Open Source Strategies

A blog about open source software and business models, enterprise software, and the opentaps Open Source ERP + CRM Suite.

Thursday, April 07, 2005

Open Source and the Road to Mainstream

I keep coming back to the notion that open source is following its enabling technology, the Internet, from academia into the mainstream. The road to mainstream will, in my opinion, be similar as well. Specifically, it will resemble the road of the online retail industry.

In the beginning, of course, nobody believed that people would buy things online. Then startups such as showed that people, in fact, did buy things online, and eCommerce took off as its own industry. (Remember the days of the "Internet analyst"?) Next, established retailers responded by setting up separate online subsidiaries of their own, partly in hopes of cashing out in the dot-com boom, but also because they could not integrate online easily with their stores. (Remember when online purchases couldn't be returned in the stores?) Finally, eCommerce became mainstream, as startups such as have matured into multi-billion businesses, and established retailers such as Wal-Mart and Staples have fully embraced online as part of their core business. Whereas once there was an "eCommerce" industry, all retailers today speak of "multi-channel", "bricks and clicks," "clicks and mortar" strategies of integrated selling through online, catalog, and store channels. The reason? Simple--that's what the customers wanted: lower prices and convenience.

What is interesting is that eCommerce became mainstream not because the startups displaced the established retailers, but because established retailers have fully embraced eCommerce. Consumers shop online at as well,,, etc. etc. In fact, the top retailers from an annual list compiled by Internet Retailer, the trade publication of eCommerce, is a who's who of major established retailers.

Open source software will follow a similar evolution. Originally, of course, nobody believed there could be businesses around open source. Now we are past that and into the second phase and third phase, where venture capitalists are funding open source startups and traditional software vendors are responding with open source projects of their own. The logical final phase would be traditional software vendors embracing the open source model as an integral part of their business, taking from and contributing to open source projects. Then open source will simply be mainstream. It's not clear when this will happen, but it is a matter of time. The reason? Again, simple--what the customers want: lower prices, better software.

One really interesting company to watch is Novell. Here is a billion dollar software company that is literally betting its future on open source. It is not just releasing existing software to open source, but rather adopting open source as the core of its future business. If Novell succeeds at bringing open source to its customers and building a business around services, it will send a powerful message to the entire industry. If it does not succeed, it will offer some equally powerful lessons on how the road into the mainstream should be traveled.

On a closing note, Microsoft has also joined the open source community. In addition to sponsoring open source conferences, it has actually created its first open source project Wix, which has gotten over 120,000 downloads to date. No company understands the business and strategies of software better than Microsoft. It will be interesting to see where they go from here.

The open source community should give them a big applause of welcome.

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