SpikeSource shifts gears, eyes smaller firms

The open-source services firm has reorganized to sell to medium-size companies through channel resellers.

SpikeSource, one of the first companies to stake out a business in open-source services, has changed its strategy to focus on medium-size customers.

The company's original business plan, revealed in fall 2004, was to provide testing and certification services to large corporate customers for open-source "stacks." These stacks are pre-integrated open-source components such as tools, databases and operating systems.

In the past year, SpikeSource, headed by Kim Polese, has refined its strategy to sell services to midsize companies through value-added resellers, company executives said. Polese was the original Sun Microsystems product manager for Java and was a prominent figure during the dot-com era as the CEO of Marimba.

"There was a realization that there was this larger untapped opportunity with small and medium-size firms," Joaquin Ruiz, SpikeSource's vice president of marketing, said Wednesday. "Larger organizations, while are they are a good opportunity, have longer sales cycles."

He noted that spending on information technology at small and medium-size businesses is growing substially faster than at large corporations. Also, there is growing interest in building applications such as Web content management systems using open-source components, he said.

SpikeSource's strategy is to sell to value-added resellers and other channel distributors that build customized applications. End-customers, particularly smaller organizations, often purchase hardware or finished applications from a regional reseller or consultant.

SpikeSource provides pretested and bundled stacks of various open-source products, and offers regular updates and support services. The company is pitching this automated update service to channel partners as a cheaper and simpler way to keep open-source software components up-to-date.

"We can do this at scale, so our value proposition to them is better margins because we can be more cost-effective," Ruiz said.

So far, the company has signed on about 20 partners in the U.S. and about six in Europe. SpikeSource intends to introduce an extended value-added-reseller partner program in Europe this fall.

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