economics of open source, ow2con11, nov 24-25, paris

The Changing Natureof Open Source

OW2con 2011November 23-24Paris

Cedric ThomasCEO, OW2

3

0> The freedom to run the software for any purpose

1> The freedom to study how the software works and to adapt it to your needs

2> The freedom to redistribute copies of the software

3> The freedom to improve the software and distribute your improvements to the public

4© OW2 Consortium 2011 www.ow2.org

Open Source Achievement

Apache has been the leader in web server platform since years. It dominates with over 50% of market share.

Image: http://www.chotocheeta.com/2009/03/06/apache-vs-litespeed-time-to-switch/

Apache server market share +- 50%

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Ligne 21

0

1

2

3

4

5

6

7

8

9

Bill

ion

US

$

Source: IDChttp://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20090729005107&newsLang=en

Open source software market >$8b


Since the first venture investment in an open source vendor in 1997:$3.2bn has been raised by 163 open source

vendors through 378 separate

funding deals.

Even VCs Like Open Source

Source: The 541 Group, 2008http://blogs.the451group.com/opensource/2009/04/08/the-past-present-and-future-of-vc-investment-in-open-source/

VC investments >$3b


And Red Hat Makes the S&P 500

NEW YORK, July 17 /PRNewswire/ -- Red Hat Inc. (NYSE: RHT) will replace CIT Group Inc. (NYSE: CIT) in the S&P 500 after the close of trading on Friday, July 24.


Commercial Open SourceFree Software


WeblogicWebsphere

JOnASJbossGlassfish

OpenText(Vignette)

(Documentum)

NuxeoAlfrescoDrupal

Business ObjectsInfoBuilder

Cognos

SpagoBIJaspersoftPenthao

MS Sharepoint(Hummigbird)

(Plumtree)

Exo PlatformLiferaynetNUKE

SAP(Peoplesoft)

(JDE)

CompiereOpenBravoNexedit

(Sonic)Tibco

IBM

PEtALSMuleServiceMix

IBMOracle

W4

BonitaJBPMShark

ProprietaryLeaders

Open SourceChallengers


Agenda

Commercial Open SourceDefining momentsOSS market growthOSS efficiencyFLOSS became COS

Commoditization ProcessMature COS offeringsCommoditiesDisruptive Innovation process

Open Source OpportunitiesThe nature of COSStrategiesThe OW2 opportunity

The Case for Open Source

© OW2 Consortium 2011 www.ow2.org

Free Software Makes Sense


What you give

Software code

What you gain

Free expertise

Experience

Market share (if you are a software vendor)

Open Source is Economically Efficient

€

£

$

¥


Quality

Peer review

Reliability

State of the Art

Global knowledge sharing

Frequent releases

Open Source is Technically Efficient


For Vendors

Accelerates time to market

Business ecosystems leverage

For Users

Avoids vendor lock-in

Stability and auditability

Open Source is Strategically Efficient


Grows local expertisePromote local software industry

Empowers the commnunityReduce technology lock-ins

Open Source is Socially Efficient


Open Source is Efficient

You can achieve...More

Leverage resources from the community

BetterBenefit from the ideas

and the experience of others

FasterQuick response from

the community.Image: http://ara.footblog.fr/615924/1-ER-TOUR-GROUPE-C-ITALIE-FRANCE/


Quality not guarantied Code is provided "as is"

Perceived legal riskOSS license are unproven

No responsibilityCode perceived anonymous

Investment riskSmall vendor companies

Lack of stabilityFrequent releases

Lack of roadmapNo strategic "owner"

Lack of internal competenceSelf-training not a policy

Still a Challenge for Others

Image: http://ara.footblog.fr/615924/1-ER-TOUR-GROUPE-C-ITALIE-FRANCE/


Agenda




Open Source Disruption

19Source:

Clayton M. Christensen, Innovator's Dilemma, Harper Business, New-York, 2000

Clayton M. Christensen and Michael E. Rayno, Innovator's Solution, Harvard Business School Press, Boston, 2003

20

Source: Clayton M. Christensen, Innovator's Dilemma, Harper Business, New-York, 2000 Clayton M. Christensen and Michael E. Raynor, Innovator's Solution, Harvard Business School Press, Boston, 2003

Per

form

ance

Time

End-user maturity

21

Fun

ctio

nalit

y, R

elia

bilit

y...

Time

End-user maturity


22

Fun

ctio

nalit

y, R

elia

bilit

y...

Time

End-user maturity

OSS entrants offe

rings

Modular architectures,

Business Ecosystems


23

Agenda




Changing Nature of Open Source

24


1980 2000 2020

OSS Offering

25


1980 2000 2020

OSS Offering OSS Awareness

1980 2000 2020

26


1980 2000 2020

1980 2000 2020


1980 2000 2020

OSS Experience

27


1980 2000 2020

1980 2000 2020

1980 2000 2020


OSS Strategic Ability

1980 2000 2020

OSS Experience

Passive OSSDisruption

28


1980 2000 2020

1980 2000 2020

1980 2000 2020


OSS Strategic Ability

1980 2000 2020

OSS Experience

DisruptionPassive OSS

Proactive OSSDefault

29

Agenda




A Profitable Strategy

Open Source is a Strategic Decision

For Users

Avoids vendor lock-in

Investment protection

Control

For Vendors

Outsider's initiative New rules weaken

leaders

31

How do you make money with free software?

Free Software Makes Sense

SystemsSystems Integration Integration

Training

ConsultingConsulting

Add-onsAdd-ons

SolutionsSolutions

CertificationCertification

SupportSupport

On-Line On-Line Services Services

SubscriptionsSubscriptions

SuitesSuites

PackagingPackaging

ExpertiseExpertise

Generic Open Source Business Model

Product

Insurance

Service

35

Agenda




New Challenges

© OW2 Consortium 2007 36

Leverage Business Ecosystems

Value Chain Downstream flow of

added value Vendor-Buyer

relationships Quantitative rationale

Efficiency – Differentiation – Customer Ownership

© OW2 Consortium 2007 37

Leverage Business Ecosystems

Value Chain Downstream flow of

added value Vendor-Buyer

relationships Quantitative rationale

Business Ecosystem

Value-added sharing Coopetition

relationships Qualitative rationale

Efficiency – Differentiation – Customer Ownership Network Externalities

38

Leverage Open Source Sweet Spot

In

du

st

ry

Fi

na

nc

e

Et

c.

Ut

il

it

ie

s

Re

ta

il

Go

ve

rn

me

nt

He

al

th

C

ar

eInfrastructure

Business solutionCompetition

Cooperation

Open Source

ProprietaryModels

Infrastructure: Used by everyone, Shared by everybodyThe bedrock of our information society

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OSS mostly following

OSS mostly racing

Cloud Computing

2010

40

Leverage Cloud Computing Opportunities

OW2 to drive

open source

innovation

for open cloud

architectrure

Open CloudRequires

Open Source

Cloud Architecture

Requires Innovation

Open Sourcefor

Open Clouds

41

Opportunities in Progress

Industry Automotive, Aeronautics Embedded, R&D mutualization

Government Economies of scale Public software (Brazil)

Future Internet Base R&D Infrastructure

Etc.? ...

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Agenda




Thank you

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www.ow2.orgwww.ow2.org

For more informationsPlease contact

Cedric Thomas (CEO)‏cedric thomas @ ow2

org

economics of open source, ow2con11, nov 24-25, paris

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