Dear Microsoft, HP, IBM and Oracle:
Okay, prospects for enterprise software sales look a little bleak. The world is in a recession and being able to sell millions in licenses is becoming harder and harder. Plus, the new U.S. administration is getting caught up in phenomenon called “open source”.
President Obama has asked for Scott McNealy to provide advice on this “open source” thing, while a number of Silicon Valley software companies have written an open letter to promote it as well. Plus, Senator Rockefeller is now wanting to require open source software as part of health care reform.
I’m writing to tell you to relax. There is a silver lining. As is typical with government, while the hue and cry for open source is starting, no one has taken the time to actually define what open source means. Although a definition has existed for many years, business interests (of which you can be a part) have blurred it so much that anyone, including yourselves, can become open source companies simply by releasing a little software code and by making a few minor changes to your website.
Now, I’m sure the idea of publishing your source code is scary, but it doesn’t have to be. Think of it as “fauxpen source“. Take some product that is pretty much end of life, sanitize it a bit and release it as open source. Call everything else “enterprise extensions”. Update your website and suddenly you are an open source company. Or, you can just acquire an open source company (I’m looking at you, Oracle) and be assured of a piece of the coming windfall.
It gets even better. Remember how normally you’d charge 100% of the cost of the software up front, plus 20% in maintenance every year after that? Over five years you get 180%.
With open source, charge 40% of the cost as a “yearly subscription”. You can immediately point to a 60% cost savings over “non-open source” solutions. Over five years, however, you’ll net 200%. Plus, since the software license is limited to one year, should a customer decide not to renew they lose the right to use the software altogether (unlike the old model where the license would let them continue even without maintenance).
Open source is the wave of the future. Don’t miss out.