Industry can consolidate for billions, or go open-source for free

Open source may offer technology titans a more efficient way to reach new customers than industry consolidation promises.

Oracle has spent tens of billions of dollars buying companies that give it a diverse, rich product portfolio. Such industry consolidation also, not coincidentally, has granted Oracle significant pricing power and a ready-made bevy of customers to which it can cross-sell its products.

I wonder, however, if this is the best way for Oracle to be attracting new customers in a slow-growth enterprise software market.

I've suggested before that open source provides an efficient way to distribute software and attract new customers . No, it currently doesn't generate Oracle-worthy billions in profits, but it wouldn't need to for Oracle to make good use of it.

In MySQL, Oracle bought a fantastic complement to its proprietary database business and, as such, it also acquired an excellent on-ramp to a wide array of proprietary Oracle technology, including its flagship database. Open-source purists might not like such a strategy, but it is the very same strategy that MySQL was pursuing before it was acquired by Sun, and which it continued to espouse post-acquisition.

Let's just say that Oracle is likely to get more bang for its proprietary buck than either MySQL or Sun could achieve.

Oracle, of course, isn't alone in standing to reap benefits from open-source "on-ramps" to its proprietary products. IBM has been working this strategy for years , and to great effect. I think we'll see Microsoft adopting this approach for some of its products soon enough, too, especially as its Windows client business loses pace within the company and it seeks ways to spruce up adoption.

An open client that feeds into closed cloud offerings seems like a great strategy, and it's one that Microsoft is already mimicking with its SharePoint product.

Yes, these companies could spend billions acquiring competitors and complementary product lines so as to achieve economies of scale and sale, but they could also discover the ease of distribution that open source offers. It's a lot cheaper and could prove equally or more effective.


Follow me on Twitter @mjasay.

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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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