Are 90% of Software Companies Doomed?
The VAR Guy loves unique perspectives and strong opinions. He got plenty of both May 3 during an insightful conversation with SugarCRM CEO John Roberts. Among the revelations: Roberts believes 90 percent of traditional software companies don’t have a long-term future. And while he greatly respects Red Hat, Roberts believes Oracle Linux is not to be underestimated.
Asked to comment about how the world of software will look in three to five years or beyond, Roberts predicts “90 percent of Silicon Valley software companies wonâ€™t be here. And those that survive will depend mainly on maintenance revenue. No venture capitalist is funding proprietary software anymore. That model is dead. Only in last three years have software companies gotten funding again.” And in those cases, Roberts notes, the companies typically focused on open source.
In five years, Roberts says, people will stop referring to Linux, Apache, MySQL, SugarCRM and other software as open source. “It will just be the entire industry; the norm,” he predicts.
And how will Linux evolve? Roberts speaks highly of Ubuntu’s community approach (which led to Ubuntu’s new relationship with Dell). He also expresses respect for Red Hat, but indicated that people are under-estimating Oracle’s Unbreakable Linux. He predicted that within a few years, more and more customers will embrace Oracle’s Linux offering because of simple economics: It will take Red Hat time and money to continually upgrade its Linux. And after each upgrade is released, Oracle can quickly re-brand the software as its own and charge “10 cents on the dollar” compared to Red Hat’s pricing.
Of course, Roberts has plenty to say about SugarCRM own business. He notes that the three-year-old company already has 100 employees, 1,200 customers and 100,000 users in 30 countries. Roughly 30 percent of customers are using the software in an “on-demand” model, paying either SugarCRM or a managed service provider monthly fees to access hosted applications.
Also of interest: SugarCRM is now available in more than 75 languages, and half of those “localized” versions involved VARs tweaking the product for specific markets, Roberts says.
In a separate interview, Lars Nordwall, VP of worldwide sales, predicts that SugarCRM is gearing up for raid expansion and he expects hockey-stick type growth in the next few years.