Ian’s Blog on Open Source Marketing

Last week I was writing my presentation for the upcoming joint seminar with Unisys focusing on the commoditization of ECM and it reminded me of a book and phrase “Barbarians at the Gate”. I worked in enterprise software for 20 year and still have many friends there. A thing that is often said is “The problem with open source is it is 10 times cheaper than enterprise software so you have to do 10 times as many deals”. The key thing here is commoditization is happenning and the commoditization is happenning at the software, business model and marketing levels. The net effect is that the large enterprise deals are going away and the sales process is being commoditized. What is key now is to have a business model that is efficient in this new world.

Geoffrey Moore was always my marketing hero and in “The Gorilla Game” (1998) he makes some points that are particularly applicable today and to working in “Open Source Time”. Moore talks about the differences between “Applications and Enabling Technologies” (page 65) and says:

“The plug-in structure of layered technology, makes it critical for standards to emerge in the enabling technology layers, but it is not as critical for this same process to occur in the application layers.” Applications “do not commoditize easily and thus cannot proliferate as broadly or interoperate with other systems as intimately. As such these vendors have networks effects only with entities immediately adjacent to their market space … By contrast enabling technologies commoditize extremely well, allowing them to proliferate into markets far afield from the original starting points and generate a high degree of network effects. These in turn put pressure on the overall marketplace to standardize exclusively on a single set of components driving market shares to extraordinary levels …”

Open source is key driver of commoditization and a modern example of the network effect. These principles explain why many of the leading open source companies are infrastructure companies - they can be commoditized more easily and benefit more from the network effect - MySQL, Red Hat, JBoss. Traditional enterprise markets tended to follow a pattern of moving from hundreds of companies in a space, to a pack e.g. Oracle, Ingres, Informix and Sybase to a gorilla emerging form the pack - Oracle. In open source the network effect and commoditization happens much more rapidly - in open source time. That is why in many open source categories there is very quickly one clear leader.

Alfresco has benefited from these principles, being infrastructure software in a commoditizing market with a massive network effect. That is what has made it the clear leader in its segment in just over a year. GPL just accelerates the commoditizaion and network effect. We feel strongly that open source is the future of software. There is a phrase that you can’t be “half-pregnant” and similarly you can’t be half open source and half proprietary. It is open source, not hybrid models that will drive true disruption, commoditization and benefit most from the network effect. The GNU General Public License (GPL) is the ideal license to drive forward this industry disruption and accelerate the network effect. That is what drove us to move to GPL.

The acceleration of the network effect is happening. Friday saw us have 3 times the traffic we have ever had on our website and we have had more enquiries about Alfresco than ever before. Open source works and GPL just accelerates the network effect.

This entry was posted on Monday, February 26th, 2007 at 10:39 am and is filed under Open Source Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.