News that Amazon Relational Database Service (RDS) provides a MySQL 5.1 relational database in the cloud has been met with a lot of interest.  On the surface this is good news for open source users and proponents.

When I read about RDS, I wondered if this was in fact good news for open source vendors.  I asked if Sun/MySQL was being compensated for Amazon’s use of MySQL in RDS.  Sun sources confirmed:

“The MySQL database that is used in Amazon’s RDS is based on the free, community version of MySQL.  However, for those Amazon Web Services customers that need MySQL technical support, Sun does offer that through our MySQL Enterprise subscription.”

At this point, it’s helpful to stop treating RDS as a competitive action against Sun/MySQL.  The rest of this post could apply equally to another open source project, the related open-core or dual licensed product and the related open source vendor. I fully expect to see Amazon continue to offer open source middleware components; RDS is the first step. I only mention Sun/MySQL below to help explain my thinking, not to draw any conclusions to its current or future market position.

Amazon’s decision to use the free version of MySQL to build RDS is completely sensible.  First, Amazon has the technical skills to support their usage of MySQL without having to acquire the MySQL Enterprise subscription. Second, this decision helps Amazon lower the cost of RDS, which makes RDS more attractive to customers.  This is clearly not good news for Sun/MySQL who is missing out on capturing some portion of the revenue from MySQL users spending on RDS.

Customers can still pay Sun/MySQL and Amazon to deploy MySQL Enterprise to the Amazon elastic compute cloud (EC2).  But with the introduction of RDS, Amazon is asking, why bother?  RDS reduces the need to manage, administer and support a MySQL environment. These are the key reasons one would purchase MySQL Enterprise.  RDS makes these three purchase drives less valuable to customers.

Until now, open source vendors have attempted to secure revenue by offering management and administration capabilities only through a for-fee product offering built around an open source core product.  Amazon has just thrown a major wrench into that strategy.  Why pay for the vendor’s “enterprise” product to obtain management, administration and support, when Amazon’s Cloud service minimizes the need for management and administration and includes support?

So what can open source vendors do?  Well, first, open source vendors have time to respond since the majority of workloads are not (yet?) in the cloud.  Second, proprietary features will be required in the “enterprise” version that are not available in the “free community” version of the product.  These features must not fall into the administration and management category.

Proprietary may just be an open source vendor best strategy against Amazon and other cloud providers.


Follow me on twitter at: SavioRodrigues

PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

Recently the news about the inevitability of open source has been everywhere.  Just today I exchanged tweets with Matt after he blogged:

“Indeed….open source has won”.

Seeing that I’ve always advocated the happy balance of open source and traditional software used in conjunction to address customer needs, news about A winning over B is somewhat hard to accept.

When I pressed Matt on what he meant by “open source has won” he replied:

“Won in the sense that 5 years ago no one, including IBM, would have thought it would be a part of all software”

Well, IBM was ahead of the game in terms of contributing to. and using open source within its products.  Whether Steve Mills (the head of IBM’s Software division) every thought or does think that open source will be “part of all software” is up for discussion.  But at least as far back as 2002 we used reasonably important open source components in a major IBM software product, WebSphere Application Server.

In any case, a discussion about the use of open source components within traditional software products is only mildly interesting.  It was/is inevitable that any software vendor with a budget to worry about will choose to consume open source components versus building from scratch when the customer value point is higher up the stack.

The interesting discussion centers on the open source versus traditional software business model.  In this discussion, far from “we won or they won”, I’d argue that we and they learned from each other and evolved our collective business models.  We have added free and open source offering to our product portfolio.  We have opened up our development practices to become more transparent. (Could we be even more transparent? Sure, give us time).  They have moved beyond selling support to selling proprietary products.

We and they have taken steps that would have been sacrilege just 2 or 3 years ago.  As a result, we, they and our joint customers have benefited.  But this angle doesn’t get the news coverage it deserves.

To be fair, Matt gets this and retweeted my tweet: “…so to me, “we both won” (we= the overall software industry, oss or traditional vendors)”

Follow me on twitter at: SavioRodrigues

I wrote this a few weeks ago and held it back until now. I decided to publish this somewhat in response to Roberto’s post. While Roberto is trying to find a band-aid to the problem, I think we need to re-think the root cause of the problem.

I’ve been blogging about OSS for nearly 2 years now. My in the trenches experience with OSS goes back to early 2004. The constant drumbeat of “proprietary software is dead, open source is the only path forward” has been deafening at times. I’ll admit that I too used to espouse similar words. But, I am fortunate enough to work with colleagues who’ve been in the software industry since day one. They’ve challenged my thinking on open source and made me ask the difficult questions that OSS proponents don’t seem willing to ask. That’s why I’ve been writing that OSS will not kill the software industry as we know it. Rather, OSS will be a component of every software vendor’s strategy.

Like you, I read OSS proponents claim that the lowered marketing, distribution and sales costs associated with OSS would ultimately convince all proprietary vendors to open source their products or perish. These proponents could only hope to be as correct as one can be in predicting a winner based on the score after two innings.

Yes, OSS lowers marketing, distribution and sales costs. And yes, OSS is a great way to drive revenue from $0 to $X. The value of $X differs based on the software segment in question (i.e. operating systems vs. business integration vs. databases vs. content management). I’d put the value of $X at $100M for most software segments. Once an OSS vendor approaches $X, their business dynamics, and more importantly, customer dynamics, change dramatically. These changes were not wholly understood by OSS proponents making the “repent or perish” claims, simply because virtually no OSS vendor had run into their $X figure at the time.

As the vendor reaches $X, they have saturated Category “C” users (i.e. those with cash and willing to spend cash to save time). Now, the OSS vendor must try to win with Category “B” users (i.e. those with cash, but who have been trained by the OSS community to expect value for free). This is no small task. It is however a task that requires significant marketing and sales expenditures. The only way that you can convince these users to pay is through the same route that proprietary vendors have been using for decades; sell proprietary products. Sounds vulgar, I know. I’m sure many OSS vendors will try novel tactics instead. It won’t work. Selling proprietary products, while sure to draw fire from “the community”, is truly the best way forward.

I’ve had conversations with several leaders at large(r) open source firms who have all expressed that, contrary to published reports, selling open source products is, simply put, difficult and gets more difficult as the vendor grows. It’s not surprising that their employers are all approaching their individual $X. This is why I believe that a fresh look at the OSS business model is required. Nobody seems willing to acknowledge this. Strategies that work from $0 to $X aren’t necessarily the right strategies to grow beyond $X.

Next up: The OSS business model is broken – here’s one potential solution