Open-source companies crashing en masse? Puh-lease!

One analyst thinks open-source companies are on the decline, but he's got his facts wrong.

Remember Trip Chowdhry, the analyst with Global Equities Research? He's the guy who said that Red Hat is rubbish, and that the entire LAMP stack is potty, too . He said this a year ago, and Red Hat has delivered three solid quarters of growth and profitability since then.

Given how far off Chowdhry was then, it's perhaps no surprise that he's now claiming that "'almost every VC funded open-source company is struggling and will run out of funds within the next six months," as reported in Barrons.

To be fair, Chowdhry doesn't stop with open-source companies, and insists that virtually the entire technology ecosystem is doomed to die a quick and painful death.

On open-source companies, however, it would help if Chowdhry actually talked to some in developing his "research." Given how shockingly off-base his information is, I can't help but respond, complementing the data on SugarCRM and Openbravo that The VAR Guy already provided on this topic.

Yes, I know of some open-source companies that are struggling. But they are the anomalies. I sit on 10 advisory boards of open-source companies, work for one, and hear about many more. Alfresco is days away from profitability with over $12 million in the bank (most of our venture money), plus is en route to its 12th consecutive growth quarter. Pentaho and JasperSoft have millions in the bank and growing revenue. MindTouch and Loopfuse are pulling in record sales, with millions in the bank, etc., etc.

Which open-source companies did Chowdhry talk to, if any? Yes, there will always be weak companies, open source and otherwise, but when writing analysis that real investors are presumably supposed to rely upon, Chowdhry has a responsibility to do real due diligence, due diligence that would have dispelled the myth that he just attempted to create.

Tech Culture
About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.


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