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Open-source companies to be acquired by proprietary vendors?

Open source is not going away. It's coming into its prime. Tim O'Reilly correctly spots a trend but incorrectly assigns its significance, as it relates to open source.

I will predict that virtually every open-source company (including Red Hat) will eventually be acquired by a big proprietary software company.

Thus spake Tim O'Reilly in the comments to one of his other posts. Tim believes that open source, at least as defined by open-source licensing, has a short shelf life that will be consumed by Web 2.0 (i.e., Web companies hijacking open-source software to deliver proprietary Web services) or by traditional proprietary software vendors.

In other words, why don't I just give up, sell out, and go home? I guess I would if I thought that Tim were right. He's not, not in this instance.

There's something more fundamental going on here than "Proprietary software meets open source. Proprietary software decides to commandeer open source. Open source proves to be a nice lapdog to proprietary software." I actually believe that open source, not proprietary software, is the natural state of the industry, and that Tim's proprietary world is anomalous.

Doc Searls used to compare the software industry to the construction industry, and I think the analogy was mostly apt. It was apt because it contemplated software as being more like a commodity business that focuses on service than a business framed by heavy intellectual property and light service.

That's how the vast majority of the world's businesses operate. There's no reason to believe that software is different, as Jonathan Schwartz and others have argued.

Sure, it was very different for several decades while we played with our new toy (software). Back when it looked like this software thing actually was different, it made sense to treat it as such.

Open source has completely obliterated that transient, silly notion. Frankly, so has Web 2.0.

The emphasis in software is shifting away from software to the services it enables, whether those services are expressed in support and things like Red Hat Network, or whether those services are described in things like "search" (Google), professional networking (LinkedIn), etc. This, however, makes open source more relevant than ever, not less so.

Suddenly, the license matters more, not less, because it is the license that ensures the conversation focuses on the right topic--service--rather than on inane jabberings that only vendors care about. You know, like intellectual property.

It may well be that proprietary vendors will desperately try to keep the emphasis on software and learn the new world by acquiring open-source vendors. Given where the money currently sits, I think that's likely true.

But that's a transitory state. Over time, the money is going to shift to those that focus on customer needs, not vendor needs. In other words, it's going to shift to open source and SaaS (Software as a Service).

I look forward to buying Microsoft. I've got a great job ready for Steve a product evangelist.