The risks of open source focus

My last post addressed the nature of open source evolution and the [increasing] risks of generic strategies within the context of industry maturation. However, I did not delve into an analysis of the risk of focus simply because I felt that the topic might warrant another blog post to itself. Along those lines now, when there is an unprecedented level of activity in the commercial open source sector, more than ever, it's appropriate to work towards an understanding of:

1. What the risks of open source focus are
2. How they are affecting industry maturation
3. Where they fit into the competitive dynamics of commercial open source

That being said, focus of any variety carries its own set of cost-benefit realities. In the case of open source focus at this stage, of what is turning out to be a disruptive period, in the history of the software industry, there is undoubtedly a slice of profitability for vendors that accept both the risks and rewards of the model. However, as the open source marketplace evolves so do the forces enacted upon its participants. As such, the risks of open source focus haven't necessarily transformed, only the associated implications have shifted.

This shift, from my perspective, will serve to create a new class of truly hybrid vendors that develop software in thoroughly open and transparent communities but also offer other products and/or components that are proprietary. Some might scoff at this assertion since what was described sounds exactly what a number of commercial open source vendors have been/still are doing for a while. However, these hybrid vendors of the future won't only look to monetize across different versions of the same product (i.e. community & enterprise) but over a portfolio of offerings that consists of those offerings that are fully open source and those that are closed source...without losing sight of their commitment to the open source software model. This evolution will be driven by the following risks of open source focus:

• Widening cost differential eliminates the advantage of focusing solely on open source.
• Narrowing differences between desired products and services within the marketplace.
• The economics of a one-sided software portfolio. 

Not that the above risks will bring about the end of commercial open source by 'forcing' vendors to sell proprietary software, only industry maturation will present a number of business opportunities associated with doing so...in much the same way that proprietary vendors are utilizing open source without fully opening up. It will be interesting to see how this affects the definition of what it means to be an open source/proprietary company as well as customer expectation for both.

Technorati Tags: risks |  open source software | generic strategies |  competitve dynamics | industry evolution

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