Feeds

VCs warm to LAMP and services

Good way to an SMB's heart

  • alert
  • submit to reddit

The essential guide to IT transformation

One of IBM's senior venture capital investment authorities is encouraging software start-ups to follow the money, and back the LAMP open source stack.

According to Drew Clark, director of strategic insights for IBM's venture capital group, building software using Linux, Apache, MySQL and Perl/PHP/Python (LAMP) is one of the key requisites for VC investment today.

He also believes start-ups should examine delivery of their software online, as a subscription service like Salesforce.com, instead of via CD or in a box.

This combination will enable small and medium business (SMB) customers - a growing economic force according to analysts - to more easily access ISVs' functionality while being able to control IT costs.

"One of the differences between now and five years ago was we didn't have a tool to [reach] SMBs. Now we have open standards and the ability to deliver value over the web," Clark said during a recent meeting with The Register.

He warns that traditional ISVs are being squeezed by the pricing pressure created by LAMP and software-as-a-service.

Clark, a 20-year IBM veteran, is one of the original line-up in an IBM group created in 199 by former chief executive Lou Gerstner that was designed to encourage start-ups.

IBM's venture capital group doesn't put its own cash into start-ups as such, but works with VCs to identify and support start-ups with IBM products and services, such as eServer Application Server Advantage for Linux, or Chiphopper, launched in March. Chiphopper provides tools and services to run Linux applications on IBM's eServer x86, POWER and mainframe architectures.

SMBs are seen by vendors and analysts as a growing opportunity. According to Forester, SMBs spent $320bn on IT in the US last year - 44 per cent of total IT spending - and are expected to increase that amount by eight per cent this year. Spending by enterprise-level customers is expected to increase by six per cent.

"VCs have realized there's a huge opportunity - it's just as prestigious as going after that sector [SMB] as the enterprise," Clark said.

VCs, meanwhile, have hefty reserves to draw on. Hedge funds - one source of money looking for investment - recently hit record levels, growing 15 per cent in 2004 to a record $1 trillion in value. Funds are expected to grow between 10 per cent and 15 per cent this year.

But there are no blank cheque for ISVs, though, with VCs wary of inflating another bubble by funding every LAMP or service start-up. Instead, Clark says, VCs are "under pressure to behave", and that today's investment climate is characterized by more "thoughtful" deals. ®

Related stories

Oracle wading into open source certification?
Software as service: read the small print
IBM outfits blade servers with cheap middleware for the masses
Oracle teams up with Zend for PHP love-in

Secure remote control for conventional and virtual desktops

More from The Register

next story
BBC: We're going to slip CODING into kids' TV
Pureed-carrot-in-ice cream C++ surprise
China: You, Microsoft. Office-Windows 'compatibility'. You have 20 days to explain
Told to cough up more details as antitrust probe goes deeper
Windows 7 settles as Windows XP use finally starts to slip … a bit
And at the back of the field, Windows 8.1 is sprinting away from Windows 8
Linux turns 23 and Linus Torvalds celebrates as only he can
No, not with swearing, but by controlling the release cycle
Scratched PC-dispatch patch patched, hatched in batch rematch
Windows security update fixed after triggering blue screens (and screams) of death
This is how I set about making a fortune with my own startup
Would you leave your well-paid job to chase your dream?
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?