March 2008


I want to thank Matt Aslett & The 451 Group for being brave enough to publish this report on the impact of open source databases on the DB market. An excerpt:

“One of the key findings is that open source software has had a superficial impact on the enterprise database market in that adoption has been widespread but shallow. While open source databases have been widely deployed for Web-tier applications, there has been minimal adoption in the enterprise application tier, and adoption for enterprise applications is at this time limited to certain specific application workloads.”

Matt “the OSS glass is overflowing, go get another glass, oh man, it’s overflowing, get a bucket, oh man, get a hot tub” Asay believes the report to be a “glass half empty” assessment. (Matt, I’m teasing; the world needs more optimists like you).

When data refutes “obvious truths about OSS”, we often hear one of three responses.

  1. The data is flawed.
  2. You’re measuring revenue, and OSS companies will always make less than proprietary vendors because of the nature of the business model.
  3. Just you wait; the OSS market is still young.

Let me address #2 & #3 using recent revenue results from two vendors we all know. Red Hat released revenue results today. They grew fourth quarter revenue by 27%. Not bad at all. Two days ago Oracle reported a 21% increase in quarterly revenue. The only difference being that Red Hat grew from a $111.4 million base, while Oracle grew from a $4.42 billion base. Younger businesses, addressing younger markets (i.e. the OSS market), should be growing substantially higher than their older counterparts, addressing older markets. Shouldn’t they?

I don’t want to sound like Red Hat’s growth is not impressive. It is. I only want to provide some perspective…a $100M business *SHOULD* grow much, much, much faster than a $4.4B business.

The answer may be no. But hey, this is a blog, so why let reality get in the way of a post?I don’t have a history degree, so please correct me if I’m wrong. But, I can only imagine that pundits foretold of an unpleasant death for railroad companies when the automobile started looking like a promising alternative. Later, pundits likely saw the dawn of the airline travel as a worrisome development for automobile makers. I’m sure all these pundits would be surprised to learn that the largest railroad companies in North America are worth nearly 3x more than automakers and over 4x more than airlines.

North American Transportation Companies & Market Capitalizations (from Yahoo! Finance)

Railroads Mkt Cap $B Airlines Mkt Cap $B Automakers Mkt Cap $B
BNI 32.47 LUV 8.96 Ford 17.75
CNI 23.36 NWA 2.46 GM 11.54
CSX 22.61 AMR 2.40
CP 10.07 CAL 2.1
    JBLU 1.34
Total $88.51B Total $17.26B Total $29.29B

Yes, railroad companies now make the majority of their revenue from transporting goods vs. transporting people as they did in “the good old days”. That just means companies can evolve when market forces demand change.

What’s more, I’m sure someone is doing a PhD thesis showing that the addition of competition from an alternative mode of transportation helped to grow the overall transportation market.

In any case, don’t underestimate the resiliency of established market leaders. This is especially true when they’ve been given decades to study and respond to a disruptive trend as is the case with open source software.

Today at OSBC, the results of the North Bridge Venture Partners’ annual “Future of Open Source” survey were released. Try as I may, I could not find out who the respondents were (i.e. developers, CIOs, the Asay family, FSJ, etc) or what the sample size was.

You can see a summary of key findings at the bottom of this page. Here are two findings not included in the key findings list.

Head on over to chart 9/16 to the question asking “Who will command the majority of commercial OS software revenue (non consulting) in 2012?” Yes, 15% of respondents went with pure play vendors like Red Hat. However, over 2x that figure went with platform vendors like IBM, Oracle, SAP (?) and Sun.

Even more interesting, chart 11/16 asked: “Can a startup software vendor realistically enter the (enterprise) market with a product/service that is NOT open source?” Nearly 80% of respondents disagreed with the statement. Now, if you’re a VC, and you see the type of money that closed-source vendors can generate vs. OSS counterparts, (i.e. vmware vs. Xensource) are you going to think twice about the “should this be open sourced or not” decision?

EnterpriseDB just raised $10M in Series C financing. IBM joined the list of investors including Fidelity Ventures, Valhalla Partners and Charles River Ventures. To date, EnterpriseDB has raised $37.5M (compared to the $39M that MySQL had raised in total after Series C).

EnterpriseDB uses the slogan “The Oracle-compatible database company”. While I wish Andy and the folks at EnterpriseDB the best, the challenge is that Oracle’s high end products aren’t in danger of losing to OSS competition. Next, in the majority of Oracle deals, Oracle isn’t selling a database anymore. They are selling a database, an application server, tools and applications in a joint fashion. It’s difficult for vendors to compete unless they can offer, or partner to offer, the equivalent products. This is bad news for smaller ISVs, especially smaller/regional application ISVs.

EnterpriseDB does have an opportunity to compete, and win, against Oracle in deals where the customer just needs a standalone database (and not all the other Oracle products) that can be utilized with their existing Oracle sills. This isn’t new news to Andy and team. I’m sure some of the new funding will be used to compete with Oracle in this market segment.

I just realized that EnterpriseDB is also targeting MySQL users (news to me!):

“MySQL users know firsthand that MySQL is most effective for read-only environments and the web/edge tier – but not for applications in demanding OLTP environments, requiring enterprise-class reliability, availability, and scalability.

In fact, some EnterpriseDB clients continue to run MySQL databases for less demanding applications and turn to us where they’ve “hit a wall” with MySQL. “

I find this quite interesting, and very much in line with what I’ve experienced. No one product is right for ever customer project. Also, a product may be right when you start the project, but it may not be appropriate a year or two down the road.

What do you think, does EnterpriseDB have a brighter future by targeting Oracle users that want “Oracle like features for MySQL prices” or by targeting MySQL users who have “hit the wall”?

Tasktop and Protecode are two interesting startups I ran into at EclipseCON 2008. They are very different businesses, aimed at very different audiences. However, both are made possible by Eclipse ecosystem….It would be very interesting to estimate the revenue opportunity that the Eclipse Foundation has opened up for vendors of all shapes and sizes.

Tasktop is based on Eclipse. The makers of Tasktop are many of the guys behind the Eclipse Mylyn OSS project. Mylyn is a task-focused UI for developers using Eclipse. Mik and team realized that the task-focused nature of Mylyn could be extended to support everyday use (outside of developers). Tasktop is able to group documents, emails and websites based on tasks you’re working on. So, for instance if I was working on a customer issue for work, researching for a blog post and writing a paper for school, I could switch between these three tasks and Tasktop would open/close the appropriate files, emails, webpages etc. based on the task I’m working on. Searching for files becomes simpler because they are associated with tasks. Also, Tasktop tracks how much time I’ve spent on a given task. I suspect there is a way to prevent Tasktop from tracking how long I spend reading FSJ and Dilbert ;-) It does a lot more, so watch this demo. While Mylyn is pure OSS, Tasktop is a commercial product for $60/year.

Protecode on the other hand has a really useful Eclipse plugin that tracks the pedigree of your code. It does so whether you import a file into Eclipse, or paste text from clipboard. The tool works unobtrusively while the developer is working away. As a result, the developer doesn’t have to remember the pedigree of a file or snippet of code 6 months later when the lawyer comes knockng. Companies can also set policies to restrict the code that can be brought into the project based on the license type (i.e. restrict GPL code usage). If you bring in code that doesn’t have a license attached to it, Protecode is able to check the code against its constantly updated collection of OSS software code. This occurs over a network connection. If there isn’t a network connection, the code is marked as “Unknown” and the developer, manager or lawyer can act on identifying the code when there is a network connection. As the use of OSS grows in the enterprise, so to does the worry of IP infringement. A tool like Protecode could become just what IT managers have been looking for. BTW, the guys at Protecode are in the midst of updating their website, so don’t let that get in the way of trying Protecode. The product is actually very cool and I can see it helping companies (and lawyers) get more comfortable with using OSS to develop their own products.

InfoWorld blogger Sean McCown at Database Underground wrote about a key difference between SQL Server & Oracle:

“The answer is simple… information. MS has built such a strong community and its members are committed to helping each other. There are so many forums out there you just don’t have time to go to them all. And one of the most amazing things I’ve found is that the MSDN forums are actually sharked by MS’s own PSS and dev teams. You just can’t get any better than that. You’ve got both the guys on the support team, and the guys who actually write the code helping you with your problem. You’ve got MVPs out there writing new and exciting books like crazy. They’re really giving up all the secrets on how SQL works, and what you can do with it.

Oracle is still living in the old days where everything is a good ole boys club. This is the world of linux and unix where they started, and it’s a dinosaur, man. You just can’t afford to do business like that anymore. You have to open up your community and start programs to encourage your best people to help and teach.”

Sean’s description of the community around SQL Server and the level of Microsoft employee interaction in the community should sound similar to the community around MySQL. It’s not exactly the same, but similar. I’d like to believe that MSDN became what it is today because Microsoft learned about the importance of community from OSS vendors. However, when something is a good idea, it’s not uncommon for several people/companies to have the same “good idea”.

Stating that Community matters today is as insightful as saying air matters to humans. Yet, it appears the folks at Oracle could learn a thing or two about Community from Microsoft. And they could both learn a thing or two from OSS vendors.

Rod had an amusing and interesting session at EclipseCON titled The Future of Enterprise Java. In the session he spoke about innovation in general and sources of Enterprise Java innovation in particular (more on this later in this post).

He discussed how the JCP is like the Russian Commissar who was tasked with doing what is “in the best interest” of the people, but sometimes gets in the way (of innovation). Rod went on to highlight how political motivations in the JCP hurt customers. He gave several examples including, most recently, Sun attempting to reinvent a sub-optimal alternative to OSGi (with JSR-277) when OSGi exists as a standard already. Apparently this is happening even though IBM, Oracle and BEA would rather utilize OSGi within the JEE spec. Here’s the deck from Rod.

Rod talked about the three sources of innovation in Enterprise Java:

  • The Cathedral (proprietary vendors)
  • The Bazaar (OSS vendors)
  • Commissar (the JCP)

Rod challenged the notion that the Bazaar model is the best or only way forward. Rod claimed (near quotes):

“The bazaar model encourages competition in implementation, but may not produce innovation.

….

The cathedral model is more likely to produce innovation. Remember that Eclipse began as a cathedral project from IBM.

….

Now, the combination of the bazaar model and the cathedral model drive innovation to a much higher degree than either would alone.”

Until now, I’ve always considered the cathedral vs. bazaar models to be mutually exclusive choices. But upon reflection, Rod used the Cathedral & Bazaar metaphors to state what I’ve long believed about the future of the software market. Namely, that the combined use of the OSS model and the proprietary software model is the future. I’ve seen (and lived through) proof that proprietary vendors are learning from OSS vendors. Are OSS vendors doing the same with lessons from proprietary vendors? Or have OSS proponents led OSS vendors to believe that there is nothing to be learned from “the past”. I hope not.

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