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Commercial OpenSource: SpringSource CEO Rod Johnson (Part 5)

Posted on Sunday, Jan 18th 2009

SM: If you are doing an OpenSource application server I have no problem gauging the size of that market.

RJ: Obviously there was already one significant player in that space, JBoss. JBoss was really largely a commodity play similar to MySQL. We have previously brought genuine, new ideas to market, and that is what we intend to continue to do. That has changed the way people do Enterprise Java; thus, we see ourselves as being truly innovators in this space.

OpenSource for us is less fundamental to the company than thought leadership. OpenSource, for us, is a means to an end. Then end in our case is that we honestly think we have the best solution.

SM: If you are saying $8 billion is the enterprise application server market, you are probably going to drop it down a bit.

RJ: We are going to drop it down some. The reality is that many customers did not need the products they were sold. That must be accounted for in the $8 billion. One of the advantages we have is that we are not associated with that baggage. If you represent a large company that sold people things they didn’t need, you cannot admit that. A new challenger can come along and be a lot more honest.

SM: You can also play with business models and financial models that large companies cannot. You can come up with something hugely more efficient whereas your competitors cannot, as it will cannibalize their core market.

RJ: There has been little economic incentive for large companies to give customers in Enterprise Java what they actually wanted. Oracle and IBM are really pushing people to complexity which does not necessarily meet their requirements. We are focused around point solutions that immediately address the pressing needs of a client.

SM: Can you give me an example of that?

RJ: If you look at the way in which larger companies dress up an application server as part of suite strategy, which may or may not make sense for end users, you will see a great example of what I am talking about.

SM: Do you see what you are doing in the application server market as an industry trend going forward?

RJ: I think the industry goes through swings. It goes through times where it looks for best of breed, then it goes to suites, then it goes back through best of breed. I think the biggest threat to this space is overconsolidation. Oracle bought BEA. JBoss is no longer an independent vendor. That in itself is possibly a driver for more competition.

I think OpenSource as a distribution is unique. If you are a small company selling proprietary software without any OpenSource backing, it can be very difficult to get in the door. People get worried about source code escrows, and OpenSource alleviates that concern.

SM: We are seeing this in the CRM industry as well. I think that this model, at this point of the evolution, is a real trend.

RJ: In order to get new software in the door today it is pretty much essential to lead with OpenSource. I don’t see a lot of pure enterprise license players coming anymore. I do disagree with OpenSource zelots. I do not believe in our space that OpenSource is a fundamental good. Our software is primarily used by large companies.

SM: They are perfectly capable of paying and they should pay.

RJ: Exactly. I have never gone with the rich installment philosophy. If things are free, then it will enable large encumbents to deposition OpenSource as the threat. There has to be a viable economic model.

SM: Somebody has to pay for it. There are mortgages and bills that programmers must pay!

RJ: That might seem obvious to me and you, but you would be amazed at the number of people who do not find this obvious. I have offended people in the OpenSource community because I have always said that.

SM: There are also all sorts of web services which are free, such as the social network services. The expectation is that everything is going to be free. In that case the VCs have to pay for it. One way or another, bills have to be paid.

RJ: One of the amusing things about people in the OpenSource community is that they think VCs are demons. Ironically, these people are among the biggest beneficiaries of VCs. I think it is going to be interesting to see how this all plays out because this environment is going to drive a lot of companies to the wall. Obviously early stage funding is going to dry up. Any company that is developing a lot of OpenSource software but is not near profitability is going to come under a lot of pressure from investors to direct their efforts.

We are not overly concerned about the downturn, because we do think that we can help drive cost reduction. That has to be the conversation you are having with leads. It will be a short conversation if you are not explaining how you are going to help him or her reduce their IT budget. I also think it will be very interesting to see if it forces a ‘growing up’ to occur.

This segment is part 5 in the series : Commercial OpenSource: SpringSource CEO Rod Johnson
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