Does selling mean selling out?

by Brett Shoemaker on February 01, 2008 08:51pm

As an open source business strategy lead here at Microsoft, I am particularly interested in community reaction following acquisition waves like the one we have seen recently (Sun/MySQL, Nokia/Trolltech, SpringSource/Covalent, etc.).  While I am interested in reaction to each announcement individually, I find those that attempt to extrapolate what the event says about the broader OSS landscape especially interesting.  This time around, one question that keeps surfacing is whether open source companies have sold out.  Put differently, does selling mean selling out?  My answer is no.

First, let me quickly point out the obvious.  This recent wave of open source acquisitions is nothing new.  Over the last 3 years, we have seen a number of open source companies sell to traditional ones (e.g., Zimbra to Yahoo, XenSource to Citrix, Gluecode to IBM).  There is also a continuum of “ownership” and participation at the project level as well from company-driven to community-driven projects (e.g., from IBM’s influence over Geronimo to Zend’s PHP involvement to community-driven projects on Sourceforge or CodePlex).  And, there is a continuum of opinion on it. 

When I hear the question raised of whether open source companies are selling out, my reaction is “Why should OSS companies be held to a different standard than that of traditional ones?”  What I mean is that I expect companies, whether open source or not, to do what is in the best interest of their customers and provides the best opportunity for future growth.   The question should not be are OSS companies selling out, but rather are OSS companies selling to the right companies and in what ways will it further the company’s purpose. 

Furthermore, the approach that an OSS company takes—IPO, acquisition, VC backing, or go-at-it-alone—doesn’t particularly matter.  Today, we see more acquisitions and not IPOs because these traditional companies place higher valuations on these OSS companies than the market does.  While the market focuses more on revenues, these traditional companies price in other variables (competitive impact, benefits to existing complementary offerings, etc.).

Does this acquisition trend mean that the terms open and closed source will no longer be relevant in the future?  Maybe.  Maybe not.  To me, it’s minutia compared to the overall trend.  I expect to continue to see convergence between the traditional and open source business models, and I expect to see Microsoft and other traditionally proprietary companies’ involvement continue to grow, as it is in the best interest of customers, partners, and shareholders.  The heterogeneity of the technology landscape will continue to grow and consist of multiple source approaches so as to deliver the most value to customers.  So, for me, this wave of acquisitions is nothing more than the next logical step on that path, and I’m excited to be a part of figuring out those next steps.

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