February 24, 2003
Open Source cuts out intermediaries
Tonight, there was the (late) 2003 working year kick-off meeting of the BeLux XML user's group I'm participating in. We've got a line-up of 6 planned events for this year, and no conference as we did the other years. People seem to like short half-day focussed events better than day-long group gatherings with speeches and all. If all goes well, we'll get Mike again, now about XQuery, and possibly Dave, too.This afternoon, we had a prospective meeting with some guy working in business intelligence and data warehousing (which we don't know sh*t about, but want to learn because of xReporter). The meeting wasn't exactly a success, except for the nice and open discussion, which taught me something about open source and how it will get us rid of intermediaries. We thought the guy was a consultant, but he was refocusing his line of business more towards software distribution this year. So we were basically trying to come up with a business model for distributors of open source software. For a one-man company like his, he said selling 4 copies of a certain (proprietary and expensive) software tool meant breaking even for a year because of the margin he got on the license sale. Any extra services on top of a software sale was money in the pocket. He also stated the average cost of 15% licenses on a large project wasn't big enough so that IT managers would change their perspective on open source just for budgetary reasons. They might be doing that for brand awareness reasons, and that was what a distributor could help you with.
Needless to say, doing this with open source tools is more of a problem... If people need services around xReporter, they are more likely to come and talk to us. And because xReporter is open source, they are not required to come and talk to anyone anyhow. In any case, we felt it was quite 'difficult' to agree on a margin for him, calculated on a license cost of zero. And he had no time to invest in learning to use xReporter so that he could sell its own services around it. Does that mean open source is the end of all intermediaries?
Comments
IBM seems to think/hope so, since they've built their business around it. Sure they make money on websphere, etc, but they would love to see a world where the money is in the integration services, not the software...to some extent we probably live in that world already.
Posted by: Steve Conover at February 25, 2003 05:51 PM