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 Channel Futures

Open Source


Will the Financial Crisis Boost Open Source?

  • Written by The VAR Guy 1
  • September 30, 2008
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.

Linux and open source for businessDuring 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.

Desktop Challenge

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.

Stay Focused

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.

The VAR Guy is updated multiple times daily. Don’t miss a single post. Subscribe to his newsletter, RSS and Twitter feed.

Tags: Cloud Service Providers Digital Service Providers MSPs VARs/SIs Open Source

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7 comments

  1. Avatar Prometheus October 1, 2008 @ 6:08 am
    Reply

    Dead right. The bottleneck limiting even more open source growth is education. There are still far too many folk around (professionals, engineers as well as C-level) who labour under the “open source is by amateurs” fallacy. But heck Rome wasn’t built in a day.

  2. Avatar ion January 4, 2009 @ 3:25 am
    Reply

    how the heck will “free” software developers survive, with no income in this financial crisis? just think about thousands of jobs being wasted…by the open source community and it’s communist philosophy?

  3. Avatar The VAR Guy January 4, 2009 @ 1:42 pm
    Reply

    Ion: Um, Red Hat is “profitable” — very profitable.

  4. Avatar ion January 22, 2009 @ 10:19 pm
    Reply

    communists. are happy now? long live red-linux. heh

  5. Avatar ion January 22, 2009 @ 10:20 pm
    Reply

    red hat is making money out of “free” stuff people.

  6. Avatar I dont know February 11, 2009 @ 10:22 pm
    Reply

    just think about thousands of jobs being wasted…by the open source community and it’s communist philosophy?

    HAHA … so the communists created this deep shitty crisis? I don’t think so AFAIK jobs are now being lost as a consequence of extreme capitalism (you remember these guys from the banks flying with their private jets for their bail-out so they good at least ensure their own bonuses)

    I just went to Las Vegas and saw a lot of people gambling. Well gambling is an addiction and I think some people who are rich and watch their bank account growing, sometimes are addicted as well. For these people it doesn’t matter what happens to the rest of the world (just like the gambler-addicted) as long as this number is going up. I sense this feeling myself a bit as well …. I feel good/rich when I see my bank account is going from €1000 to €4500 (yes I got a bonus as well). But I try to remember that it’s just a number, next month this number will go down again because stuff has to get paid. But seeing your bank account going up from €4.000.000.000 to €4.500.000.000 in a year is in my opinion sick. It should feel like a third world country producing oil with a few rich families which own like 99% of the countries money. This greed should stop: imagine you own a bakery and thus bake breads for lets say $2 a peace. The profit on one bread is $1. In that case you should bake 500.000.000 breads. baking 500 breads a day, makes 1.000.000 days, makes 2793 years of baking bread. This is insane and IMO criminal.

  7. Avatar regexgreg February 13, 2009 @ 8:10 am
    Reply

    FOSS doent mean you dont get paid… it just means the software is free… many companies sponsor the development of these projects including the likes of Redhat, and very often donate massive portions of code at their own expense.. its a two-way street.. they benefit, the users benefit. In 2001 when IT BOOM crashed, how many big paid for closed companies closed? People lost jobs by the thousands… Even worse alot of software was lost as well due to their closed source nature. Most developers of FOSS aren’t in it for the money… they do it for the love of it… sometimes you just do something to see if you can do it… and receive a great reward by users loving what you’ve done…

    Intellectual Property is bullshit.. nothing anybody ever comes up with is an idea completely of their own, you think of something new because you have been tought or inspired by so many others… any for of ownership is just plain greed fullstop.

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