Software Industry Shortcut -- Open Source Code

In just five months, John Roberts set up a software company to launch the first product, and immediately had thousands of potential customers.

What is his secret?

Take the open source route.

Roberts's SugarCRM company officially announced its opening on the 2 day. It has earned $2 million in external investment and has become one of the first open source commercial application companies sponsored by the company.

Roberts deliberately announced this good news at the time of this week's Linux World conference in San Francisco.

"Open source code is a more efficient and effective software business model," Roberts claims. "The advantage is not only that software is cheaper, but also a pformation, a movement to build a contemporary software company's development model."

More and more entrepreneurs and investors like Roberts feel that opening source code is a better way to build software companies.

Unlike the establishment of traditional software companies, they must invest in huge start-up expenses and hire executives of software sales. Small companies choose to embrace open source business models, based on the readily available software components, call on volunteers to work together to develop products, and lay the foundation of potential customers through word of mouth among communities.

Roberts's small companies face competition from software giants such as Oracle, SAP, Siebel Systems, but entrepreneurs and venture capitalists are willing to take a chance because the initial investment is not high enough.

David Skok, a partner in Matrix Partners David, a leading investment company in JBoss, said: "entrepreneurs understand that open source code is a way to break the rules and quickly allow users to be accepted by users."

The interest of users is increasing and the market of open source companies has been improved.

In March, which released the research report entitled "open source code entering mainstream market withdrawal", Forrester Research said that more than 60% of the 140 companies that had received opinions were planning to adopt or are using open source products, including web servers, databases, development tools and even desktop computer software.

In the past, the traditional software company's model was to call on a group of strong engineers and management teams to get some financing, and then try to win customers who are not satisfied with the existing software.

In contrast, supporters say that the open source model shortens the whole business process, accelerates the time of the product to go on the market, and reduces the cost of the business that the company needs, and the product is better than the "closed source" software because of the pparency of the source code and the diligence.

Take SugarCRM as an example, the company's sales applications are all taken from popular open source infrastructure software "stack", including Linux operating system, Apache network server, MySQL database and P HP web development language.

The company based in Cooper, California, does not even have to buy server hardware for building software. It is hosted by a host leasing company in Cornell, Dick, which is cheap and economical.

If you take the traditional route, it will be expensive to purchase and purchase new hardware from commercial software.

Moreover, experts say that the operation cost of commercial open source software companies is much lower than that of traditional software companies.

The cost of operation has been reduced, coupled with low cost or even free, lt, P> has recently faced the dilemma of traditional software companies that, despite the rise in technology spending, companies are reluctant to buy software licensing contracts.

"Today's software prices are ridiculously expensive," said Josh Stein, another partner of SugarCRM Draper Fisher Jurvetson. "I think the new companies will not be SAP or Oracle, because the high-end prices that these companies rely on are bound to be driven by open source software."

At present, the operation mode of free software is roughly divided into the following categories.

One is the mode adopted by Red Hat Inc (Red Hat), which focuses on free software and provides member payment services and support.

MySQL, an open source database company, provides commercial licensing contracts to customers who need support in addition to providing open source authorization.

Other companies, such as Zend Technologies, a tool maker, also offer a more functional commercial version of the software in addition to providing open source software.

SugarCRM plans to sell its own software support services, and brews the website hosting products.

Do you still have challenges to overcome?

Despite its many advantages, open source business models still face significant challenges.

The "closed source" software company such as Microsoft and other companies can strictly monitor their intellectual property rights.

But open source companies may have potential legal traps because of the large number of sources of product components, which must be noticed by these software companies and their customers.

Black Duck Software chief executive Doug Levin said: "you have to properly authorize and clearly indicate all open source sources, including copyright and other documents."

The successful open source products need to work together, but at present there are not tens of thousands of projects under way.

Levin expects that future open source projects need innovative ways to attract followers.

For example, the Eclipse open source foundation is relying on IBM's software development manpower and a $40 million investment.

Relatively, by investing in open source plans, IBM, a solid software company, can acquire the latest technology to enhance the shortage of existing commercial products and open up new products.

Where is the market?

So far, the open source code has aroused the most enthusiastic response in the infrastructure software component market, because software programmers who participate in open source plan are usually the potential users of such software.

For example, program developers have been holding red open source databases, Java application servers and development tools.

According to Skok of Matrix, open source code is the best way to enter the mature market, and the niche is to replace it with high cost commercial version at low cost.

If Gluecode Software is far below the price of BEA, IBM and Oracle Software, it will provide a cheap version of infrastructure software for user portal website and business process management system.

SugarCRM is one of the few open source companies that choose to open up the business application market.

The open source business model in this field has not yet been verified, but the SugarCRM product quickly accepted the Roberts surprise.

He said: "the commercial version of open source software business mode, its power lies in the collective wisdom of the whole community as a military adviser."