A pivotal reality being ignored in the debate of whether open source can mount more serious pressure on proprietary behemoths like Microsoft, Oracle, SAP and the like, is the fact that open source doesn't necessarily compete on an individual product/platform basis with the aforementioned. Not only because doing so remains beyond the individual reach of smaller open source vendors but due to the strength of the collective squeeze being applied to the proprietary model by open source. This collective form of competition is far more robust than any an open source operating system can muster, individually, against the Windows hegemony, for example.
The open source marketplace has found ways to feed its own momentum and translate it into extended growth opportunities for its participants. In the same way that the success of early open source business pioneers such as MySQL and Red Hat has given way to more and more enterprise quality open source companies, Oracle is experiencing the disruptive effects of the availability of several open source alternatives to the members of its enterprise software suite. In the same manner, it won't be MySQL which challenges Oracle vis-a-vis initially, but the choice of opting for either MySQL (instead of Oracle DB), SugarCRM (instead of Oracle Siebel), or Red Hat Enterprise middleware (instead of Oracle's J2EE layer). This aggregate competitive palette has already significantly slashed market share from larger closed source vendors from below while steadily progressing towards becoming a player in the higher end.
For the meantime, the upper crust of the market for enterprise software ($1 million+ deals) will remain mostly the domain of entrenched proprietary products and services. However, as the open source marketplace continues to exhibit a build-out of capacity by its member companies, its larger closed source competitors will find themselves shut out of the global mid-market. One which is set to emerge as a fast growing segment with developing countries providing a significant boost to its size over the next 5 to 10 years. Vendors such as Microsoft are going to find it downright arduous to adjust business models which have structurally internalized lock-in and closed processes to the point where they are able to prevent revenues from drying up places where they can depend on bureaucratic inertia and risk aversion to keep the dollars flowing (see: The Global 1000).
Conclusively, as more cumulative pressure is exerted on the rapidly consolidated top one half of the providers of enterprise software and services, we're more likely to see an increase in overt moves meant to co-opt and divert further growth, similar to what Microsoft has demonstrated over the past 6 months. Unfortunately, the main motivation for these competitive responses will come at the behest of protecting profits as opposed to providing increased value through adaptation and innovation. The foreboding conflict will be waged between the side of the current giants of the software industry compelled by their entrenched financial interests and that of the manifestation of the evolution of demand for more open choices. So while I don't predict the annihilation of one the other, it is assured that the resulting landscape will be drastically different from its current embodiment.
About the blogger: Alex Fletcher is lead industry analyst at Entiva Group Incorporated, a research and analyst firm which concentrates exclusively on the open source software industry. His main focus is working to help clients of all sizes formulate strategy and policy surrounding their use of open source software within the enterprise. Alex has prior experience as a consultant, software engineer and start-up founder. He can be reached at alex dot fletcher -at- entivagroup dot com.
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