The open core business model has its roots in the traditional software business model. Open source vendors have learned what works in the traditional software business model and applied it to the open core business model. This learning has not been a one way street. This is the first in a series of posts discussing how open source and traditional software vendors are, or should be, learning from each other.
A few weeks ago the IBM WebSphere marketing team wanted to launch a competitive marketing campaign to coincide with Oracle OpenWorld. After some discussion we settled on “more for less” or said differently, a focus on value and price as the key message for the campaign.
Simply offering a lower price than Oracle WebLogic Server (WLS) doesn’t tell the customer enough to select WebSphere Application Server (WAS). That’s why the “value” message is important. In this case, the value of additional programming models and standards such as service component architecture (SCA), session initiation protocol (SIP) and communications enabled applications (CEA). Or the value of an integrated web cache and not having to pay for backup servers or unused CPUs on a virtualized server.
I’ve seen too many open source vendors simply beating the “lower cost” drum. At times they also highlight “not proprietary” as if this is a highly valuable feature; compelling enough to choose product X over a proprietary product Y. I don’t see value in “non proprietary” for at least two reasons. First, with open standards, the risk of lock-in is reduced not with the availability of source code, but the availability of multiple implementations of the open standard. Second, since the large majority of open source vendors are adopting an open core model, the product for sale can be just as closed source and proprietary as traditional software.
To reach CIOs hearts and wallets, open source vendors should rethink their messaging to move beyond just cost to talk about the “more” that they are providing for “less”. Note that “more” can actually be less, as in less complex. For instance, MySQL clearly provides a “lower cost for higher value”, in terms of less complex and fewer administrators required, than Oracle DB for certain use cases. This is why Oracle continues to value MySQL as part of the pending Sun acquisition.
There’s also a longer term reason to focus on higher value for lower cost than lower cost alone. The latter paints the vendor into the low cost corner. Going forward it’ll be difficult to increase prices as the vendor increases value delivered to the customer.
“More for less” certainly resonates in today’s market. This is true for IBM as much as any open source vendor.
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PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”