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.

Featured Video
This content is rated TV-MA, and is for viewers 18 years or older. Are you of age?
Sorry, you are not old enough to view this content.

Toshiba's Radius 12 is a stunning hybrid laptop with some comfort issues

It seems speedy and it has a beautiful screen, but the Toshiba Satellite Radius 12 might not be worth your money. CNET's Sean Hollister goes hands-on.

by Sean Hollister