100-150 entrepreneurs andventure capitalists from all over the world, and see what kind of start-ups are getting traction. The goal of the event is to provide forum for live networking and exchange of cutting edge ideas on emerging technologies coming from countries like Brazil, China, India, and Russia.
Now, here is a hint - this event is a portion of the symposium agenda which does not require registration. If you are around and like the opportunity - see you there!
What: Business Plan Competition at Global Technology Symposium, Stanford University
When: Wednesday, March 25th, 1:00 pm-4:15 pm
Where: Plug and Play Tech Center, Sunnyvale
John Nogrady, Director of Strategic and Emerging Business Team, Microsoft
Ben Dubin, Managing Partner, Asset Management Company
Howard Hartenbaum, Managing Director, August Capital
Brian Mesic, Partner, Anthem Venture Partners
Andreas Stavropoulos, Managing Director, Draper Fisher Jurvetson
Mark Sugarman, Managing Partner, MHS Capital
Richard Wolpert, Managing Director, Mail Room Fund
I just got back from Dr. Dobb’s Architecture & Design World 2008, where I was speaking on the future of mashups. This year’s conference was cool, with many attendees wearing shorts and hanging out in Chicago at night. The event is much smaller than mega events, such as Oracle World, but you can see the geeks here and there. Speaking of Oracle World–when it comes to town, attendees are flooding San Francisco downtown like a hurricane and you feel like a herring within 15-block radius from Moscone.
During Dr. Dobbs, I went with a couple of local friends of mine to Kingston Mines blues bar. We met a couple of cool folks, chatted about history of blues and its South-East roots. Next day in the speaker’s room I figured out that these two folks where fellow speakers–Sonya Lowry of the National Optical Astronomy Observatory and Michael Rosen, CTO of Wilton Consulting Group. The world is flat (Sonya, no offense:), the world is small…
Last, but not least, I wanted to say thanks to Amber Ankerholz, Conference Manager for making the conference a blast.
To close this post, I wanted to share with you my speaking schedule for next week–I would love to meet you face-to-face, if you are attending one of the following events:
LinuxWorld 2008 in San Francisco August 4-7 If you happen to be attending LinuxWorld 2008 in San Francisco on August 5, I invite you to stop by the session “Case Study: Professional Open Source at Autodesk” where Jason Pratt of Autodesk and I will be sharing our experience applying open source Apatar data integration software at Autodesk. For those who want to attend, but can’t afford it, I have one (1) full conference guest pass to give away to the readers of my blog on a first-come first-served basis. One full conference pass is courtesy of LinuxWorld for all speakers. Call Ludmila Radzevich, our VP of Business Development at (213) 784-4915 to arrange getting this conference pass.
Web 2.0 NY Best Practices Conference in New York on August 7
On August 7th I will be sitting on the Web 2.0 NY Best Practices panel on how to monetize mashups. Sorry, no free passes here for Naked Open Source readers:)
I’m sitting at McCarran International Airport, waiting for my red-eye to Boston. Last night I stumbled into Doug Levin of Black Duck Software at Mandalay Bay’s Starbucks. The first thing Doug told me was that “Next Monday we are announcing acquisition of Koders.Com”. Doug’s fledging company now has a search engine for open source software source code at its disposal with all strings attached to it such as activity data. Doug did not disclose details of the transaction, but said “It was a good opportunity to move our business forward.
A few weeks earlier I’ve received an email from Mark Kofman, the founder of SourceKibitzer, that he got funded by Ambient Sound Investments (ASI) and Serenda Estonia. The backers were the guys who founded Skype and Rate.ee a while ago, and now became VCs.
SourceKibitzer is a start-up that has invented unique metrics and performance indicators for software teams. Apparently a missed opportunity for Black Duck - it could be a great asset to accelerate its growth and add one more enterprise revenue stream with tremendeous growth opportunities. Go SourceKibitzer, go!
There was an open source panel at Interop called “Open Source Governance: Recognizing & Dealing with the Risks of Free Software “.
Panel consisted from Brian Gentile of JasperSoft, Dominic Sartorio of Open Solutions Alliance,
Doug Levin of Black Duck Software and Ross Turk of SourceForge, with Daniel Kohn of The Linux Foundation moderating.
What I did not expect was to see an attendee scream “We’re not here for the benefits of open source. If you’re not going to take my question I’m going to walk out.”
Indeed, he did walked out!
Last year the “Software Conference” was acquired by CMP Media (the producers of shows such as Interop, VoiceCon,
Web 2.0 Summit, Web 2.0 Expo, the Enterprise 2.0 Conference).
I really liked the “Software” conference when it was independent. To me it lost its flavor with the crowds of Interop people, while outsourcers occupied the entire expo floor.
Overall, quality of the open source track was good. I think only two sessions were sponsored (about SaaS and virtualization). It would be great to see some real world customer stories at the show next year.
I’ve attended Mashup Camp 4 this week. It started with a two-day Mashup University, followed by a two-day Mashup Camp.
Monday, July 16th
Several vendors who sponsored the event presented their mashup development tools.
I’ve seen Zude product, announced in April with the help of ZDNet’s David Berlind. Nice UI, Dapper and OpenKapow did demos too. Google Gears appears to be a great enabler of developing applications that work both online and off-line.
John Herren, whom I met first at Mashup Camp 3 at MIT in Boston, MA this January, presented Introduction to Mashup Development. LignUp demo was cool too.
Tuesday, July 17th
2 pm. Bungee Lab’s Brad Hintze demoed their new technology. I requested access to Early Access Beta for Bungee Connect, and soon got access code by email.
4 pm. People from IDG called about the upcoming LinuxWorld trade show where Apatar will exhibit, and I had to change the booth delivery logistics and missed the rest of the demos:(
6 pm. On Tuesday night there was a pool party sponsored by StrikeIron. Over wine Mark Madsen and I developed a concept of the mashup “Cold Call Assist!”. The idea is to improve performance of sales folks working with Salesforce.com by gathering and displaying recent news about the prospective customer company and their competitors, and provides a list of restaurants near the prospect’s location along with a map for directions, making it easy to suggest meeting for lunch or dinner in an area close to the prospect. Next day we began working on creating this mashup using IBM QEDWiki and after several hours of work we got the mashup working. Overview of mashup is available at IBM QEDWiki page here with lessons learned documented and demo of the actual mashup application here.
Wednesday, July 18th
On Wednesday I moderated a session called 5 Ways to Monetize Your Mashup Development Skills. It was a nice discussion, together the participants brainstormed the possible options for mashup-driven business models, discussed ideas how fellow masher-uppers could leverage existing opportunities to make money and start new companies. Speed geeking was cool, I demonstrated how Apatar Enterprise Data Mashups extracts data out of Salesforce.com joins data from MS SQL and generates an RSS feed at ApatarForge.Org
After the session I did a bit of Speed-Geeking (for those who don’t know what Speed-Geeking is, look here and here).
Wednesday night – working with Mark on implementation of our mashup. Late, very late. I don’t know when Mark finished, but he was still working when I left at 1 am for a conference call with my team in Belarus.
Thursday, July 19th
10 am. Got an email from Mark which he sent at 5 am! He will be late. I’m submitting our mashup for the contest.
10:30 am. I decided to develop one more mashup using IBM QED Wiki and StrikeIron SMS widget. The idea is to enable any Salesforce.com user send SMS messages to any of the contacts in Salesforce.com.
1 pm. Salesforce.com-StrikeIron-QEDWiki-SMS mashup is ready. Very hungry. Lunch is good, even better than on Wednesday:).
3 pm. I moderated a session called “Apatar Enteprise Data Mashups: Mix information between MS Excel, RSS, MySQL, MS SQL, Flickr, Amazon S3, and salesforce.com without writing a single line of code.” Attendees were very active and asked lots of questions. Bill Graham of CNET Networks requested a capability for Apatar to process large quantities of data by threads, with the goal to speed up processing of ETL transformations.
4 pm. WOA! The mashup which Mark and I developed was named the Best of Conference Business Mashup. Now we have to split the main cash prize of $1,500.00 sponsored by IBM, Dapper, Kapow, and StrikeIron. Mark and I, now the happiest mashup campers in the world, decided to sponsor the first round of beer for the attendees of the Camp at a bar nearby. David Berlind announced the Mashup Camp 4 officially closed.
6 pm. Masher-uppers are having a party at the bar called Tide House in Mountain View. A friend of mine who lives nearby Andrew Filev, CEO of Wrike.com, joined the party which was filled with geeky discussions about the future of mashups.
Photos from MashupCamp4 are available at Liz’s photo stream .
Are you geeked out? I’m:)
Apatar team is getting ready to head out for two trade shows - OSCON and LinuxWorld. Although the two conferences may sound similar to you, they are very different. As ZDNet’s Dana Blankenhorn puts it:
1. OSCON is a theater. LinuxWorld is a show floor.
2. OSCON is intimate conversation. LinuxWorld is hard negotiation.
3. OSCON is beer. LinuxWorld is wine.
4. OSCON is polo shirts. LinuxWorld is business suits.
5. OSCON is a code wizard. LinuxWorld is a star salesmen.”
I would like to invite you as a Naked Open Source blog reader to attend (passes will be provided by Apatar): 1. O’Reilly Open Source Convention, taking place in Portland, OR on July 23-27, 2007.
O’Reilly’s OSCON is perhaps best conference for open source developers. Speakers include Chris DiBona from Google, Larry Wall creator of Perl, Guido Von Rossum creator of Python, Rasmus Lerdorf creator of PHP, Robert “roml” Lefkowitz, Matt Asay from Alfresco, Brian Aker from MySQL, Mitchell Baker from Mozilla, and many others.Parallel to OSCON, there will be an OSCAMP, an “open” space for meeting, for learning, for connecting, for writing code … The agenda is created and modified “on the fly” by the participants. You can add to the agenda any issue that importance to you. Most of the key points and next steps will be captured in Wiki online so that the entire Freedom/Libre/Open community can benefit from our work. To register for OSCAMP, follow the instructions on the Registration page. 2. LinuxWorld Conference and Expo, taking place in San Francisco, CA on August 6-9, 2007.
LinuxWorld is a more business-oriented event, and a good place for to catch up with latest developments in the world of infrastructure, Linux and Open Source software. Speakers include Brian Aker of MySQL, Matt Asay of Alfresco, John Roberts of SugarCRM, Raven Zachary of The 451 Group, Andrew Morton of The Linux Foundation, Werner Vogels, VP and CTO of Amazon Web Services, Kevin Kettler, Chief Technology Officer of Dell, Diane Greene, President and CEO of VMware, Ron Hovsepian, President and CEO of Novell and many others.
Attendees will be able to participate in the developer’s contest for the most innovative Apatar DataMap (and win a 80GB Video iPod), find out more about Apatar Data Integration, view live presentations and learn about the upcoming features. If you are interested in attending any of these conferences, email me your name, and I will register you for the shows.
The short answer is, “yes,” but I believe it is conditional to certain changes that have to happen first. Let me focus on what prevents mashups from evolving into the enterprise space right now. According to Gartner, corporate developers spend approximately 65 percent of their effort building bridges between applications. Think about information that’s stored in a typical enterprise and how it interacts with information on the Web. The problem each enterprise faces is how to let customers, partners, vendors, and everyone else with interest in a company use the company’s data and services within their own enterprise applications. A sweet spot is a reliable way for the information to be used inside and outside of the enterprise easily. If you look closely, there is a disconnect between a huge amount of infrastructure being built for the future of “cloud computing,” and the capabilities of today’s companies to effectively link data between on-premise and on-demand applications.
But there are three problems with existing middleware products in the enterprise market:
a) The tools are expensive.
b) The tools are complex to install.
c) The tools are difficult to implement and maintain, and most require a serious work effort (architecture, configuration, programming, and custom coding and testing) before delivering any value to the end user.
What kind of middleware does Enterprise 2.0 need in the area of information integration?
I wrote about mashup building software tools in this post. Today these tools lack enterprise data integration capabilities, especially in the area of batch-type data integration, where large chunks of data (in the tens of megabytes, or even gigabytes range) have to be moved in and out. What we see now is mostly a web scrapping/RSS/light-weight XML approach to creating situational applications, or mashups. Enterprise 2.0 needs middleware that can access data both on a local network (like MS SQL/MySQL/Oracle databases and files), and on-demand applications and systems in “the cloud.” The tools should be much easier to implement and cost 5x to 10x less compared with traditional information integration tools available to the enterprise market from companies like Informatica, TIBCO, etc.
I separate all information integration into two distinct categories: batch and real-time. These categories have been powered by what we know as Extract-Transform-Load (ETL) and Enterprise Service Bus (ESB) respectively, where ESB inherited EII/EAI with the emergence of SOA. Designed for cloud computing, Middleware 2.0 across both of the above categories should come in as many as three packages:
b) Built into mashup building tools, such as Dappit, Teqlo
c) Built into emerging enterprise software available on-demand, such as DabbleDB, Blist, and Swivel.
During the next two to five years, Middleware 2.0 will evolve to quickly and inexpensively link “the cloud” and the existing on-demand and on-premise applications and databases across the enterprise.
My next post will be about the long tail of information integration. I will take on how the technology adoption of data integration tools looks today, and how it will look in the near future.
In this post, I will describe the top three drivers influencing the adoption of Web 2.0 in Enterprise 2.0. In my next post, I will express my opinion on whether mashups are capable of pushing Web 2.0 into the enterprise arena.
Trend #1: Shift to Cloud Computing
In “cloud computing,” documents and business information are managed online. Google is rapidly building an amazing platform for rolling out on-demand applications on a worldwide scale. Very soon, Google Apps will be a good-enough solution for millions of small business to solve most document management and collaboration problems. Have an idea where all these multi-tenant applications and zetabytes of data will be hosted? Google will spend $500M $3B this year to build the largest data center in the world. Services like Amazon EC2 (covered here and here) offer pay-as-you-go fully managed server time. On-demand computing is going to completely change enterprise IT architecture. When it only costs $70 a month for a dedicated virtual server with fantastic connectivity 24/7, and you can turn them on and off as needed, why would you want to mess with hardware on-premises?
Trend #2: Growth of Web 2.0 Content and Infrastructure
Since 2005, many successful venture capitalists have been trying to find yet another promising Web 2.0 startup to add to their portfolios. Pundits speculate that during the last two years close to a billion dollars were invested into Web 2.0. During the next five to seven years all this money will pull off a lot of infrastructure with an enormous amount of content and data on it. But in order for a Web 2.0 company to secure longevity, aggregating terabytes of user-generated content and having lots of servers to serve traffic to gazillions of registered users is not enough. You’ve got to create an ecosystem. How will these newly-minted Web 2.0 companies create ecosystems? Ecosystems will come through APIs and data mashups with other websites. ProgrammableWeb maintains the best up-to-date API directory. Look at how fast APIs are being added to their database. In a very short period of time, the key advances of Web 2.0 (namely collaboration and new ways of sharing information) will become an attractive target to benefit enterprises.
Trend #3: Mashups
2007 has been named by BusinessWeek as “the year of the widget.” Widgets are small embeddable components that can seamlessly integrate on third party sites and can deliver content from beyond the realm of the site. To help users create widgets, a growing number of companies out there are developing mashup building tools:
I learned about Dapper at the Mashup Camp unconference at MIT on January 17, 2007 where I met Eran Shir and Jon Aizen, the company founders. Dapper is an impressive new online mashup tool that takes the concept to the extreme, making it possible to convert and reuse just about any source of information on the Web, including that in plain old HTML. This promising startup has recently closed a round of financing with Accel Partners.
DataMashups.com is a new highly Web-centric mashup tool complete with a WYSIWYG “edit” mode.
Grazr is an application development system for feeds and their GrazrScript is a programming language for feeds. John Musser of ProgrammableWeb posted a recent news update on Grazr closing $1.5 million Series A round of financing.
JackBe’s JackBuilder product is a browser-based mashup tool to create mashups called “Rich Enterprise Applications” or REAs. JackBuilder is an entirely Ajax based IDE that allows widgets, components, and services to be integrated together into enterprise mashups
All of these tools allow for building a quick and dirty SOA, and are aimed at technology enthusiasts. Focused on web screen scraping and RSS, today’s mashup design tools could hardly be applied across the enterprise sector. But that will change. Mashup technologies can and will disrupt enterprise applications. During the next three years, mashups will open up a new enterprise application market, providing business users and IT departments with a quick and inexpensive approach to develop and implement applications. And during the decade following 2010, maturing mashup building technologies will shrink the enterprise application market. In my next post, I will write about whether mashups are capable of pushing Web 2.0 into the enterprise space.
UPDATE FROM MARCH 18, 2007: Folks, the latest news… Jack is OK now, and has received a lot of attention from the community willing to help.
I just received this post by RSS from Matt Asay’s blog. Jack Aboutboul, who is in charge of Fedora’s marketing, is very sick. He’s looking for help:
We are part of a very smart and very well connected community of people, especially when it comes to scientific matters. I know that a few years back Patrick Volkerding, creator of Slackware, had some crazy rare health issues and by posting online was able to find someone who led him to a proper remedy. I hope we have enough smart people around that will be able to do the same for me. Please pass this on to anyone you know, its a desperate plea for help. Obviously pass it on to scientists, doctors, pharmacists, etc. but please also pass this amongst non-geeks because I’m sure someone out there knows someone who can help.
If you have any ideas, please pass them along to Jack using contact information on his blog.
Six days ago, I wrote about the key factor influencing disruptive market strategy – New Market. This post summarizes six additional characteristics of a truly disruptive open source business. Most of them derive from one of the best books I can think of in the area of disruptive business models, The Innovator’s Solution: Creating and Sustaining Successful Growth by Clayton M. Christensen. Here are all “Seven Qualities” as of March 18, 2007:
1. New Market
I believe that a new business model alone doesn’t make it, be it open source, or SaaS, or whatever. The key idea is that in order to be truly disruptive, an offering has to address a large underserved market segment, and create a NEW market in the first place. In commercial open source, the initial target is never the existing users of expensive, proprietary software. What the heck can they do with your scrappy product? The best target market is a highly growing underserved market with a lot of demand and little to no supply. Similar to what MySQL offered to all Internet small businesses who can’t afford MS SQL or Oracle database to power an e-commerce shop or a content management system of a micro business with little to no revenues. Then move up the stack and target the ones who have the budget, but are still not willing to pay 5K-20K for a piece of software if there is a cheaper or better yet FREE alternative.
2. Low Price
It takes 5x to 10x the price advantage between what your proprietary competitors charge for a solution and what a commercial/supported package of your software costs in order to create enough disruptive “leverage” to cross the chasm and enter the mainstream market.
3. Good-enough Product
A product/solution should be good enough to solve 50% to 80% of the most common customer needs. At the beginning, your competition will not consider such an offering as a threat at all, as it doesn’t have all of the “things” and “features” their BMW-driving sales force is communicating to prospects all day long. Their customer and your customer are two different animals.
4. Easy to Implement
The product should be simple enough that it can to remain easy to implement and extract value from. Take Mule, a highly successful open source ESB as an example. Mule can be installed in several minutes compared to hours to install and configure proprietary products from EII/ ESB vendors such as TIBCO. At Apatar, we strive to do the same and make sure Apatar ETL can be installed in two minutes or less.
5. Community of Loyal Users
There should be enough supporters willing to contribute their time to requesting new features (compliment Product Marketing), testing your software and reporting bugs (compliment QA), and developing new product functionality (compliment R&D).
6. Standard Technology
A disruptive open source product/solution should utilize widely used technologies, which have already become or could become a “commodity”-type component in a technology stack, LAMP or Java.
7. New Distribution Channels
The traditional distribution models are not good for a truly disruptive product. No BMW-driving sales folks to “push” your product into the market (unless you are really short on time and have VC backing to support some direct sales). The Internet is replacing most roles in the marketing, PR, and sales functions of an emerging open source start-up.
If you have ideas about any additional components that make an “essential” package of a disruptive open source software start-up, I’d love to hear about them.
A few months ago, prior to the release of the Apatar Community Preview, Matt Asay asked me via email whether Apatar competes with ESB products, specifically with MuleSource and ServiceMix. After I responded to Matt by email, I thought about posting my response to a blog, and Matt said, “Go ahead.” In fact, two people asked me a similar question during the MySQL User Conference, which reminded me about the email that I’m posting below.
The short answer is that Apatar is an ETL (Extract, Transform, and Load) technology; ETL does not compete, but compliments ESB products across different information integration scenarios. ServiceMix and Mule are ESB products. ESB is a standards-oriented (in the SOA age) EAI/EII technology. Therefore, I will address the comparison question, “ETL vs. ESB” from an ETL vs. EAI/EII point of view. EAI, by the way, is a term coined by Dave Linthicum in his book (published in 1999) called, “Enterprise Application Integration.”
ETL is geared toward data movement, typically in batch modes across the enterprise. It is “pull” technology and works on user’s demand or on schedule.
ESB is a “push” technology, sending messages when they occur.
|ETL is a “pull” technology, works on demand/on schedule.
|ESB is a “push” technology.
|ETL cannot time-out, decay, or issue transactions to front-office applications during transformation processes.
|ESB is capable of timing and decaying data in queues, escalating information content to the right decision-maker on that piece of content.
|ETL is fully scalable, capable of loading massive batches of data in parallel.
|ESB is not suitable for massive volumes of data because of its service bus architecture (by network, and source system speed to X transactions per second).
|ETL can hook to ESB/EAI middleware as just another feed, if desired.
|ESB’s primary job is to integrate applications, opposed to Data Migration, Replication, Data Warehousing, and BI.
I can also refer you to a comparison table I found at http://www.coreintegration.com/solutions/di.asp:
|Unit of work
|Set of transactions committed within an ETL cycle interval
|Single business transaction
|Single business transaction
|Persistent Auxiliary Tables
|No. Transactions applied directly to applications’ tables
|No. Virtual database
|Managerial reporting, trend analysis, multi-dimensional aggregation
|Near real time synchronization of operational data where transaction commitment is dependent on state of related transactions
|Near real time decision making based on most current information in operational systems. No update.
|What it’s not
|Not source of record. Does not support transaction processing
|Not appropriate for ad-hoc analysis and reporting
|Not a virtual data warehouse
At the end of the day, I think that business users have to consider their unique requirements, and pick the technology accordingly. There are different horses for different courses. Be it Apatar, Mule ESB, DataStage, Yahoo! Pipes–whatever works.
In my opinion, as more vendors enter the information integration space, they are confusing things even more because of the differences in technology they are offering. No two are alike, but all are calling themselves data integration vendors. Go figure.
Josh Kopelman of First Round Capital, an early stage investor in many Web 2.0 emerging leaders (including Wikia, Mashery, and Odeo), posted an excellent article on the emerging business models across many industries:
“Here at First Round Capital, we see a lot of business plans for consumer-facing internet services. Most assume a significant portion of their revenue comes through advertising — but almost all of them have a “premium/subscription” option. Typically that subscription revenue accounts for 20-40% of total revenue, and is based on a very low ($1-5/month) subscription fee. However, that is rarely how things play out. Most entrepreneurs fall into the trap of assuming that there is a consistent elasticity in price - that is, the lower the price of what you’re selling, the higher the demand will be. It happened in music. It happened in movies. And it’s happening in directory assistance. Now I’m looking for other industries that are going to be converted. If you’ve got a plan that uses the free model to get that first penny and disrupt an industry, I’d love to hear about it. It’s a great way to shrink a market.”
When reading this, IT folks think, “open source.” Looks like that’s exactly what is happening in enterprise software. Open source vendors play the price elasticity game in the demand/price equation. Commercial open source vendors are sizing down their markets by offering free to low-cost solutions where the buyers get far more value for the dollar. But that’s only on the surface.
What I would like to describe is why open source/free software is not about shrinking the markets. Of course, there will be many cases when market leaders will have to step down.
IBM has $2B running on WebSphere. Looks like for every dollar of revenue JBoss made, it took two dollars of revenue from BEA and one from IBM. JBoss made its fortune from shrinking the middleware market.
Informatica SOLELY DEPENDS on license revenue from ETL tools.
IDE Tools Borland has had its IDE business on the auction block for a while and is realizing it’s not easy to find a buyer for a sinking ship. Did Eclipse play a role in replacing Borland IDE tools? Sure it did.
For Informatica and BEA to transition to cheap/near-free subscription and OSS is a systemic shock that might literally kill them.There is no doubt that the existing software leaders would have to shrink their appetite significantly, since the disruptive newcomers have totally different cost structure and distribution business models. When you look at the drivers of the seismic shifts going on in many markets, the disruptive business models are not about shrinking markets. It’s not about “evil communists” dreaming about getting the behemoths of the software business to die. I don’t think they will.
What really happening is that new value is being created in the marketplace. Open source is so successful because it’s creating new markets. That’s the key for a true market disruption.
Just a few years ago JBoss, now a RedHat company, and MySQL were not going after the Fortune 1000 enterprise market. They are best at enabling underserved customers who previously could not afford expensive proprietary software. Now, JBoss is a part of a public company, MySQL is VC-backed, and they both have external shareholders. The latter demand returns on their investment thus pushing portfolio companies into a replacement business where the money is. But what these companies are best at is not a replacement business.
Open source is so powerful that it can destroy a license-driven software business. But the truly disruptive businesses are successful as long as they create new markets in the first place, not shrink the existing.
Oracle is chasing SAP like never before. Now, thousands of Hyperion customers who run SAP will view their business through an Oracle/Hyperion BI “lens.” Tony Baer posted a good review about the transaction. I can’t disagree with Tony about further market consolidation and Business Objects/Cognos being the two BI leaders left out there. Two years ago, IBM acquired Ascential Software to round up its data integration offerings, and the BI acquisition is only a matter of time. My prediction is that Cognos will be the target.
Before: Century of Technology
At the end of the last century, those who had accumulated the most brilliant technological inventions became the leaders of the world of enterprise software today.
Oracle, IBM, SAP, Microsoft, and hundreds of other successful companies have created the industry based on proprietary Intellectual Property (IP) and patents.
What has the open source movement done for the industry? Apache, Linux (in the server market), and Sendmail have commoditized their product categories. Eclipse has changed Borland’s IDE business. jBoss and MySQL are more often in a replacement business instead of going only after non-users who can’t afford commercial solutions.
Can you imagine what open source will do during the next decade to the enterprise software industry?
Now: Century of Marketers
In the past, engineers and companies with the best patented technologies were the ones who received funding and developed the best products. Today, we see an array of open source companies creating products and “application stacks” using IP developed by the community.
In the last century, Intellectual Property creation and engineering were core business activities to software vendors; today, IP creation and marketing is core, but IP engineering is not. From a VC perspective, startups are not fundable unless they are ready to outsource IP engineering.
The software companies who best communicate the value of their solution to the audience, be it the end user, the community, or the enterprise customer, are sure to be the winners as the industry moves into the next economic cycle.
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