Overview 1
Catalyst 1
Summary 1
Table of Contents 2
Table of figures 3
Table of tables 3
Introduction to Open Source Software 4
The history of enterprise IT shows that OSS is not a new paradigm 4
Commoditization of IT and liberalization of the intellectual property regime underpins OSS 4
OSS: a licensing, development, distribution and business model 5
OSS licensing: Promoting accessibility, transparency and freedom 6
Licensing is central to OSS as it determines the mode of engagement with the code 6
OSS licensing promotes distribution, accessibility and modification 6
Copyleft licenses: preserving the freedom of the open code 7
GNU General Public License has emerged as a default copyleft license 7
Permissive licenses: protecting flexibility and promoting adoption 7
The collective impact of the principal permissive licenses on the enterprise OSS market is considerable 7
OSS licenses form a spectrum ranging from the copyleft to the permissive approaches 8
Copyleft remains important but permissive licenses will gain in prominence as the constituency expands 8
OSS offers a compelling software development and distribution model 10
Gratis enables lower acquisition costs and the pull adoption model 10
Unhindered distribution lowers the initial costs, enabling a pull-based acquisition model 10
The pull-model lowers the sales, marketing and distribution costs while reducing the risk of project failure 11
Liberal engagement with the code accounts for the unique benefits of the OSS model 11
The open approach to source code can deliver well-tested, modular, flexible and interoperable software 11
The ability to fork code lends the OSS model a degree of evolutionary resilience 12
Based on the twin pillars of gratis and libre OSS remains a compelling development model 12
OSS business models 13
Not-for-profit organizations: volunteering and sponsorships 13
The pure OSS business model: services and other non-product revenues 13
Subscription services have emerged as a mainstay of the pure OSS business model 13
Service-intensive business models are better suited for complex systems 14
The hybrid OSS business model: the best of both worlds 14
Dual licensing model: the code is simultaneously available under an OSS and a proprietary license 14
Despite the availability of the OSS version, a proprietary license may be preferred by some customers 14
The dual licensing business model has been successfully applied to IT infrastructure projects 15
The open core OSS business model: OSS core and proprietary extensions 15
The open core model is attractive but requires superb execution of community and product management 15
Permissively licensed enterprise applications are particularly suitable for the open-core business model 16
The open periphery model: proprietary core and OSS extensions 16
The proprietary core has to be large enough to support the OSS extension ecosystem 16
OSS as a business enabler: OSS embedded at the core of a business model 17
Embedding the OSS in proprietary software is a possibility with permissively-licensed products 17
Purists' complaints aside, OSS could play a key role in enabling successful business service 17
Despite some differences, the enabler approach closely resembles the classic services-based OSS model 18
The future of OSS is in enabling online services, including cloud computing 18
OSS is an IP regime enshrining the freedom to obtain, inspect and modify the code 18
Customer Adoption Overview 19
The impact of OSS can be difficult to measure 19
OSS is present throughout the stack but most widely adopted in the infrastructure layer 19
Commoditization and developer-led adoption are behind OSS' success in IT infrastructure 19
Systems management and middleware technologies also form a natural fit with OSS 20
Recently, OSS has been crossing the chasm and gaining traction in the applications market 20
OSS is set to thrive in the enterprise technology stack, but not without creating frictions 21
Despite public sector focus, OSS is widely deployed across verticals 21
The public sector is a strategic market that validates the OSS approach and creates a potent network effect 21
The public sector has slightly higher expectations, but other verticals are just as optimistic 21
The link between national initiatives and OSS adoption is more apparent than real 22
Strong arguments in favor of the national adoption of OSS can be heard in certain parts of the world 22
Strong rhetoric does not always translate into enterprises' readiness to adopt OSS 23
The UK is frequently singled out as an OSS adoption laggard 23
Rigid, protracted and vendor-focused procurement processes continue to inhibit OSS adoption in the UK 23
Mundane concerns can play a far greater role than bold public statements 24
OSS Competitive Landscape 25
The OSS competitive landscape consists of a patchwork of providers 25
Red Hat has emerged as a clear front-runner among the OSS IT infrastructure vendors 26
Red Hat's performance during the last 12 months has been exemplary but a few challenges remain 26
A diversification strategy led Red Hat to expand into adjacent middleware and virtualization markets 27
Reluctance to confront the database layer illustrates Red Hat's future predicament 27
Whether Red Hat escapes the gilded cage of its Linux business depends on its diversification strategy 27
Novell and Canonical both offer viable alternatives to Red Hat in the infrastructure market 28
Under Canonical's leadership Ubuntu is expanding from the desktop into the cloud 28
Novell remains a formidable competitor, particularly in the mainframe, desktop and SAP segments 28
The competitive landscape for OSS middleware and applications is dominated by hybrids 29
WSO2 and Mulesource show that different business models could be adopted in the same market segment 29
Several OSS application vendors have proved able to compete with the entrenched proprietary incumbents 29
IBM and Oracle have pragmatically adopted a hybrid approach to OSS 29
IBM has recognized the role of OSS as a part of its to services-based transformation 30
Oracle continues its long-term strategy of embracing OSS with a dose of ruthless pragmatism 30
Following the take-over of Sun, Oracle will control more OSS assets but will not change its stance 30
The threat of negative community reaction will safeguard the future of Sun's OSS assets 31
Google's complex relationship with OSS points to the future of the paradigm 31
Google consumes, hosts and develops prodigious quantities of OSS code 31
Google's business model offers a unique insight into the OSS model of the future 32
Google's strategy portends the shift of emphasis away from the code in favor of transparency and APIs 32
Software foundations are set to continue to play an important role in the OSS market 33
Eclipse: a wonder of collaborative product management 33
Apache Software Foundation: guarding the future and archiving the past 33
Following years of hostility, a fragile Microsoft-OSS détente is on the horizon 34
Microsoft's interoperability agenda marked the first step but many larger strides have followed 34
Controversial as it may be, the Novell deal marks a watershed in Microsoft's attitude to OSS 34
Having hosted and contributed GPL code Microsoft should be considered as a hybrid OSS vendor 35
Microsoft's motives can be debated but should have no bearing on the significance of the move 35
Amidst the détente, Microsoft remains selective in its adoption of a conciliatory stance 36
Microsoft's attitude has transformed from vehement opposition to selective self-motivated collaboration 36
Datamonitor Opinion 37
OSS has won its place in the enterprise IT market but many challenges remain 37
The OSS genie is out of the bottle and there is no way to put it back 37
OSS has become an integral part of the enterprise technology market 37
In order to compete with the proprietary model throughout the stack OSS needs to learn new tricks 37
APPENDIX 39
Definitions 40
Methodology 40
Further reading 40
Ask the analyst 41
Datamonitor consulting 41
Disclaimer 41
List of Tables
Table 1: List of OSS vendors in IT infrastructure, middleware & enterprise application market 39
List of Figures
Figure 1: Summary of the basic open source license principles, according to the OSI definition 6
Figure 2: Map of the principal OSS licenses along the copyleft/permissive spectrum 8
Figure 3: License adoption shows a long tail of permissive licenses behind the copyleft GPL 9
Figure 4: The two principal elements of OSS freedom 10
Figure 5: Relying on a pull model, OSS alters the traditional push-driven software acquisition process 11
Figure 6: Enterprise OSS adoption across the IT infrastructure, middleware and application stack layers 20
Figure 7: Public sector institutions perceive OSS very positively during the downturn 22
Figure 8: Despite the absence of mandated adoption, enterprises in the US remain bullish on OSS 23
Figure 9: A simplified OSS competitive landscape framed within the enterprise technology stack 25
Figure 10: Red Hat stock price has outperformed its competitors during the last 12 months 26