It seems as though the explosive growth of the open source software industry has brought about the drastic polarization of thought in terms of its future. At one end of the spectrum you have the idealists who think that in 5 years every software company will have to be open source (see: 1998 predictions that by 2002 every company would be doing $100M in e-Commerce). At the other end you have the constant forewarning of impending open source doom that push the idea that this is the recent growth is a bubble and is destined to explode sometime soon.
The truth is that both perspectives are wrong without being entirely off the mark. The future is going to entail a continued rapid proliferation of open source as a whole in addition to the erosion of certain of its other aspects. And this is actually a fundamentally good thing, no matter how tempting it may be to assume that the recent growth we're seeing is going to continue indefinitely (in its current form) or that things are 'oo good to be true and will come crashing down any moment now.
An Open World
However, there are various 'signs of the times' that open source is primed to entirely shake the foundation of the IT industry and usher in a new era of software services instead of licenses. Open source is already a top level agenda item for CxO's in organizations of all size, across the world. There has been a marked commitment by venture capital funds to investing in open source companies not only because it is the new kid on the block but also because it's a model that is here to stay. Also, proprietary software companies are still being funded but it is becoming increasingly more difficult to justify the value of keeping their product closed to investors and customers. Various business strategies regarding open source have become common talk amongst those who follow the industry because there are now sizeable audiences/platforms for such discussion(s).
Nonetheless, the Big Three (Microsoft, Oracle, SAP) have a stranglehold on three important channels that account for a majority of IT spending: the operating system, back-end data storage, and enterprise software (CRM, ERP, supply chain). Plus they still have such an entrenched advantage stemming from their revenue and install base that many open source products are reduced to alternatives instead of competitors. And while there is absolutely no doubt that the availability of open source solutions will continue to grow in breadth and depth, the aforementioned behemoths have attained more than just market share, they have thought leadership and the financial resources to withstand the onslaught of open alternatives. A concrete reality that is and will continue to actually call for (not to be mistaken for cause) the decomposition of parts of the open source industry.
As can be seen through the movement of demand driven supply, certain parts of the open source community are slowly decomposing into other efforts or simply into non-existence. For example, there are over 350 different Linux distributions currently available but most of them have long since 'given up the ghost' and are inactive. This is a trend that is going to take hold within other areas, leaving a number of projects as well as companies in its wake. Some of the companies that have attracted attention as open source front-liners today will either be acquired by larger competitors or go out of business altogether. The products will remain in circulation based on the availability of the source code, but the user/development communities will initially suffer from the lack of dedicated commercial backing. Also the barrier of entry for starting successful open source projects will spike significantly, effectively making it harder for the next JBoss or MySQL to emerge from the pack. It will become more of a struggle to build attract and build a community organically over the coming years than it has been up until now.
These developments don't mean that growth (both financial and organic) is set to come to a screeching halt by 20XX. It only signals that the face of open source is going to go through changes that will inevitably involve companies being consumed through acquisition and lack of demand for their product/services. Still, the prospect of comparatively large (in both size and revenue) open source software & service companies emerging from this evolution is quite strong. As a matter of fact, the withering of other parts of the community will actually fuel the growth of both established as well as some new entrants. Plus, this transformation will coincide with an increase in understanding related to the dynamics of open source by large numbers of the general population, which the lack thereof has limited widespread adoption thus far.
What it Means
This growth and decay should not be viewed as an alternating set of time periods that happen distinctly from each other. Rather they should be looked at as balancing factors that will be/are occurring right now. These factors are apart of a process that is going to result in the establishment an even stronger open source ecosystem, one that will serve as a foundation for the next generation of IT. A formation that doesn't imply the total extinction of all proprietary software, nor the end of expensive, bloat-ware, but one that has and will continue to provide strong, cost-effective offerings attuned to the needs of those who use it.