MySQL chief: being open source is not enough
Scandinavian, socialist, party people
Open source startups can hit profitability sooner than it took closed source incumbents, as long as they steer clear of rivals' costly business practices.
That's according to MySQL chief executive Marten Mickos, who told vendors and venture capitalists open source companies could cut their costs by not ploughing money into expensive sales and marketing activities.
However, start-ups shouldn't expect a fast track to growth just because they have adopted open source code or development methodologies.
"Maybe we [MySQL] come from Scandinavia, but open source is not socialism, it's not a party. Open source is not a business model. Open source is a smarter way to produce the goods and distribute the goods. It doesn't give you a biz model automatically," Mickos said.
Speaking at this week's Open Source Business Conference (OSBC), Mickos picked what he believes are the four most promising business models: advertising, licensing your product with a closed-source product using and OEM model, maintenance, and charging for enterprise-class features.
"Maybe today you have to be bigger to become profitable, but maybe you will get there sooner as an open source company then a closed source company. Closed source companies spend enormous amounts of money on sales and marketing," Mikos said.
Industry pundits estimate the traditional enterprise vendor model sees 75 per cent of revenue ploughed straight back into sales and marketing.
"How much did Linux vendors spend promoting Linux compared to IBM on OS/2? How much is MySQL spending on marketing in the database sector – not much. There's a very strong benefit for open source companies and they have a chance to rise sooner on this profitability curve," Mickos said. ®
What is "Cost"
When we use software - "What is the real cost?"
The most significant "Real Cost" is the personal time and energy spent learning the software and figuring how to implement and deploy it.
With the "Closed Model" you pay for the software up front. After that - you bear your Real Cost - and hope that the software you paid for does everything you need in a way that you like.
With the "Open Model" - you get to make a more judicious and affordable decision - You use the software some and figure out if it does what you need. If it does not, and your needs are important, many Open Developers will put your unsatisfied needs into their "Change/Update List".
Net result - by the time you shell out money for software or support - you are in a much more confident state of mind about spending the money.
Talking of the costs associated with Advertising & Marketing. With the Open Approach - the developer restricts these costs.
Therefore - he/she does not have to load those costs on what you finally pay.
Because of these fundamental differences - I think that Open Source will gain dominance when money is being spent on "Government or Public Projects". With Open Source becoming better known, public watchdogs and audit functionaries are learning new metrics for software and systems costs.
Here are some major costs avoided or minimised by the Open Model: -
(1) Advertising and Marketing
(2) Legal fees for developing & maintaining licensing agreements.
(3) Shrink-wrap box production and logistics - most Open Source is downloadable.
In essence - Open Source - puts a larger percentage of the developer's real dollars into the real work of software development and enhancement.
Maybe because mainstream marketing has become more of a liability these days. Informed IT people are usually weary of software that has a massive marketing campaign, especially if it seems a) a large part of the budget is being spent on it, and b) they give relativiely short release dates (which means the software will be crappy and buggy).
And open source software usually gets its own marketing for free ... the "word-of-mouth", Internet style.
Then again, the MySQL & PHP combo packs are the main responsible that MySQL hit it big ... I began with Postgresql, but switch to MySQL during the 2000-2001 hype over MySQL. I eventually returned to PostgreSQL because of that thing about, you know ... no transactional tables in MySQL. And MySQL boasting about it as a *feature*! (Isn't that Redmond's job???)
The primary advantage of going "open source" is the automatic advertising hype you get, and the legions of fans who will advertise your product and defame any close-source competators.