Skip to Content.
Sympa Menu

homestead - [Homestead] Big Bucks in Linux

homestead AT lists.ibiblio.org

Subject: Homestead mailing list

List archive

Chronological Thread  
  • From: Tvoivozhd <tvoivozd AT infionline.net>
  • To: homestead AT lists.ibiblio.org
  • Subject: [Homestead] Big Bucks in Linux
  • Date: Tue, 05 Oct 2004 08:19:31 -0700

Source code will remain open, bug-free with 50,000 programmers inspecting it daily. Tech support has been the problem for users who are not tech-einsteins.

Here is a company betting the farm on the idea that multi-source Linux vendors and their customers need a single-source of tech-support, especially to support tech-confused newbies who desperately need something like the MS Knowledge Base as constant reference. Hard to argue with that conclusion.

And since they can make millions on tiny fees, and probably have little competition, none at inception they sshould grow like Topsy.



<http://www.redherring.com/Article.aspx?a=10880&hed=Closing%20the%20gaps%20in%20open%20source#> <http://www.redherring.com/Article.aspx?a=10880&hed=Closing%20the%20gaps%20in%20open%20source#> <mailto:editorial AT redherring.com>


Closing the gaps in open source

Startup SourceLabs hopes to fill a pothole in the road to open-source software.
September 29, 2004

When it comes to open-source issues, companies need “a single throat to choke if something goes wrong,” said Brad Silverberg of Ignition Partners, a venture capital firm based in Bellevue, Washington.

That’s why his startup investment firm, along with Index Ventures, recently gave $3.5 million in Series-A funding to SourceLabs, a startup that provides much-needed support for open-source operating systems.

“The way the open-source community is organized, you have thousands of programmers in a decentralized scenario,” Mr. Silverberg said. “This doesn’t match the perspective of the enterprise software provider,” he added, noting the importance of support and maintenance that he claims SourceLabs will provide.

Based in Seattle, SourceLabs was formed by three former executives of software giant BEA with the goal of providing pre-integrated, tested, certified, and supported systems made up of combinations of open-source projects. The company launched on Tuesday with the announcement of its seed funding.


From the number of startups popping up to make money off of open-source
systems, it appears that open source is here to stay. In the last year-and-a-half, use of open-source software grew by approximately 30 percent, according to Julie Giera, an analyst with Forrester Research <http://studio.financialcontent.com/Engine?Account=redherring&PageName=QUOTE&Ticker=FORR>.

A survey conducted by Forrester at the end of March showed that more than 60 percent of respondents had installed or would install open-source software by the end of this year. But open-source penetration is not easy to track, Ms. Giera noted, because it is easily downloadable and not always distributed by vendors.

*Bubbling up*

The year-to-date saw four other open-source startups receive first-round venture financing. The largest of these was a $10-million investment in JBoss, a developer of Java-based application servers based out of Atlanta. The remaining transactions ranged between $2 million and $5 million.

“I think the overall trend is clear: open source is tearing its way up from the application stack,” said Eric Raymond, president of the Open Source Initiative, a non-profit corporation dedicated to managing and promoting open source.

Mr. Raymond said a good measure of open-source penetration was to monitor the operating systems run by various servers. He pointed to Linux, one of the more well-known names in open source. “Linux is the most visible operating system on Internet servers. I expect Linux servers to be at parity with Windows in server markets by the end of the year,” he said.

Software vendors frequently receive a higher portion of their revenues from support and maintenance than from license sales, said Stephen O’Grady, an analyst with technology analysis firm Red Monk, located in the U.K.

According to Mr. O’Grady, it is this revenue stream that SourceLabs hopes to tap into.

“Today, when you buy open-source software, it is totally dependable – the stuff is rock solid,” he said. “What’s missing is dependable /systems/. You have to mix and match and piece [the system] together yourself. And when something goes wrong, you don’t know who to turn to – what’s missing is the integration and the sales and support,” Mr. O’Grady added.

Mr. Silverberg confirmed that SourceLabs views support and maintenance as its key value proposition – a business plan that convinced Ignition to invest.

“As we talked to potential customers, from Fortune 100 companies to industry analysts, we heard this gap resonate,” he said. “That’s when we decided to…fund SourceLabs.”

*Zeroing in*

CEO Byron Sebastian said he got the idea for SourceLabs shortly after leaving BEA Systems <http://studio.financialcontent.com/Engine?Account=redherring&PageName=QUOTE&Ticker=BEAS> in January.

“As I started talking to executives and larger developers, engineers, folks in the industry, a burning question came to mind: why isn’t open source being used more in global 2000 companies?” he said.

The answer: while most companies felt open source had many advantages, they chose proprietary software because it was integrated and provided post-sales support and maintenance.

Mr. Sebastian identified this as an opportunity to build “an interesting business” and approached Mr. Silverberg at Ignition. After a year working with Ignition on the business plan as an “entrepreneur in residence,” SourceLabs was formally kicked off earlier this year.

Although Mr. Sebastian said he has no direct competitors at the moment, he expects future competition from other startups and not from larger software vendors like BEA or Redmond, Washington-based Microsoft <http://studio.financialcontent.com/Engine?Account=redherring&PageName=QUOTE&Ticker=MSFT>.

Red Monk’s Mr. O’Grady disagreed.

“There is very much competition in many respects,” he said, adding that there probably would continue to be a lot of overlap and that companies would “co-exist for some time in a highly competitive fashion.”

Josh Stein, an associate with early-stage venture capital firm Draper Fisher Jurvetson (DFJ), sees open source climbing up the application stack to replace proprietary software in the future. In August, DFJ made a $2-million first-round investment in SugarCRM, which offers an open-source customer relationship management (CRM) application.

“SugarCRM started six months ago, but has already been downloaded 40,000 times over the Internet,” said Mr. Stein. “Within two weeks, the SugarCRM code was translated into 14 languages.”
RELATED ARTICLES

Next Wave: Cracking down on open source code <http://www.redherring.com/Article.aspx?a=10497&hed=Next+Wave%3a+Cracking+down+on+open+source+code>
Black Duck's software detective tool sniffs out users, and abusers.

Vive la venture capital <http://www.redherring.com/Article.aspx?a=7293&hed=Vive+la+venture+capital>
VC funding is up in the U.S. and Europe, but investors are treading lightly.







  • [Homestead] Big Bucks in Linux, Tvoivozhd, 10/05/2004

Archive powered by MHonArc 2.6.24.

Top of Page