The next $1 billion open source acquisition? Give it 12-18 months

Open-source companies will increasingly top $1 billion in valuation.

Michael Tiemann's Cygnus Solutions held the open-source valuation record for nearly a decade at $674 million. A few weeks back, Sun broke that record by paying $1 billion for MySQL. So how long does Michael think MySQL will hold the record?

Not very long.

...I would not be surprised to see another $1B deal of some sort in the next 12-18 months. The reason is simple economics:

open source beats proprietary software as a development platform and as a value-delivery platform, and given how many millions of dollars companies are seeing wasted on proprietary software, it's only a matter of time before the majority of software technology deals are denominated in open source.

I advise 10 open-source companies and see amazing growth rates. Most open-source companies are starting from small numbers but several of these (counting companies I advise and some that I don't advise) will top $100 million in sales within the next five years. Some get there within the next two or three years.

At those sales figures, $1 billion may become the new norm for open-source valuations. The real question will be whether any will stick it out long enough to hit $1 billion in sales, and not just valuation.

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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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