Open source can still win in a down economy

In meetings with venture investors in the last few days, it became clear that the impact of the credit crisis and the overall bleak economic outlook has people really freaked out.

Rightly so, but it's times like these in which smart investors invest in early-stage ideas that will take a few years to mature.

While it's clear that spending will slow a bit in the technology sector, today's environment is less risky than that in the last meltdown, in which everyone was overinvested in technology. That doesn't mean that we won't be impacted; it means that the nuclear winter in financial services probably won't affect tech as much as it did circa 2001, when many start-ups failed, and big companies lost billions of dollars.

Open-source consumption did really well during the last economic downturn. In this downturn, open source offers the best value for money, and with more mature supported products, enterprises can continue to innovate while budgets are frozen.

SourceForge saw a significant spike in downloads in late 2000 and 2001, according to Ross Turk, director of community. Why? Nervousness about the economy drives down IT budgets, but it doesn't necessarily reduce IT expectations.

If you are trying to do more with less, open source helps you get things done with a try-before-you-buy approach, instead of a huge up-front investment. Large vendors such as IBM, Intel and Novell, all which fund open-source development, will likely continue to fund the developers and the projects, which are now core parts of their products. In fact, I think that the guys working on open source in big companies have more job security than almost anyone else.

Open-source consumption is in for a boom, and commercial open-source start-ups should be able ride the wave, provided that they have enough adoption and working capital to get through the rough patch.