Consolidation and open source: Not likely anytime soon

The commercial open-source world may have no other option beyond creating sustainable long-term businesses because the M&A market may not have much to offer it.

CNET News Editor in Chief Dan Farber believes a wave of consolidation is about to hit the technology industry , as "sharks--Microsoft, Google, Hewlett-Packard, IBM, Cisco Systems, Oracle, and a few others--are looking at the landscape to see what fits best into their portfolios at discounted prices." I think he's right.

What will this mean for open source? Dave Rosenberg recently opined that Cisco could become the big consolidator of the commercial open-source ecosystem. He may be right, or perhaps Red Hat or Sun Microsystems will step up, though neither has the market capitalization to spend willy-nilly on acquisitions.

Given that most open-source companies are still doing less than $50 million in sales (a factor of their recent vintage, and not their potential, I would argue), it may be that the only companies that can afford to corral them will be the big ecosystem vendors: Cisco, Oracle, Microsoft, SAP, IBM. But then, as Dave points out, such acquisitions may not move the revenue needle enough for a Cisco to justify the experiment.

Not to worry. This may turn out to be an exceptional opportunity for open-source companies to prove that they can grow and scale into standalone entities. There may not be any other choice given the bleak macroeconomic conditions. I suspect we'll see an occasional acquisition in the open-source world over the next year or two, but for most it's time to prove a recessionary "flight to value" favors open source .

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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