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Analyst argues that capitulation to open source is proprietary software's best hope

Open source is here to say, finds Saugatuck. The way for proprietary software vendors to survive the onslaught is to become open source themselves.

Saugatuck Technology has some advice for proprietary vendors looking to survive the open-source threat to their businesses. Why? Oh, because enterprises are moving to open source in droves, with Saugatuck reporting that "Open source software's presence will increase from approximately 10% of key enterprise on-premise software in 2007, to between 15% and 20% by 2010."

According to a Saugatuck survey:

  • 25% of enterprises "always consider and evaluate open source alternatives when planning to acquire new systems, applications, databases or software tools."

  • 40% "frequently" consider open source alternatives for the same.

  • 50% report that open source software is widely used within their enterprises.

  • 60% state that open source software delivers significant business value to their enterprises.

Time to give up? Well, yes. Why? Because enterprises aren't giving up on open source anytime soon, as they told Saugatuck in a survey, in which they were asked why they increasingly seek open-source software solutions:

  1. Free acquisition

  2. An ability to customize and use the software code to whatever extent required and useful, and

  3. Reduced dependence upon software vendor technologies, license schemes, and maintenance/support requirements.

As Saugatuck reports, proprietary vendors don't have a good answer for this disruption:

These three core open source attractions - free acquisition, ability to customize, and proprietary vendor/tech independence - run counter to pretty much all core tenets of established, traditional software vendor business models.

So what's a proprietary vendor to do? I mean, besides actually stop pilfering from customers and deliver real business value?

...[V]endors will be best served by adapting their business models to take advantage of open source community development. We see two core models to accomplish this:
  • Incorporating commoditized applications, tools, or other code into more complex/sophisticated solutions, or

  • "Opening" their own source code (selectively, in most cases) to communities of users and engaging these communities to improve and expand software capabilities (e.g., Sun, MySQL,

In other words, Saugatuck is suggesting that if you can't beat open source, join open source. I couldn't have said it better myself. We're here to welcome you proprietary laggards. It's great to use open source to work with your customers, rather than against them.