I completely agree with Matt Aslett’s view that 2009 will see consolidation in the open source arena at the hands of established software vendors (e.g. IBM, Oracle, Microsoft, SAP). Aslett writes:
“As proprietary vendors will be looking to open source to extend their reach into new potential customers, many open-source vendors will be looking to proprietary technology as a means of converting community interest into revenue.”
Matt Asay also agrees with Matt Aslett, and Asay predicts that Microsoft will make its first open source acquisition in 2009, probably Zend. Indeed, folks at Microsoft have, at a minimum, considered this acquisition. I think it’s a bad idea, here’s why:
IBM was long considered an open source supporter before we made our first “open source acquisition“. Sun was considered an Open Source company well before acquiring MySQL. Oracle’s acquisition of Sleepycat didn’t really add to its Open Source credibility. Intel and HP are considered open source supporters, without open source acquisitions. Simply put, a Traditional vendor can support the open source movement without acquiring an open source company.
Now, considering Zend specifically; the problem with buying Zend is that the acquisition delivers very little customer value or impact to the acquirer’s top/bottom line.
What would Zend deliver to Microsoft (or another suitor, be it IBM, Oracle, SAP, or even Red Hat)? Two key items that come to mind, first control over the PHP language, and second, revenue that Zend drives from Zend’s enterprise PHP products.
Control over the PHP language is a red herring. Customers can be well served without control of the PHP language. IBM and Oracle both have PHP-based offerings without having control over the language. If Microsoft were to buy Zend, what could Microsoft do with the PHP language? Microsoft couldn’t make any language-specific changes that would favor the Windows environment or allow native access to Windows resources without users fearing that their PHP applications will be locked into the Windows OS. One great thing about PHP is that I can develop on my Windows desktop and deploy to my hosting service provider running Linux. If this changes, Microsoft (or any Zend acquirer) should expect an uproar from millions of PHP users. Also, we shouldn’t neglect the possibility of another vendor or “the community” forking the PHP interpreter under the guise of protecting PHP users from Microsoft’s commercial interests.
Next, let’s consider the revenue potential through Zend. Today, the revenue is nowhere close to impacting Microsoft’s growth targets. The reality is that PHP use is so widespread that the “community PHP” has become solid enough for all but a few usage scenarios. So, the need to pay for a “production ready PHP” or advanced management, scalability, etc. for “business critical PHP” is minimized by the quality and breadth of community driven PHP offerings.
Having PHP in its toolbox isn’t going to help Microsoft grow revenue in the enterprise market. Let’s not ignore the fact that the PHP language hasn’t been able to attract developer interest at the enterprise level. This has been a surprise to me considering the level of PHP use outside of the enterprise. Yet, Python and Groovy have had a lot more traction than PHP in the enterprise.
This leaves us with Microsoft using PHP to further penetrate small & medium sized business (SMB) and partners. Microsoft already owns this segment, and VB is the lead-with language here. So, adding PHP into the mix isn’t going to drive a lot of net new revenue. Unless Microsoft is experiencing VB losses to PHP, which I doubt. And even if these losses are occurring, then I’d argue that Microsoft’s current partnership with Zend delivers the same benefit to Microsoft that owing Zend would. In both cases, the likelihood that the SMB is paying for the use of PHP, e.g. Zend-driven revenue, is minimal. In both cases, the likelihood that the SMB is running the PHP application on Windows is very high.
Maybe it’s just me, but I see a lot more risk than upside for Microsoft in this particular deal.
What do you think?