Dec 2005
Cashing in on open source software

The growth of open source software in the enterprise IT arena is changing the way that vendors, end users and investors do business and make money. It is a powerful force of change with both upside and downside. In the worst-case scenario, open source can do severe damage – to licensing schemes and to legal definitions of intellectual property – if used improperly. The potential benefits, however, are also massive – making it important to clearly understand the critical path to finding upside in the commercial adoption of open source. Vendors, in particular, face a major challenge in creating a commercial model around the delivery of open source platforms and applications.

This report provides analysis of the market opportunity for companies that are building or investing in open source technology, or are using it in the software they deliver to enterprise organizations. After examining the pros and cons of various licensing models, this report looks at the decisions that enterprises and vendors need to make when choosing whether to incorporate an open source approach into their businesses. It also discusses how investors should view the use of open source in potential investment targets and how open source affects the value of and risk associated with investments made in this area. Fifteen case studies yield a considerable amount of actionable advice for other organizations considering adopting similar strategies. The report also examines the four most-often-cited obstacles to adoption of open source software, which are: 1) software quality (or the lack of it); 2) the availability of commercial support; 3) deliberately disseminated fear, uncertainty and doubt (i.e., 'FUD'); and 4) license issues.

This report is more than 100 pages in length and was written by Rachel Chalmers, Senior Analyst for Enterprise Software at The 451 Group, with support from John Abbott, Chief Analyst; Chris Noble, Director of Research; and Martin Schneider, Analyst.

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About The 451 Group

The 451 Group is an independent technology industry analyst company focused on the business of enterprise IT innovation. The company’s analysts provide critical and timely insight into the market and competitive dynamics of innovation in emerging technology segments. Clients of the company – at vendor, investor, service- provider and end-user organizations – rely on 451 insight to support both strategic and tactical decision-making for competitive advantage.

The 451 Group is headquartered in New York, with offices in key locations, including San Francisco, London and Boston. For additional information on the company or to apply for trial access to its services, go to: www.the451group.com