In our “winner take all” society, The VAR Guy is starting to wonder: Can open source companies like Concursive, Compiere and EnterpriseDB ever escape from the shadows of their larger and more successful rivals (SugarCRM and MySQL)? Before you answer, consider these lessons.
First, let’s look beyond the open source market and zero in on the search industry.
Yahoo generated $1.8 billion in revenue during its first quarter, yet the press and Wall Street widely consider Yahoo a modern day failure because of its second-place status to Google.
Before we all bury Yahoo, shouldn’t we give the company a little credit? Anybody else remember Lycos, Altavista and all the other non-relevant search engines that went by the wayside? Yahoo’s still in the game… though many folks forget that.
Open to Alternatives?
Now let’s shift gears to the open source sector.
First up, consider the situation at Concursive (formerly Centric CRM). Intel Capital seems to like the open source application provider, and has pumped money into the company. And Concursive claims to have several Fortune 500 customers.
Another open source ERP and CRM company, Compiere, claims to have the world’s most widely used open source automation solutions. In fact, Compiere has been downloaded more than 1.3 million times.
Sweet. But apparently, not as sweet as the situation over at SugarCRM. Bloggers and journalists (The VAR Guy included…) seem to fall over each other, as they position SugarCRM has the open source industry’s best hope for a successful IPO (initial public offering).
Perhaps it’s time for our resident blogger to start digging a little deeper and spending more time looking at Compiere, Concursive and Spain’s Openbravo, which just received a $12 million investment.
Meanwhile, EnterpriseDB has landed a new CEO, and IBM has pumped a few bucks into the open source database provider. Will that take EnterpriseDB from good to great?
Or will MySQL remain the open source industry’s database darling?
Let’s face it: Finishing second place can be pretty darn good to your wallet (just ask David Archuleta). But in the corporate world (and the software industry), the press continues to insist that finishing second sucks.
Tags: Centric CRM | Compiere | Concursive | EnterpriseDB | IBM | MySQL | Openbravo | SugarCRM
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I think “second place stinks” in open source largely because the commercial corner of open source is still small enough that if, say, MuleSource is successful then it’s unlikely that VCs will fund another open-source ESB competitor. Ditto for SugarCRM. Concursive (which was proprietary long before it decided to open up any of its code) managed to get funded, but not by the kinds of investors that were jumping into Sugar’s various rounds of funding.
It’s tough to be #2. Profitable? Maybe, but at one point Yahoo! was #1. I think it’s hard to start and finish at #2 and expect to make much money….
From which perspective are we talking about? From a consumer viewpoint, we always want there to be an active competition between vendors.
If AMD never contended with Intel, would Intel have dropped their monopolistic prices and done such great improvements in technology?
In addition, there are different customer needs that can often be met by a second-tier player. If I want safe, brand-name virtualization, I buy VMware. But if I have little money to spend and can accept the risk of a smaller player, then Virtual Iron is a good fit.
Choice is good. Competition is good. I expect we will see many successful #2 open source companies.
The AMD example is a wonderful one, Tristan. Yes, competition opens up new markets and new opportunities for consumers. Anybody else remember the 1995, when PC vendors were afraid to change even a single icon on the Windows 95 desktop? Linux and a restored Apple gave us true customer choice.
But I think the original blog post was more about company valuations and Wall Street perceptions. And, frankly, press coverage. Second place is a tough place to be if you want to earn a lofty market cap and glowing coverage from analysts and press.
I think the key is to break the bounds of the open source designation for many of these applications. When the issue escapes that qualifier and starts being considered alongside the rest of it’s software sector (proprietary apps included) as MySQL. JBoss and SugarCRM are then things get interesting.
I doubt MySQL’s share of Sun will ever rival the Oracle DB division basically because of price points. However, I do think it will be interesting as it’s install base is likely the largest of any DB provider. Theoretically, as that user base gets larger more convert to commercial customers. What remains how many orders of magnitude larger that user base will have to get to have their conversions start creeping into the billions of dollars.
I believe we are in the early days of commercial open source early on you see leaders in their space like @Matt Asay’s Alfresco in Document Management or Pentaho in BI. They are in first place in your category and have few competitors with the OSS designation. I think the time for them to reach revenues comparable to their proprietary counterparts is much longer as typically they don’t receive the big upfront licensing boost proprietary software companies do.
Compiere’s success has been largely due to being narrower than it’s ERP competitors by focusing on financials and keeping the central product lean and mean and allowing an ecosystem of partners to fill in around the edges. While Oracle tries to provide everything from CRM to Financials. Compiere exploits the Oracle attempt to be all things to all people. Which allows them to flourish among a smaller set of customers.
I also think @Tristan has an excellent though tangential point about the pressure the 2nd place vendors but on the leaders. As a group I think OSS is doing that to the proprietary software industry. While it remains to be seen if there will really be any multi-billion dollar OSS vendors they definately will be good for the end-user as the put pressure on the market leaders to mend their “evil ways”.
As the chief marketing officer at Concursive, I have briefed and talked to Matt multiple times. It is therefore mystifying to me that he still claims that “Concursive was propriety long before it decided to open up any of its code.” Source code for Concursive’s products–CRM and team collaboration–has been available for free download under an open license for over 4 years. As long, in other words, as SugarCRM has been in existence. I’m not sure what to make about his comment that our sole institutional investor (Intel Capital) is not like “the investors that were jumping into Sugar’s various rounds of funding.” Hmmm… Intel Capital is one of the largest, most successful investors in the world with an enviable portfolio of companies that spans the entire technology gamut, including numerous leading open source companies.
If you happen to be Hillary Clinton, second place probably doesn’t feel so good. Another second place finisher once said “Second place just means that I’m the first loser.”
But the software busines isn’t like politics, or the Kentucky Derby. The only way to lose in our business is to fail your customers by providing a bad product and/or bad service. For everyone else the pie is growing every day and their slice should keep on growing right along.
If you have happy customers (your product works as expected), happy employees (rewarding work environment), and happy investors (reasonable rate of return) it really doesn’t matter what position you’re in compared to competitors.
Robert @6: You make it sound so easy (happy customers, happy employees, happy investors) but balacing those three items is quite a challenge. Pleasing investors, alas, sometimes means laying off employees.
I didn’t say the balance was easy
Just pointing out that “success” means different things to different people. And that there’s plenty of room for a dozen “successful” CRM systems, or whatever. They each fill a different niche in the market.
The media likes to make everything sound like a sporting event with winners and losers, but business generally isn’t like that - even for venture capitalists.
brief comment
open source sucessful projects come out of nowhere.. look at ubuntu - who would have thought yet another distro would be #1.
My belief the more players the better. EnterpriseDB can afford to invest developer money into supporting new grid technology, open fabric, cluster file systems…