Will the Financial Crisis Boost Open Source?
During a phone chat today, a Web developer asked The VAR Guy if the US financial crisis would send more corporate customers running out to buy low-cost open source solutions. The VAR Guy’s surprising answer: No. Here’s why.
On the server, businesses are already familiar with the power, flexibility and reliability of Linux and the LAMP stack. Looking ahead, it’s natural for CIOs to start asking how they can extend their Linux servers to run open source applications like SugarCRM, OpenBravo ERP and the list goes on.
Going From Good to Great?
Now here’s the twist: The open source market was already growing pretty darn fast before we got into the US housing and financial market meltdowns. Novell’s SUSE Linux sales, for instance, experienced a 30 percent increase during the company’s most recent quarter, notes Matt Asay over at The Open Road.
During an economic crisis — as companies lay off staff members and some major financial institutions disappear forever — it’s foolish to think that spending on open source solutions will somehow grow even faster than their current rate.
Remember: Economic uncertainty leads to business uncertainty and corporate indecision. Fact is, many businesses stop making IT decisions during these uneasy times. And don’t forget: Shares in Novell and Red Hat are trading at 52-week lows because Wall Street is worried about both companies’ profit growth rates.
Meanwhile, things are equally challenging on the desktop for open source. The VAR Guy’s own home office now has two Ubuntu Linux desktops (hurray for him…) but most consumers and small business owners still don’t realize they can embrace Linux and open source as natural, low-cost, reliable, secure alternatives to Windows and Mac OS.
The bottom line: Open source is better positioned than closed source to do well during the economic crisis. But anyone who believes the economic crisis will somehow accelerate open source sales may be in for a rude awakening.
Now for the second twist: It’s still a great time for solutions providers to join open source partner programs and evangelize these new solutions to customers. As more and more folks get distracted by the economy, VARs that stay close to their customers — while striking closer relationships with open source companies — will benefit most.
Red Hat generated roughly half of its revenue from VARs in its most recent quarter, but the company wants to lift that figure to 60 percent. Likewise, emerging companies like Alfresco (open source content management), Digium (open source IP telephony) and Fonality (IP telephony as well) are seeking more partners.
Grab the opportunities while some VARs run for economic cover.