Reading Michael Dolan’s post titled Proof Microsoft still does not “get open source” got me thinking. What do the other big software vendors have to say about open source in the Management Discussion and Analysis (MD&A) of their annual reports? Before we move on, it’s important to recognize the purpose of the MD&A section. It’s a chance for management to talk about its strategy and discuss relevant risks to the business.
For Microsoft to state that open source is a risk to their business, is perfectly valid. Heck, as an investor, I’d be weary if Microsoft’s MD&A section didn’t say anything about open source as a risk. It’s perfectly valid for Michael to suggest that Microsoft should include a discussion on how they intend to leverage open source. I’m hoping we’ll see exactly that in next year’s report.
Next, let’s look at Oracle:
Under the risk: “We may be unable to compete effectively within the highly competitive software industry”, Oracle states: “We may also face increasing competition from open source software initiatives, in which competitors may provide software and intellectual property for free. Existing or new competitors could gain sales opportunities or customers at our expense”.
Under the risk: “We may need to change our pricing models to compete successfully”, Oracle states, “The increase in open source software distribution may also cause us to change our pricing models.”
Next, let’s look at SAP:
As far as I could find, SAP does not mention the term “open source” anywhere in the Risk Factors & Risk Management section (starting on pg. 110) of their 2007 Annual Report. On one hand, this shouldn’t be surprising considering that open source isn’t as pervasive in the enterprise applications market as it is in other segments of the software market. However, open source is definitely competitive with the middleware side of SAP’s business. So, to be honest, I find it very surprising and worrisome that SAP doesn’t mention open source at all.
There is no mention of open source as a risk to IBM’s business. Rather, IBM says: “The company continues to be a leading force in open source solutions to enable its clients to achieve higher levels of interoperability, cost efficiency and quality.”
What do you think?
Should Oracle be less worried about open source? Should SAP (and IBM) be more worried?