Forrester’s John Rymer tweeted:
“Spoke with a client who believes the 4 top vendors are stifling innovation by crushing small vendors — with no hope in sight. Yikes”.
Working at one of the “4 top vendors”, it’s natural for me to disagree.
First of all, innovation occurs across the software industry, from “elder companies” (thanks Cote) to startups.
Second, most startups nowadays use some variation of the open source business model. With the code out in the open, it’s difficult to argue that elder companies can “crush small vendors”. Sure, an elder company could try to fork the code as Oracle did with RHEL. But this strategy hasn’t proved successful to date. An elder company can acquire the small vendor as Oracle has done with Sun/MySQL. However, as we’ve seen with MySQL, if the community doesn’t approve of the acquirer’s actions, the community will fork the code and innovation will continue. The open source business model severely limits the degree to which an acquirer can “crush” the acquiree, either deliberately or by happenstance.
Third, let’s look at elder company acquisitions of small vendors. Most deals have been after the small vendor has established itself in terms of usage and/or a revenue stream. This too argues against elder companies crushing smaller vendors. More often than naught, a sale to an elder company is part of a smaller vendor’s (or more likely their VC’s) long term plan.
I will concede that elder companies don’t stand idly by as competitors, big or small, introduce innovation into the market. Elder companies respond with their own attempts to leapfrog the existing innovative product or offering. But hey, that’s competition for you.
What do you think?
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