Countdown - Open Source Style

I am a big fan of top 10 lists... particularly humorous ones a la David Letterman. While I can't claim that any of the top 10 list below is humorous, it does paint an interesting picture on the status of open source in the top 10 companies (by market cap) in the Software Application Industry (Technology Sector) of the stock market.

These 10 companies represent over 96% of the market capitalization in the Software Application category. At the end of each entry, I give the company a (purely subjective) grade reflective of its efforts, commitment and contributions to the open source community.

So, here we go...

10. Sybase ($2.7B) - Database Management, Information Management and Business Intelligence Software. Sybase appears to have made at least a minimal effort to embrace open source. It even has an OSI approved license (the Sybase Open Watcom Public License). More important is how many of Sybase's competitors have serious open source credentials ... MySQL/Sun, Pentaho, JasperSoft, GreenPlum. Grade - D.

9. Nuance Communications ($4.1B) - Speech and Imaging Solutions Software. A search for "open source" on the company website results in 0 hits. Enough said. Unfortunately, there are no open source options. Grade - F.

8. Red Hat ($4.2B) - Linux and JBoss Provider. Red Hat, as we all know, is one of the premiere examples of open source software industry success. Enough said. Other Linux providers exist, as do other OS providers, but Red Hat is the go-to open source vendor. Grade - A.

7. BMC Software ($7B) - Enterprise Management Including Application & Database Management. As with Nuance, a search for "open source" on the company website results in 0 hits. However, BMC has a developer network with various, small-scale open source projects. Grade - D.

6. Intuit ($9B) - Personal Finance, Small Business and Tax Software. Intuit does not appear to have any significant involvement in open source and this probably is not the type of software that has attracted a developer community to create open source alternatives. Grade - F.

5. CA ($12.3B) - IT Management Software. To my surprise, this 30+ year old company has embraced open source in a significant way. For example, CA has supported the open source industry's patent pledge for several of its patents. Grade - C.

4. Adobe Systems ($21.6B) - Creative, Knowledge Worker and Enterprise Software Applications. Facing the commoditization of it biggest revenue generating applications (Photoshop and Acrobat), Adobe has taken the initial steps it needs to diversify its business into open source in a significant way. Grade - C+.

3. SAP. ($60.1B) - Business Operations. SAP has dabbled in the open source world, partnering with MySQL on database technology. Overall, however, SAP hasn't made many significant contributions to the open source community. Grade - D.

2. Oracle ($111B). Database, Middleware and Enterprise Management. Oracle might be described as the Jeckyll and Hyde of open source. While it distributes several open source applications (such as Sleepycat and Innobase), it also actively challenges other open source providers (such as with Unbreakable Linux) and would likely acquire competing open source companies to eliminate a business model that threatens its own. This duality makes it hard to settle on a grade. Grade - C-.

... drum roll ...

1. Microsoft ($277B). It's no surprise that Microsoft is in the number one spot (even on Letterman the #1 is always anticlimactic). In spite of making substantial contributions of code as open source, Microsoft is the big bad wolf of open source for good reason... among other things, it has a very proprietary stance on patent licensing for open source projects. Grade - D.

Some other companies that didn't make the list due to technicalities are:

• Google ($178B) - would be the clear number 2 if it were in the "Software Application" category. Google would receive a B for OS Effort (knocked down from A because of its deceptively not open Android platform and other calculating open source strategies).
• Sun Microsystems ($10.2) - would be at number 6 if it were in the "Software Application" category (though its software business is probably valued at closer to $4B, which would drop it a few spots on the list). Sun would definitely receive an A for OS Effort as the largest open source software provider.
• Still other companies like HP and IBM have been long-time contributors to the open source movement, but are not reflected here.

I find it very interesting to note that of these top 10, only 1 got a grade better than C. In addition, one estimate of the total value of the open source industry ($60B) would place the entire industry at only number 3 on the list (though without an objective market cap value, it's hard to draw many conclusions from this).

On the other hand, if we add Sun and Google (two of the top open source contributors) we come closer to a critical mass of open source presence on the list, and lest we forget that numerous open source companies with no market cap at all (because they aren't listed on a stock index) are providing strong, competitive alternatives to the software and solutions provided by the companies on the list.

What can we conclude from all this? First and foremost, we can safely conclude that I am not a mathematician, statistician, or financial analyst, as evidenced by my loose use of numbers and grading to make my point.

More important, even a pessimist would have to say that the presence of a company like Red Hat on the list means open source is making significant inroads into the traditional software industry. The amount of innovation and competition presented by companies not yet public or too small to make the list yet indicates that the trend is strongly pointing towards greater adoption of open source. It might be only a handful of years before all of the top 10 companies on this list receive A's and B's.

Commercial vs. Free: Not a Zero Sum Game

Think back to 1991 and the release of GPLv2 ... the open source software community was abuzz with great anticipation that the goals of the "free software" movement would soon be achieved. Now fast forward to present day ... the open source software business is potentially worth as much as $60 billion, a small Linux provider named RedHat has grown into a successful public company, and an open source database company named MySQL has been purchased by Sun Microsystems for $1 billion. Does this prove the success of the commercial open source movement? Of the failure of the free software movement?

If the recent firestorm in the community over Sun's proposal to sell closed-source add-ons for the open source MySQL database is any example, then the open source community appears to have concluded that the success of one is only at the expense of the other. (In the interest of full disclosure, I am a MySQL/Sun employee, and these opinions are mine alone.) The community would rather punish MySQL, one of the pillars of open source movement, than applaud the prominence it has helped bring to open source through its innovative open source and business strategies.

This "zero-sum" attitude is not only wrong, but also harmful to the open source industry. Instead, the open source industry must accept that both open source purists and commercial opportunists can co-exist in the same environment without forcing an absolute choice between them. Though it appears more open source "rationalists" are reaching this conclusion, the community needs to start acting based on what is good for open source as a whole, not just the purist forms of open source.

The viability of this type of co-existence is well proven in other contexts. Take the example of environmentalism and the "greening" of the business world. Groups like the not-for-profit Sierra Club operate on the same playing field (though at the opposite end) as companies that use the "green" label as an insincere marketing ploy (I won't point any fingers). The business world accommodates this range of diversity allowing groups interested in societal change to organize as not-for-profit entities, which allows them to focus on their chosen area of social good without being subject to income tax. Entities like the Apache Foundation, Linux Foundation and Free Software Foundation play this role in the open source world by focusing on open source for the public good (and get a tax relief too).

At the same time, though commercial entities are primarily motivated by profits, the community pushes them to be "good citizens". We see the pressure the community puts on companies these days to pursue environmentally friendly policies in spite of (or sometimes in support of) their profit motives. Similarly, commercial open source companies perform good citizenship by acting in support of open source ideals, which not only builds community goodwill but also allows them cash in someday.

To make this drive to good citizenship most effective, communities need a way to differentiate commercial entities by evaluating them both their effectiveness and sincerity in pursuing. Many environmental groups act as watchdogs and standard setters for their commercial counterparts. Similarly, the open source community has taken a new focus on improving upon the traditional benchmarks of open source (choice of an OSI approved license and release of copyrighted code) with proposals to include patent and trademarks as well as business and development models in the standard definition of "open source". Another proposal is the creation of an independent body that would objectively grade companies on their "openness". While these are great solutions, they are not likely to reach their potential for effectiveness until we all recognize the importance of co-existence.

Just as we don't hold commercial entities to the same standard of environmental purity as we do the Sierra Club, the open source community must strike the right balance between pursuing its passion and pushing commercial open source companies to act in "acceptable" ways. It must not forget that open source advocates, and good ideas that can further the open source movement, can come from virtually anywhere in the open source spectrum. While it's useful to distinguish between commercial open source companies based on openness, the community must begin acting as if we are all in this together. If we don't learn to co-exists, we risk an irreparable fracture in the movement that we all support.