Economy conspires against proprietary software

Vendors of proprietary software are discounting their products in order to keep up with the pricing pressure exerted by open source.

Back in the good old days, enterprises paid through the nose for software and didn't ask too many questions. Those days are gone.

The Wall Street Journal reports that Oracle customers are asking serious questions about its bloated maintenance pricing, which no doubt translates into hefty discounts. Meanwhile, Microsoft is shaving its leasing pricing by as much as 25 percent , CNET notes.

What gives? Not customers, at least--not to the same level they used to, which is forcing software vendors to drop their pricing to keep up. According to a recent Goldman Sachs CIO survey , cost reduction is the No. 1 priority for CIOs, and open source is rapidly gaining mind share as a primary way to achieve this.

Vendors, both open source and proprietary, may not want to compete on price, preferring to focus on differentiating technology. But in this environment, cash is king, and open-source software requires less cash.

How much less? Well, you can always calculate just how much money you're saving by reusing open-source code in your project, but at a high level, consider this: while open source requires no acquisition charge, it can also cost considerably less in implementation fees because open APIs, open standards, and code transparency translate into lower deployment costs.

Oracle and Microsoft aren't going away anytime soon. They'll be winners through the downturn.

But when you see these "winning" vendors having to aggressively discount their pricing to compete, imagine what the lesser vendors have to do...and smile if you've invested in an open-source company.

Follow me on Twitter at mjasay.

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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