Matt and Dave D. are good guys that I respect, but they are also wrong. There, I said it. We Canadians aren’t known for being so blunt, but this needed to be said. I may get a few eggs directed at me, but so be it. You can argue with me, but you’ll have to use your data to argue with my data.

Matt says:

Neanderthal proprietary past. It’s not that this model is bad in some religious sense. But it is bad in how it treats the customer (as a would-be criminal who will steal value if she can). And it is bad in its inefficiency (expensive sales and marketing costs, higher than necessary development costs because it reserves all development – even tertiary development like language backs and “last-mile” configuration/customization, etc.).

Dave D. says:

For how much longer will we continue to pay the taxes, both overt and covert, imposed by the closed-source vendors and their inefficient methods?

Can you accept that all OSS vendors dream of growing to be the “Red Hat” of their respective market?

If so, let’s spend a second using Red Hat to test the truths that Matt & Dave D. tell you to expect. And here’s the thing, it’s not just Matt or Dave D., it’s the whole OSS movement that tells you “this be true”.

I believed these “obvious truths” at one time. Then I had the fortunate experience of working on the Gluecode acquisition, and being the product manager for WebSphere Application Server Community Edition (WAS CE). I had the good fortune of managing WAS CE in the same team that manages the rest of the WebSphere Application Server family of (Traditional software) products. I/we learned a few things. I am still a believer in OSS, but I’ve resisted the second helping of that Kool-Aid (however thirst quenching it may appear).

Do OSS vendors spend less on selling their products than a Traditional vendor would? Yes and no. Yes, when the OSS vendor is working on building its customer base and trying to become a vendor with “tens of millions of dollar” in revenue. No, when the OSS vendor is trying to scale their business to “hundreds of millions” or greater.

The problem with most OSS “obvious truths” is that they are true at a point in time. But when you generalize to the time that the OSS vendor matters in a marketplace to the degree that Red Hat does, the truths don’t hold any longer.

Think I’m a brainwashed IBM lackey (or insert appropriate description)? Okay, then please explain why Red Hat spends more of their total revenue on Sales, General & Administrative (sales, marketing, advertising, etc), 54% than IBM’s 23%, Microsoft’s 31% or Oracle’s 26%. Next, Red Hat spends 3.1x more on SG&A than they do on R&D. This compares to 3.6x for IBM and 2.1x and 2.0x for Microsoft & Oracle respectively. Oh, and counter to conventional wisdom of OSS not requiring advertising, Red Hat spends nearly 5% of their revenues on advertising, while Oracle spends 0.7% and Microsoft spends 2.8% of their respective revenues. And best of all, since OSS benefits from all this “free work from the community”, it may come as a surprise that Red Hat spends 18% of its revenue on R&D. This compares to 15% for Microsoft and 11% for Oracle.

So there you have it, my data. Bring yours to the table and let’s chat. Or if you want to tell stories of strawberry fields, bliss and OSS “obvious truths”, then let me know so I can pick up a book of childhood fairy tales. We’ll have great fun!