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Open Source Forming a Dot Com Bubble?

ScuttleMonkey posted more than 8 years ago | from the ride-the-wave-while-it-is-here dept.

Linux Business 222

sebFlyte writes "ZDNet is running an interesting look at the sudden upswing of investment in open source products and the ensuing debate as to whether the open source business model has given us a bubble (akin to the dot-com bubble) that is about to burst. The counter-argument is that the increase in investment is just the natural progression of a robust business model whose time has come. One point that few people, whatever their viewpoint, could disagree with is that the key to a financially successful open source project rests with the community, rather than just the technology."

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222 comments

Well (-1, Offtopic)

jonnythan (79727) | more than 8 years ago | (#13972422)

lookie.

WWKCD? (0, Troll)

Keith Curtis (923118) | more than 8 years ago | (#13972430)

Keith Curtis would most definitely kick you square in your
Drunk [wikipedia.org]
Irish [wikipedia.org]
ASS! [wikipedia.org]

Opensource isn't the problem... (5, Insightful)

Nos. (179609) | more than 8 years ago | (#13972435)

Lets face it, if venture capitalists are investing money in companies because of buzz words (is open source a buzz word now?), then the problem isn't with the product, but with the investors. Linux, Apache, and countless other OSS didn't start with a big investment by venture capitalists. It was started by a person or group that recognized and need and thought they could fill it. OSS will live on, with or without VC.

Why is it (-1, Troll)

Anonymous Coward | more than 8 years ago | (#13972497)

That everybody just can't wait for the next bubble.

Please, people, you're morbid, jsut sitting around hoping for somebody else to lose their shirt!

Re:Why is it (1)

HiThere (15173) | more than 8 years ago | (#13972920)

You don't understand ... they're avoiding noticing the current bubble (the US Economy), because they can't do anything about it, and it's quite scarey. To do this, they're looking for scapegoats to blame that are things they CAN do something about, and which aren't so scarey.

Re:Opensource isn't the problem... (5, Informative)

Karma_fucker_sucker (898393) | more than 8 years ago | (#13972507)

I don't disagree with you because I don't have ESP and can't read the VCs minds. But I can tell you what their strategy is and why it may seem that there's a bubble forming.

VCs (and many entrepreneurs) use the law of large numbers. They'll sift through a hundred biz ideas just to get one that they'll invest money. They'll keep investing in a bunch of businesses with the hopes that one will hit really big. That's why when you get a VC contract, basically, they'll demand some percentage of return (like 40%+/yr compounded). Which means, even if the business is sold for a couple of million, the original entrepreneur (the one with the idea) will get nothing just so that the VC firm can get some sort of return that approaches their required return.

Re:Opensource isn't the problem... (0, Flamebait)

Karma_fucker_sucker (898393) | more than 8 years ago | (#13972647)

You know what really pisses me off is getting modd'ed down when I try to share some of my business readings and experience, hoping to explain why things happen and maybe helping one of you Open Source Entrepreneurs to make it and create jobs. You see, many of my source DO NOT HAVE FREE LINKS. Such as, www.fsb.com. Here's another source: The Portable MBA in Entrepreneurship, 3rd Edition [amazon.com] recommended BY A VENTURE CAPITALIST. I do a shit load of reading in this area because of my own business development and dealings with these people...you know what..I'm going to shut the Fuck up and go away.... Bye, Bye.

Re:Opensource isn't the problem... (0)

Anonymous Coward | more than 8 years ago | (#13972851)

Sounds like your business specialty is pouting. You are taking something as trivial as modding WAY too personally.

Can't be repeated enough (4, Insightful)

ylikone (589264) | more than 8 years ago | (#13972520)

What you say is certainly true... yet we keep hearing over and over about how opensource projects need to consalidate, opensource projects need more money, opensource projects need support from big players, and on and on.... That is all completely untrue and misses the whole point of opensource! So, messages such as yours need to be kept being said to combat the other wrong messages that keep being said.

Re:Opensource isn't the problem... (5, Interesting)

dslauson (914147) | more than 8 years ago | (#13972562)

I agree with you that Open Source will live on regardless of money invested by venture capitalists. The question is, at what level. Hobbyists? Tinkerers?

Or can it exist as a robust business model that can compete with commercial competitors?

I've been seeing more and more paid programming positions advertised on my campus' job site for open source projects. As cool as I think it would be to take a job like this when I get out of school, I don't want to go somewhere where the floor will fall out from underneath me.

Anyway, I'm not trying to predict doom for OSS, I'm just saying that this is a valid discussion, and I'm curious to hear what people have to say.

Re:Opensource isn't the problem... (3, Insightful)

mrcparker (469158) | more than 8 years ago | (#13972919)

As long as you don't sell the software, you are in good shape. Offering value-added support, or using FOSS as a part of a larger contract seem to be the trend.

As an owner of a consulting firm, I can compete with a good deal more companies using FOSS. We get paid for solutions, not products. If I can grab some code, make some quick improvements, and have a quick turnaround, then I can make my clients happy.

Re:Opensource isn't the problem... (2, Insightful)

T-Ranger (10520) | more than 8 years ago | (#13972924)

What kind of long term viability does one/should one desire in an employer? Conventional wisdom is that these days one is going to have many employers over their working life. If you accept that, then does it matter if you leave a place after 4 years because its simply time to move on, or if you leave a place after 4 years because it no longer exists? And if you are working on OSS projects, does your exact employer matter, if that project lives on and someone else picks up developement (and developers)?

There are some OSS projects that are very large and have (paid) developers from many companies (the Linux kernel being the biggest example), I suppose if you were a very valuable kernel hacker and your employer went belly up, one might easily find work - the exact same work - with someone else. OTOH, there are OSS projects that are dominated by one company (JBoss comes to mind) where it might take a fairly long time for the project to recover if its one major commercial sponsor evaporates, let alone another financial benafactor to materialize. Then there are companies who simply use OSS, and if you were an OSS developer there, you might never contribute anything large to any one project, or possibly anything at all that was accepted upstreem, as you would be responsible for little fixes for a wide range of projects.

Open source is not a business model (5, Interesting)

jhoger (519683) | more than 8 years ago | (#13972931)

FOSS is not a business model. It is way of licensing code that protects the user's ability to user and modify the software. It can also be seen as a vast body of resuable code for projects with compatible licenses. In the case of GNU/Linux it is also a software stack with $0 licensing fees, so conceivably it only costs as much as it takes to get it installed, maintain it, and extend it for a given business's purposes.

Paid support and customization of software IS a business model. It's called "software contracting."

That business model is well understood. It can be profitable, and can sustain most salaried engineers at a rate ABOVE their current salary, but not usually as profitable on a large scale as a software product company can be, because as part of the bargain we choose not to leverage the amazing power of government-granted monopoly profits.

However, given the success of the FOSS development model I wouldn't give mass-market proprietary software more than another 20 years unless the government(s) intervene to stop it, or consumers buy into locked-down platforms that will only run signed code.

From the programmer point of view it doesn't really matter. We seem to get paid the same whether our customer can make billions off of the bits we create, or only gets to charge a markup on our rate. Weird, huh? ;-)

-- John.

It's a development model, not a business model. (4, Insightful)

khasim (1285) | more than 8 years ago | (#13972950)

Or can it exist as a robust business model that can compete with commercial competitors?
Open Source is a software development model. It is not a business model.

A business model can be based upon selling items/services/etc related to systems developed via the Open Source model, but they are not the same.
I agree with you that Open Source will live on regardless of money invested by venture capitalists. The question is, at what level. Hobbyists? Tinkerers?
Given that Linux advanced to it's current state almost 100% via the "hobbyist" and "tinkerers", is that a bad thing?

More funding is always nice. It allows people to devote more time to it. But it won't make or break a project. The community is what decides that.
I've been seeing more and more paid programming positions advertised on my campus' job site for open source projects. As cool as I think it would be to take a job like this when I get out of school, I don't want to go somewhere where the floor will fall out from underneath me.
Again, if that happens, it is because of a failure of the business model, not the Open Source development model.

History is littered with failed software companies that used closed source. Why should Open Source guarantee success? It's all about the business model.
Anyway, I'm not trying to predict doom for OSS, I'm just saying that this is a valid discussion, and I'm curious to hear what people have to say.
And here is what I say ... don't look to Open Source as a substitute for a valid business plan.

Look at the business plan. That is what will make or break the business.

Great! (1)

darth_MALL (657218) | more than 8 years ago | (#13972450)

When do I get a pinball machine in my open source cubicle!

I'm gonna have to disagree... (2, Insightful)

penguin_asylum (822967) | more than 8 years ago | (#13972455)

Looks to me like an overreaction. Not everything that increases in value like this is necessarily a bubble. (though it does sound more exciting this way)

What if... (2, Interesting)

drgonzo59 (747139) | more than 8 years ago | (#13972598)

ZDNet's comment would actually change the perception and make some investors out there doubt the decision of investing in open source. Kind of like a measurement of a quantum system would change the system, so perhaps an article in a popular tech news commenting on the investment situation in the tech industry would end up somehow changing the overall open source investment trends eventually...

Re:What if... (1)

conJunk (779958) | more than 8 years ago | (#13972653)

that's 100% true. it may or may not be a result, but that's totally a phenomenon that we live with. the coverage of the sony drm rootkit is a perfect example of this weird relationship between between "stuff" and "talking about stuff"

Re:I'm gonna have to disagree... (5, Insightful)

Red Flayer (890720) | more than 8 years ago | (#13972644)

"Not everything that increases in value like this is necessarily a bubble"

Actually, an increase in value doesn't make a bubble -- an increase in invested capital without a corresponding increase in value is what creates a bubble.

The second part of creating a bubble is speculation; people investing in something not because of value, but because of expected ROI due to speculation. I know (well, believe) that the P/E ratio of Google was too high for me to get a good return on my investment through long-term investing -- but I also knew that the perceived value of Google shares would net me a good ROI when I sold. I wasn't investing in Google; I was investing in the public perception of Google as a good investment.

Re:I'm gonna have to disagree... (1)

electroniceric (468976) | more than 8 years ago | (#13973071)

Google is both a good example and a bad example. It's a good example because it operates on very narrow margins, and business models around open source software almost always require very narrow margins: cost of production goes down, but a large fraction of users do not become paying customers (I believe it's 2% for most OSS companies).

It's a bad example because it was technologically advanced enough to dominate an emerging space, so despite its narrow margins, it can dominate the space. Most OSS companies I've seen are not in that enviable position - rather they commoditizing an existing space, which doesn't give them the big bucks. Don't get me wrong, I believe there's good money to be made in commodity spaces, but I doubt you can rocket to prominence there.

So I think a number of VC's are going to be unpleasantly suprised when their 3 year in-and-out strategy turns into a 10 year plan for modest growth.

The only bubble... (1)

rbochan (827946) | more than 8 years ago | (#13973081)

... that exists is the aneurism that's growing in my brain because /. keeps getting "news" about OSS from friggen ZDNET.

Haha, and how fitting that the turing test to make this post was "travestry".

DRM (4, Interesting)

duerra (684053) | more than 8 years ago | (#13972464)

I think one of the arguments for an open source "burst" would be the reluctance of the open source mentality to accept things such as DRM. While I am very much with the typical slashdot mindset that thinks of DRM as bunch of BS, the corporate world is still heading in that direction. If the open source community can't come up with something acceptable on the DRM front, it's going to give the closed source vendors such as M$ a one-up where there otherwise may have been an open source trend.

One of the problems that I have been struggling to grasp in terms of its impact on my job is how important of a role DRM is really going to take in the coming years. As a pretty much Linux-exclusive shop, and as a media company, we could be in a very awkward position in the coming years since we don't really support anything in the way of DRM right now, and there doesn't appear to be a lot of headway from the OSS perspective, either.

Re:DRM (3, Insightful)

Skowronek (795408) | more than 8 years ago | (#13972556)

The problem isn't with Open Source. The problem is with DRM; all DRM schemes, namely, assume storage of keys on user's computer at some point (if it's pay-per-view, in which case the keys are sent to the user from a remote location). This means that given the full source of the DRM implementation it is possible to circumvent it. This is a design flaw in DRM.

DRM is the idea of storing keys with the encrypted content and hoping that nobody will find the keys.

Re:DRM (2, Interesting)

Kjella (173770) | more than 8 years ago | (#13972926)

This means that given the full source of the DRM implementation it is possible to circumvent it. This is a design flaw in DRM. DRM is the idea of storing keys with the encrypted content and hoping that nobody will find the keys.

Ah, but the root key isn't in Linux, isn't in software at all. The root key lies in hardware, in the TCPA chip. It is fully possible to design an OSS system that uses DRM and is secure despite being open. The reason OSS and DRM go together like oil and water is that the smallest possible change will render your system useless as the DRM validation hierarchy fails. It is as if you could modify Linux - but it would no longer run on any Intel or AMD processor ever again. That, together with the DMCA which in practise seems to trumph any notion of interoperability makes sure that you can't join them and you can't beat them without breaking federal law. The saving grace may be virtualization technology. Sure, you need your DRM-crippled VM to play media, but your Linux VM will do the rest and more. And then there's always p2p, which they will never manage to put a lid on.

Re:DRM (1)

Skowronek (795408) | more than 8 years ago | (#13972981)

Yes. My point still stands though, the key and decryptor have only been moved (to hardware); they are still in user's possession. BTW, if you have a trusted system in a VM, it invalidates the point; a VM supervisor is expected to be able to grab screen ;)

Re:DRM (1)

jfengel (409917) | more than 8 years ago | (#13972970)

Wish I had mod points for ya, but instead I'll just elaborate.

Your argument that open sourced DRM won't work is pretty convincing. From DRM to work 100% it has to involve an inviolable, probably hardware, black box, and a black box which runs all the way from the display medium (speakers, screen) back to the encrypted data stream. So you could in theory have a black-box hardware DRM player, and open source the front-end downloading of the stream, but that's it. The black box can't be open source; otherwise, it wouldn't be black.

You couldn't even make the black box a decrypter only, because then the open source would have access to the decrypted stream.

However, I'm not sure I agree with the grandparent post anyway that DRM is holding open source back. It may be holding back certain things, notably places where the content is critical (e.g. legal pay-for movie and music download sites)

But unless you're talking about preventing illegal copies of the software itself, DRM isn't applicable. And if it's open source then protecting the software ins't applicable either; it's supposed to be freely copyable.

So, if the bubble is going to burst, it's when people realize that it's difficult to make money giving things away. The remarkable thing is that it's not impossible.

Re:DRM (0)

Anonymous Coward | more than 8 years ago | (#13972722)

This is just rubbish. Most large enterprise companies are not media companies. Only media companies give a shit about DRM. So your little world is, in fact, rather little.

Re:DRM (0)

Anonymous Coward | more than 8 years ago | (#13972732)

Just invent some snake oil DRM scheme like everyone else. Anyone who requires DRM from you either clueless or already knows that there is no cryptographic theory that would allow waterproof DRM. OSS community is too honest to create such a software, so you'll have to do it yourself.

Re:DRM (1)

interiot (50685) | more than 8 years ago | (#13972746)

Most users (eg. programmers who want to scratch an itch) see DRM as more of an itch that should be removed than as a desirable feature. Furthermore, DRM and open source don't mix, since DRM usually involves obscuring the decryption code, and then securing the decrypted digital data until it gets to the output device. All of that is completely counter to open source.

Re:DRM (5, Insightful)

salesgeek (263995) | more than 8 years ago | (#13972777)

I think one of the arguments for an open source "burst" would be the reluctance of the open source mentality to accept things such as DRM. While I am very much with the typical slashdot mindset that thinks of DRM as bunch of BS, the corporate world is still heading in that direction.

DRM: Let's all erase nearly 10 years of incredible growth by closing and locking things down. DRM has ALWAYS been around. From the lousy copy protected floppies of the 80s to the parallel port dongles of the 90s to todays public key technology. It doesn't matter - it's all the same, and it is and always has been an utter and complete failure. A failure of customer service, a technical failure, a financial failure and ultimately a corporate failure. And despite everyone's best efforts, DRM will fail again.

There's no such thing as an open source bubble, BTW. Why? Because open source software, or at least the free variety, doesn't die when it's creator dies. What would happen if Mozilla.org, Apache.org, the MySQL guys went belly up or blew u Hint - development would slow for a while and would fork and then the strongest tines of the fork would continue. Open source software exists outside corporate control, and that is something that open source advocates need to explain clearly. An open source company is not about building a widget and selling it like proprietary software. It's about helping customers apply technology to their business exactly the way it should be instead of adapting to what someone working out of your industry, for a technology company thinks you should do.

Re:DRM (0)

Anonymous Coward | more than 8 years ago | (#13972849)

>While I am very much with the typical slashdot mindset
>that thinks of DRM as bunch of BS, the corporate world
>is still heading in that direction.

And what makes you think they are headed in the right
direction? Businesses that fail to perform reality
checks on what customers wants often fail to survive.

--Johnny

Re:DRM (1)

LionKimbro (200000) | more than 8 years ago | (#13972987)

Not tentirely true; We need DRM in the OpenSource community as well.

For example, we need to be able to automatically keep GFDL an CC-copyleft texts separate. In wiki, we need licensing information to transport along with a document, and it's history, if required by the license.

[Re:DRM] You don't get it, do you? (1)

codergeek42 (792304) | more than 8 years ago | (#13973009)

DRM is entirely a case of security by obscurity. The DRM decrypters remain proprietary, so you can't run/open/play/view the file without those. If open source were to adopt DRM, people could simply add hacks to the code to output the file in a non-DRM format, and it would therefore be useless anyway.

The main question (4, Insightful)

xappax (876447) | more than 8 years ago | (#13972474)

The main question that you have to ask when determining whether a particular market is a bubble is "Are investors over-valuing it?"

I would argue that open-source, as it is today, is actually undervalued, and had a huge amount of economic potential that hasn't even begun to be tapped. This is not true of, say, the housing market, which many say is a bubble.

I think rather than an insubstantial bubble, what we're seeing is a whole bunch of investors realizing the very real value of open source business models all at once.

I couldn't disagree more (1)

DogDude (805747) | more than 8 years ago | (#13972587)

I would argue that open-source, as it is today, is actually undervalued, and had a huge amount of economic potential that hasn't even begun to be tapped. This is not true of, say, the housing market, which many say is a bubble.

Housing: Absolutely limited supply. Ever growing demand.
Open Source Software: Virtually no track record of producing profit. Very shaky business model (if any). Unlimited supply. Limited demand.

I pray to all that is holy that you're not some poor schmuck's financial advisor.

Re:I couldn't disagree more (1)

jhoger (519683) | more than 8 years ago | (#13973049)

For most entities software is a cost center, not a profit center. Why would you expect FOSS to "produce" a profit? How much profit has Windows or Microsoft Office directly produced for you?

Paid support for software is called done all of the time. Ask the software consultants at your company if consulting is profitable. Then you will understand the only real software business model: you need a change, you pay me to make the change.

Of course there is a phase in every FOSS project which preceeds customer use (and paid customization). If you want to be "the expert" consultant it may make sense for you to put a lot of effort in at this stage. If you're good you can wait till the software is mostly done and then jump in, but quite likely the earlier the better if you can afford the investment.

-- John.

Re:I couldn't disagree more (1)

xappax (876447) | more than 8 years ago | (#13973140)

You'll be relieved to know I'm nobody's financial advisor, and while I won't pretend to be an expert in finance or economics, I think your analysis is a little simplistic.

The reason that the housing market looks like a bubble is that houses are a stable commodity which has an established market presence and very reliable ways of determining value. Suddenly, houses which were appraised at $200,000 are being valued at $2,000,000. Now, at the moment, for some reason people are willing to pay 2mil for a house. This makes it seem like maybe houses are just becoming a permanently more valuable commodity, however those who believe there is a housing bubble claim that at some point in the near future, people will suddenly start saying "wait a minute, this house ain't worth anywhere NEAR 2mil!". The re-realization of actual market value as opposed to the hype-driven bubble-market value is what makes a bubble "pop".

The reason that I don't think open source businesses are forming a bubble is that there will never be a re-realization of actual value, there will never be a "pop". Currently, or at least in the past 5-10 years, open source has been relatively unknown to VCs, and so it's market value has been at basically 0. Unlike the housing market, this value was not due to an established market presence or reliable standards for determining value, it was because no investors paid attention to a bunch of F/OSS hackers.

Now that F/OSS is becoming more famous, it's actual market value is becoming more apparent, leading investors to pump more money into it. Clearly there will be open source flops, just as in any industry, but for the most part, I don't think we'll see people in 10 years saying "wait a minute, this open source company really is worth $0, just as it was valued before the bubble!". In fact, with the help of VC funds, I bet open source will actually develop into a stronger, more stable market presence.

Hell, if I had any money, I'd invest in some F/OSS startup myself.

Re:The main question (1)

Arandir (19206) | more than 8 years ago | (#13972753)

DRM is a solution in search of a problem. It differs from other similar solutions in that the encryption isn't based on what you know, but who you are. A lot of people are excited and aroused by DRM because they see a solution, but they don't realize that the problem is illusory. Even if they do realize it, they're hoping that the very presence of the solution will create the problem for it to solve.

Open Source has fundamentally changed business (1, Funny)

Anonymous Coward | more than 8 years ago | (#13972477)

Open Source will free us from the boom and bust cycle of previous industries. Why, there's untold riches to be had there!

I just need a few million for some Aeron chairs and foosball tables, and I will reward all you investors handsomely!

But... (1)

42Penguins (861511) | more than 8 years ago | (#13972486)

Can a bubble bursting survive a vicious /.ing or vice versa?

Key difference (4, Insightful)

itwerx (165526) | more than 8 years ago | (#13972488)

The key difference between OSS investment and any other investment is that there can never be a true "loss" in value. I'm probably not going to explain this very well but I'll try anyway.
      What I am getting at is that every dollar invested in OSS which leads to publicly released code is a dollar whose benefit will last long beyond any potential demise of the original VC group and/or development team.
      This is the ultimate difference between OSS and CSS...

Re:Key difference (1)

tcopeland (32225) | more than 8 years ago | (#13972560)

> every dollar invested in OSS which leads to publicly released
> code is a dollar whose benefit will last long beyond any potential
> demise of the original VC group and/or development team.

Well said sir. And that's as opposed to those huge corporate systems on which armies slave for years - and then are unceremoniously dumped.

The beauty of it, too, is that a company can have a closed source product and still contribute to open projects. Running a backend database? Contribute something to PostgreSQL [postgresql.org] . Running a web server? Answer questions about Apache. Coding a propriety Java app? Buy a book [pmdapplied.com] on an open source Java code quality tool [sf.net] . :-)

Re:Key difference (2, Insightful)

LWATCDR (28044) | more than 8 years ago | (#13972588)

Or you can look at it another way. OSS never has any value to the investor.
OSS may end up being a charity at best. I have seen all sorts of "models" like support or customization but those can not be "locked in".
I can see the value of traditional OSS development. I.E. a company paying people to work on a project they use like Postgres, GCC, Apache, or even Perl. I do not see how VC investment works for OSS. I could be wrong but we will have see.

Re:Key difference (1)

size1one (630807) | more than 8 years ago | (#13972908)

"I do not see how VC investment works for OSS."

OSS has value in that businesses can be built that use it. Traditionally software is either a product or a IP that gives you an edge on the competitor. The problem with that model is that you are required to spend vast somes of money to develop and maintain the product.

Opensource allows you to build a product with an active community and you have ensured that a service type business can thrive. Or in some cases start with a partially developed product and make it better.

This model does not support "customer lock in" so continued success of the business will be based on the quality of service. Maybe its just me, but I don't see how that is a bad thing returning to a time where quality matters and customers aren't seen as just numbers?

Re:Key difference (1)

LWATCDR (28044) | more than 8 years ago | (#13973018)

Except that it is impossible to build any value. VC is all about making money. That is all that it is about. It is not about building a company or anything long term. That is why I see it as incompatable with OSS.

Re:Key difference (1)

MaceyHW (832021) | more than 8 years ago | (#13972672)

While that's (mostly) true of the the actual code, it's not that much harder to squander VC money on an OSS project than it is on an CSS project.

'if you're an investor you can dump your money in the hole there.'

Re:Key difference (1)

Tim C (15259) | more than 8 years ago | (#13973142)

The key difference between OSS investment and any other investment is that there can never be a true "loss" in value.

While that's true from a community perspective, if a VC dumps several million dollars into an open source project and never sees any profit in return, you can bet that that's goign to be viewed as a loss by them and their peers.

AJAX (5, Funny)

iMaple (769378) | more than 8 years ago | (#13972494)

Ajax , the biggest bubbles any detergent can produce :)

whoohoo (0)

Anonymous Coward | more than 8 years ago | (#13972500)

let me whip out my VC needle, but not until ive sold all my shares first.

who pays for this stuff? (5, Interesting)

boxlight (928484) | more than 8 years ago | (#13972503)

I use lots of open source software, Apache Tomcat, JBoss, a bunch of Eclipse plug-ins. In fact, before I tackle most tasks I check to see if there's a free open-source project that has already solved the hard problems.

I'm really happy that these projects exists because being able to stand on their shoulders make me a much more productive and a better programmer.

But I have often wondered -- who are these people that pay (in money or time) to develop all this stuff? I'm really glad they do, but I hope all the "funding" doesn't all dry up someday. I'd have to do all that work myself!!

boxlight

Re:who pays for this stuff? (-1, Troll)

Anonymous Coward | more than 8 years ago | (#13972660)

Stop putting your screenname at the bottom of posts, seriously, you're nobody.

Re:who pays for this stuff? (1)

Jobe_br (27348) | more than 8 years ago | (#13972932)

Amen. Hear, hear for the Apache folks, especially the Jakarta group. Wow. Awesome stuff there.

Re:who pays for this stuff? (1)

Big Frank (921537) | more than 8 years ago | (#13972963)

Open source means more to /.'ers than simply publishing source code. It means involvement of the community of programmers giving their time for free to build test, and maintain free software. As a business model, this definition of open source ultimately will be bad for programmers and the software industry. It lowers pay in the industry and demand for programmers, which is bad enough in itself but will also disincentivize young people from choosing programming/CS as a career. We need healthy, profitable companies selling software generating cash flow that pays programmers handsomely. We need to start thinking of IT as a profession, and work together to elevate the profession as a whole. What think you?

Times have changed (4, Insightful)

jav1231 (539129) | more than 8 years ago | (#13972509)

The financial world has grown a lot from the days of the first bubble. That bubble was building over a five year period and was due in large part to ignorance. People were being paid with what amounted to an ignorance tax. The less a company knew about the technology, the more they were willing to pay for it. OSS has been slowly moving along and there are more people with a good understanding of what is happening with it in the larger tech sector. You don't have the mindset of "who cares what it costs or what it does, we need it!" Rather, you have "what is it that we have now that we can leverage more value from by going with OSS!"

Re:Times have changed (1)

Karma_fucker_sucker (898393) | more than 8 years ago | (#13972544)

Absolutely! I think a lot of these "bubble forming" headlines are just to get hits or sell magazines for ad revenue. The last bubble happened just 5 years ago. That's not enough time for people to forget.

Re:Times have changed (1)

tomstdenis (446163) | more than 8 years ago | (#13972595)

Bingo. Well for the most part.

People are still lingering on to old school thinking in some respect. "we gotta use Word, our clients use Word", "we gotta use Redhat, our vendor only support Redhat". It's a matter of taking a stand and saying "our documents are available in open document format and PDF, that's all" and "we run a modern Linux distro, support us."

When I was working at $PREVIOUS_EMPLOYER their standard line was "the vendors would have a huge support matrix if they had to support Gentoo as well as Redhat, etc" and my thinking as basically "it's worth the risk if it means our developers don't have to put up with an aging distro".

The developers were on fedora core, ES and other redhat distro based boxes. Setting up things like NIS and printing was a challenge to say the least [for the record, the gentoo boxes we setup were always the first to get printing and NIS as they were the easiest].

Sometimes it's about taking calculated risks to see payoffs down the road.

If you take the risk of using ODF and PDF document formats today it could mean that in a year or two years or three years ... that you never have to hear "we use .doc format only" again. Tell your customers you value their payments and you're not squandering it on bullshit expenses like MS Office. Tell them when they are buying or licensing your software that your income goes to pay developers to support and improve the product.

Somehow that TOTALLY OBVIOUS point is something most econ101s seem to miss.

Tom

Sig Troll? (0)

Anonymous Coward | more than 8 years ago | (#13972654)

Is it possible to mod someone's sig "troll"? If so, please do this to parent.

Racism is one of the most destructive forms of prejudice present in human society today. It's NOT an issue of partisan politics. I encourage you to step out of your "comfort zone" and find out what's going on.

Re:Sig Troll? (0, Offtopic)

jav1231 (539129) | more than 8 years ago | (#13972749)

Perhaps I should amend my sig with the caveat that I live in the U.S. where racism is indeed an issue of partisan politics and exists largely in this arena. My bad. In the 50's and 60's racism was more overt. Blacks were called n*ggers and told to sit in the back of the bus. Now blacks are called Uncle Tom's and chastised for not being in their proper place if they dare not ride the proper "bus." Explain to me the difference.

Much different (1)

DogDude (805747) | more than 8 years ago | (#13972702)

You're right. Things are much different now. Instead of investors investing in technology they don't understand, now they're investing in technology they don't understand and in companies that have really no way of turing a profit.

And yes, I know that Red Hat is making a few million a year. That's pretty weak proof that the whole OSS + $$ thing can even work on a large scale. Red Hat is still a small company.
Not only is there little proof that open source makes money, there's very little reason to believe that Red Hat will continue to make money. With everything open, there's theoretically not any reason to go with Red Hat support. Right now, there aren't really a whole lot of alternatives, but there may be eventually, if people can figure out how to make a buck from this whole thing.

Re:Much different (1)

jav1231 (539129) | more than 8 years ago | (#13972816)

Using your example of Red Hat, they have been in business quite awhile now. In computing terms, they have been in business a very long time. They're already proving you can make money with OSS. I would grant you, however, that they are doing so largely in standard terms but then again I don't work for them so I don't know how big their support product is. One thing is for certain, people want Linux. They're finding it saves money and gives them task-oriented solutions now. Microsoft has been trying to make Windows such a solution for years with SMS, Exchange, RSA, etc. but the overhead is astronomical. Since the dot-com bust, people feel its more necessary now to ask "what is this going to cost and what is the return." For some, OSS is the right way to go as a result of such analysis.

Re:Much different (1)

DogDude (805747) | more than 8 years ago | (#13972893)

I'm not debating that there is some demand for it. What I'm debating is that there's money to be made doing it this way. Right now, Red Hat is the shining example of financial success for the Open Source industry, and we're looking at what... 2, 3 profitable years? And just barely at that? OSS is still a VERY risky investment any way you cut at. At least with the dot-com bubble, there were quite a few companies making money that you could point to. With OSS, I can count the number of marginally profitable companies on my fingers.

Community vs. Technology??? (4, Interesting)

MisterLawyer (770687) | more than 8 years ago | (#13972530)

> "One point that few people, whatever their viewpoint, could disagree with is that the key to a financially successful open source project rests with the community, rather than just the technology"

What a vacuous tautology!

The technology of open-source projects are the direct result of the efforts of its community.

This is like saying "the key to a successful private R&D firm rests with its researchers, rather than with its research!"

Re:Community vs. Technology??? (1)

enigma48 (143560) | more than 8 years ago | (#13972632)

I didn't read the quote that way. The community is far larger than the group of developers. If they had said developers were the key to financial success, your point would be correct.

But the community - developers, testers, document writers, bug submitters, evangelists, etc has a *very* large role in a product's success. The developers aren't the only heroes.

Re:Community vs. Technology??? (1)

Spy der Mann (805235) | more than 8 years ago | (#13972721)

I think you meant to say syllogism. A tautology is a true syllogism.

Anyway. Technology = product, community = the driving force behind that product. I think what the GP poster wanted to say was that the product was based on the community, and not viceversa.

A product is dead without support. There are open source products that have no support, even from their authors. Some investment could make the difference to let the project survive, and flourish.

Re:Community vs. Technology??? (1)

Red Flayer (890720) | more than 8 years ago | (#13972744)

The community referred to is not the group of developers who work for the financially-successful open source project, but the outside community.

The success of a private R&D firm does not rest with the community at large outside the R&D firm.

The point of the quote is that financially successful open source projects depend upon the actions of the outside community, and thus must act to foster participation by the large open source community. This also means that the open source project in question does not have ultimate control over the project, which can be a stumbling block for many investors.

You choose (1)

VincenzoRomano (881055) | more than 8 years ago | (#13972533)

Open Source is one thing, somewhere in between phylosophy and religion.
Finance speculation and stock market games are more like the roussian roulette.
You choose.

This is the Police! We have you surrounded! (0)

Anonymous Coward | more than 8 years ago | (#13972548)

Drop the crack pipe and put your hands in the air!

the natural progression of a robust business model You have got to be kidding right. NO ONE, not even RMS is bold enough to call it a robust business model, that very much remains to be seen. The fact is that I present far more examples of why it is NOT a robust business model than I possible could otherwise.

the key to a financially successful open source project rests with the community, rather than just the technology.

This is utter tripe as well. The community had absolutely nothing to do with the investment in or profits of SourceFire/Snort or Tennable/Nessus. The community has had no bearing on Novell/SuSE or Red Hat. The community is definitely not where the success has rested so far and only a zealous fan boy would insinuate that.

What's with this bubble fear? (1, Interesting)

Anonymous Coward | more than 8 years ago | (#13972565)

Ever since 2000, everytime anybody invests any significant amount into anything at all, people start proclaiming "Bubble!!!"

The great bubble crash happened half a decade ago now. It's time to get over it.

Re:What's with this bubble fear? (2, Funny)

jzeejunk (878194) | more than 8 years ago | (#13972736)

Ever since 2000, everytime anybody invests any significant amount into anything at all, people start proclaiming "Bubble!!!"

it's kinda like
day 1 - u'll become sick
day 2 - u'll become sick
.
.
day 1000 - u'll become sick
.
.
one fine day you become sick and ur friend goes - "i told ya"

Re:What's with this bubble fear? (1)

Red Flayer (890720) | more than 8 years ago | (#13972886)

"Ever since 2000, everytime anybody invests any significant amount into anything at all, people start proclaiming 'Bubble!!!'
The great bubble crash happened half a decade ago now. It's time to get over it."


Not really. Those who ignore history are doomed to repeat it. The dotcom bust affected the economy at all levels, and we are still recovering from it. Not that other factors haven't affected the economy in the past decade, but the dotcom bubble is a major reason we're in this hole that we are still scrabbling to climb out of.

Its not fair (1)

achew22 (783804) | more than 8 years ago | (#13972576)

It isn't really fair to call this a "open source bubble" it isn't realy. People are just throwing their money around, and with anything named open people cant really be expecting to make money through the code. I think this is more of a give a little get a lot scenario, not a bubble. If you (company A) give 1000$ to open source solution X and company B gives 1000$ to open source solution Y then both companies who donate (and presumably use the software) benifit. This is just a win win thing for people and they are realizing it. Also, despite popular media beleif, when the dot-com bubble burst the dot-coms continued to exits. So you open source guys who go crazy when people sugest that their way will end, don't freak out -- if it pops you can still keep on the tradition.

It's fair (1)

DogDude (805747) | more than 8 years ago | (#13972829)

I think this is more of a give a little get a lot scenario, not a bubble. If you (company A) give 1000$ to open source solution X and company B gives 1000$ to open source solution Y then both companies who donate (and presumably use the software) benifit. This is just a win win thing for people and they are realizing it.

And so, what happens to the value of Company A's previous software-based competitive advantage? That had to have gone somewhere (it did: it's gone). In this situation, software actually becomes LESS important to companies. OSS software developers are programming themselves right out of a job. If companies don't get any competitive advantage from their software anymore (assuming that competitors are using the same open source software), then the software becomes just another cog in the wheel.... important, but not important enough to pay a premium for. It becomes like electricity... a cheap commodity that while important, certainly isn't given a second thought. People make a living producing electricity, but very few get wealthy, nor is it an exciting, innovative job.

Short term or long term? (4, Insightful)

UR30 (603039) | more than 8 years ago | (#13972577)

The question of a "bubble" is as relevant for open source as for science. Is there a bubble in science? Both open source and science are based on openness and peer review. It there is a bubble, long term it does not matter.

Maybe. Maybe not. (1)

Red Flayer (890720) | more than 8 years ago | (#13972591)

We're the first to call the bubble!1one Other analysts PWNED!

First off, it may be a bit premature to say that there is a bubble. The open-source movement is still an adolescent, and it remains to be seen if expected returns on investments justify the VC going in. The only people who think there is a bubble now are the people who firmly believe that open source business models aren't as profitable as proprietary software models -- which remains to be seen.

Unrelated to that thought:
FTA: Echoing those sentiments, Ron Rose, the chief information officer of Priceline.com, said that the company has become "predisposed" to buying open source products because they of the "economic benefits". A vibrant community behind a product also ensures a long-term road map, he added.

Yes, open source can be cheaper, Ron, and journalists sometimes use "quotation marks" for no apparent "reason," especially when they of the "paraphrased comments".

Here's the difference (5, Insightful)

bitspotter (455598) | more than 8 years ago | (#13972596)

There may well be a bubble forming. That's business.

The difference is this: At the end of the dotcom bubble burst, there was a lot of proprietary code floating around, locked up in asset portfolios that would never see the light of day. At the end of an alleged OSS bubble, there will be a lot of open source code floating around *in the open*, where people can actually make use of it and build upon it, regardless of the solvency of the company that originally authored or contributed to it.

This may well actually give the supposed "bubble" more floating power, since one company that might not be able to properly handle an open source project might have their fumbles recovered by another company that can. This could happen immediately, rather than waiting for the former company's death march to complete, drying up the VC and selling off the company's copyrights to the code.

It's not big enough to be a bubble (4, Insightful)

electroniceric (468976) | more than 8 years ago | (#13972635)

Open source may be garnerning more investment than it merits, but it's still a very small fraction of the software development market, much less the overall enterprise IT sales and service markets. So if OSS investment overheats, it will just lead to VC's being wary of investing in OSS companies for a while. Given that OSS is more a process than a particular sector or a business model, this will have limited effect on the overall march of open source, and especially open standards. In concrete terms, it would suck for JasperSoft to lose funding because hype around OSS' profit potential turns out to be overrated, but it wouldn't really stop people like Sun or IBM from moving towards open source, nor will it stop the commoditization of a variety of products by open source equivalents.

Bubbles take a long time to burst (2, Insightful)

spike2131 (468840) | more than 8 years ago | (#13972649)

So what if its a bubble. Bubbles take a long time to burst. Alan Greenspan noticed there was "Irrational Exuberance" in the stock market in 1996 - but the bubble didn't pop until 2001. The real estate bubble is supossed to pop in the US any day now.... but it hasn't yet. While I have no doubt it will pop one day - probably soon - its a fools game to try and time the thing. The thing about economic bubbles is that they last a lot longer than anyone expects they will.

So, open source is a bubble.... fine. But to say its "about to burst" is a reach. If its like other bubbles of late, now that its been declared a bubble, it won't burst for a few years yet. My advice, then, is get on that train and make some money while the getting is good.

Re:Bubbles take a long time to burst (1)

Red Flayer (890720) | more than 8 years ago | (#13972971)

"The real estate bubble is supossed to pop in the US any day now.... but it hasn't yet. While I have no doubt it will pop one day - probably soon - its a fools game to try and time the thing."

As long as the expected rate of return on real estate is significantly higher than inflation, the RE market will not bust. All the fed actions to keep inflation in check will prevent a real estate bust -- apparently we learned something from the 80s.

We're already seeing readjustments at the high end in certain markets of real estate, but it's just not happening in most markets, and likely won't. The only way I can see it happening is if there is a massive upwelling in speculation in a certain sector -- but I think most modern investors learned their lesson from the dotcom bust.

Some economists have said that the recent real estate boom is due to undervaluing of real estate in the past decade -- investors preferentially invested in dotcoms, or other risky-yet-having-the-potential-to-create-early-ret irement enterprises. When this busted, investors turned to the standard "safe" investment -- real estate, thus bringing the real estate market back up to its actual value (though over its value in certain areas).

Profit or die? (1)

digitaldc (879047) | more than 8 years ago | (#13972659)

Seems like the bottom line of expected profit will determine whether a bubble will burst. Besides, what more is an economic bubble than an overvalued profit making mechanism?
Profits don't seem to go too well with the open source definition shown here:
http://www.opensource.org/docs/definition.php [opensource.org]
Do and should people profit from Open Source? If so, who? and how? Why does Open Source need investment? Why do people/companies need to profit from Open Source projects? Is it inherently wrong to look at profit as a desired end result for Open Source projects? If someone owns and patents an Open Source project or related project derived from Open Source, is it really Open Source?

Another interview with David Skok:
http://www.developer.com/java/other/article.php/62 6991 [developer.com]
A bubble cartoon from 1875.
http://upload.wikimedia.org/wikipedia/en/a/ad/The_ Way_to_Grow_Poor%2C_The_Way_to_Grow_Rich_--_Currie r_%26_Ives_1875.jpg [wikimedia.org]

It's an iteresting qustion... (1)

amcdiarmid (856796) | more than 8 years ago | (#13972673)

Open Source is largely sucessful when there is a large enough community of quality contributers. They have seen a problem, and are trying to solve it. A company, on the other hand is management directed. The dichotomy of this problem is that an Open Source Company must have "Management" trying to direct what is essentially a community of volunteers.

From the question on managing geeks (or coders, or cats) yesterday (?), I gather that if you take away the mouse (interesting problem) from the cats (programmers) - they programmers loose interest. Somewhat problematic if your programmers are largely volunteers.

So, let's say you have an OpenSause company. You exist on volunteer programming & documentation, and on service support contracts. Perhaps, to a lesser extent, also on coding paid for features. You can't document too much, or no one will need the support contract. You can't pay for too much code, or you volunteers will feel unappreciated, and fork the code. How do you manage this? Perhaps with a feature bounty?

So, many Open Source companies exist - if only to control the naming rights of their products. Investors see a new buzzword and want to invest. From an open source users standpoint, it's all good: More open source code gets made. From the investors standpoint, it's only good if $$ gets made.

I think it's not such a good deal for many investors, but the investment will get made anyhow - as everyone will want part of the next Zend, Snort, MySql, whatever. However, unless the companies are very careful the investors will find that all their programmers leave for a fork of the project.

my $.02

Children (0)

Anonymous Coward | more than 8 years ago | (#13972699)

I think this is an argument beteen human beings who have children and human beings who don't have children. I want to die leaving the world a better place than I found it. I think open source will falicitate this

Intelligent Capitalists Still Learning (1)

SuperBug (200913) | more than 8 years ago | (#13972704)

It seems a bubble is created when there are no checks and balances, yet when any bubble pops, that in itself is a way of balancing what is otherwised unbalanced. That said, I believe any person or other entity which receives let's say, new ability, might tend to abuse that ability at first and go through various cycles of progression to hopefully become better in the long run than at first.

Since money, in this country at least, is a motivating factor for our capitalist society, then it stands to reason that anything we can adapt which allows us to reap more benefit of the cash flow and business plans we set forth causing this bubble effect, due to "over use".
That smacks highly of something like the slashdot effect I'd say, just put into different light.

When something new and useful comes along, we all want to use and possibly over use it to what end, not all benevolence, and thus all who partake in it are risking something. This is both good and bad, but hopefully, a much needed learning experience for all of us so that we may better fine-tune exactly what that balance is between too much and just enough.

In Solvat Russia... (-1, Troll)

Anonymous Coward | more than 8 years ago | (#13972710)

Dot Com bubble you!

Size of bubble. (3, Insightful)

NumberOneFan (811608) | more than 8 years ago | (#13972719)

To quote from the article:

Until the end of September this year, the amount of venture money that went to companies with "open source" in their business description was $144m (£81.8m). That's more than double the total for the whole of last year, according to research from the National Venture Capital Association, PriceWaterhouseCoopers and Thomson Venture Economics.

In addition, a conservative estimate is that there have been at least 18 open source companies funded in the first three quarters of 2005, compared with 12 last year, a NVCA representative said. Among this year's top investment recipients were XenSource, which landed $23m, and SugarCRM, which got third-round funding of $18.7m last month.


What's the size of the "bubble" we're talking about here? $144M? That's like a spit bubble, heh. I bet if you take MS, Oracle, and Dell's yearly complimentary food, drink, and party budgets, they'd be more than that. Ok well, that's probably not true, but I mean, $144M as far as business investments go is a peanuts. Whether or not this is bad for the OSS/FS community, I don't know. How much OSS/FS software is developed by employees of IBM and other friendly companies versus how much software is developed by some little startup on VC funding? That to me, would be a larger indicator on how "volatile" this is becoming.

Seems unlikely (1)

NickFortune (613926) | more than 8 years ago | (#13972728)

First of all, I haven't heard the tales of VCs going mad throwing cash at every tom dick and harry, just so long as they could pronounce "e-commerce". Bubbles only work if people invest in them.

Certainly we've seen some investment in open source companies, and a bit of lively trading to control some of the commercial distros. We're still a long way from the giddy days of dot com madness. How many paper open source millionaires ("on paper", don't forget the magic words) live in your neighbourhood? Anyone living next door to Mark Shuttleworth needn't bother answering.

If this was a bubble, I'd expect to see a slew of new distros, all being made to be bought, and being bought faster than people could make them. I'd expect to see some serious money being sunk into projects like MenuetOS, SkyOS and the like. I'd expect to see cash being sunk into moribund sourceforge projects just to get in on the ground floor.

Instead, what I'm mainly seeing is some fairly modest support from industry in those sectors where the sponsor has a well defined use for the software, I see Novell desperately trying to reinvent itself (and it may yet succeed) and a bit of consolidation going on among some of the commercial distros. That could turn into a feeding frenzy as people try to gain control of Linux - if it wasn't for the fact that for every distro bought out, a new one will likely pop up to replace it.

So, no, I don't think there is a bubble, let alone on due to burst. But you know, even it there was a bubble, and just supposing that it was to burst... so what? It's not like Microsoft are going to come along and buy up all the free software after the VCs lose their shirts. The software will remain free, people will continue to work on it, and people will continue to make money offering corporate support contracts.

Last bubble (1)

Barkley44 (919010) | more than 8 years ago | (#13972759)

The last bubble had a large number of companies "promising" great things - products that never existed. People rushed to invest.

In this case, there is an actualy product.

Re:Last bubble (1)

Red Flayer (890720) | more than 8 years ago | (#13973128)

"The last bubble had a large number of companies "promising" great things - products that never existed. People rushed to invest.
In this case, there is an actualy product."


Except, the promises are still the same -- profits.

Old hotness: Well, we don't have a working product, but our business model rocks... you'll make a killing when we get to market.

New hotness: Our product is great, our marketshare is growing, even though our business model is unproven... you'll make a killing if we can translate marketshare to profits.

Either way, there's an unkown (or two) that presents the risk the VCs are willing to take in order to have a chance at a big payoff.

Open Source Never Fails (3, Insightful)

RAMMS+EIN (578166) | more than 8 years ago | (#13972775)

The key difference between open source and everything else is that everyone gets equal access. This means a product can never fail while there is interest in keeping it alive. Even if the party producing it quits, the product continues to be available (through the right to redistribute), maintainable (through the right to read and modify the source), and even improvable (nothing stops you from making a new, better version).

Whether businesses that try to make money off open source can fail is another matter. I see it this way: open source exerts a downward pressure on software prices. This means that it tends to make businesses that try making money by selling software fail, but it provides businesses using software (and what business isn't?) with financial benefits. This, and the properties mentioned in the previous paragraph, is where the business benefit of open source is.

TFA seems to be asking whether venture capitalists can expect to see returns on the money they invest in open source startups, or that it's a bubble that will burst. That depends on how you see it. If they want these businesses to generate money that flows back to them, it's probably a bubble, because these businesses are trying to make money exactly in the way that is likely to fail (see previous paragraph). However, the open source software these companies make will be around, no matter if the company persists. So the invested capital is never really lost, as it would be if the company had been making closed source software (and failed to pass on the rights before closing down, as too often happens).

Ah Crap, back to stealing software... (1)

Traegorn (856071) | more than 8 years ago | (#13972779)

If an Open Source Bubble "bursts," and there's less new Open Source software for me, it will mean that I'll have to go back to pirating software 'cause I sure can't afford Closed Source software prices...

...and I finally got my computers running 100% legal software...

All the rules have changed. (4, Funny)

dpbsmith (263124) | more than 8 years ago | (#13972780)

If you think this a bubble, you just don't get it. This is a fundamental paradigm shift. The secret to wealth without effort has finally been found. This is totally, absolutely different from the Internet bubble, Florida real estate during the 1920s, multilevel marketing, pyramid clubs, and arbitrage of international postal reply coupons. You see, it's completely legal, because you give the government your social security number so that you can pay income tax on the fabulous wealth this system generates--guaranteed!

This one works. You just have to dare to be great. Fire your boss and never work again! It can work for anyone. You can do it from your home in your spare time. And for $19.95 I'll send you absolutely free a valuable envelope packed full of information on how you can buy our videotype seminar series. Try it at absolutely no obligation. If you follow the simple step-by-step instructions and, after three months you are not making $2000, $3000, $5000 a month, just send a letter to our PO box or call our disconnected phone line and we will cheerfully refund your money.

uh oh (1)

frankcow (925500) | more than 8 years ago | (#13972803)

We'd better all switch to paid software to avoid the burst!

semi-almost-kinda (0)

Anonymous Coward | more than 8 years ago | (#13972806)

Nobody but nobody knows if there's an Open Source investment bubble brewing because nobody knows how many Open Source installations are going in. You can't know because there's no licenses to count; take this CD and copy the hell out of it. There's no visible paper trail, no visible timetable, no visible anorexic blonde mouthpiece from Marketing. And it scares the crap out of the Big Boys. What you're seeing is nervous money from people with too much money and a determination not to miss the next VA Linux (or the next Microsoft.) Bubble Schmubble, the salient point here is that none of the traditional pipelines of rumor and stats is worth a damn right now. It's a stealth revolution alright; by the time it surfaces for the Fat Cats playing Pebble Beach or Coronado it will be too late.

Here's the Math (1)

KrackHouse (628313) | more than 8 years ago | (#13972846)

These open source startups don't need venture capital like they used to. Servers are nearly free on Ebay, most of the software they're using is open source and free as in beer. That leaves investors standing around with their cash in their hands, not knowing what to do. There's even talk of some giving the money back to investors. This is a supply and demand issue. Too much money chasing too few ideas.

The only money to be made in open source is in hosting and consulting which really doesn't have a heck of a lot to do with the open source idea anyway. By that I mean you can apply the open source philosophy to a business that has nothing to do with software.

Investor's Guide to Open Source (4, Insightful)

salesgeek (263995) | more than 8 years ago | (#13972881)

Three very simple rules will help you:

1. Invest in companies that know how to make money by being paid by a customer to perform a service.
2. There are usually minimal or no barriers to entry in the open source universe.
3. Check community involvement. A small community or lack of one indicates a lack of mastery of the open source model.

BTW: coming out with a closed source derivative product can be risky: sometimes you get forked and out developed.

Pretty Tiny Bubble ---- $144 million (4, Insightful)

hansreiser (6963) | more than 8 years ago | (#13972951)

Considering the impact of free software on the industry, $144 million is pretty small stuff. If a bubble that size bursts, will anyone notice? People will notice if Google goes under with their $15 billion dollar valuation based on a free service, or if the "network" television companies go under as a result of the Internet. Calling $144 million a bubble of significance is just headline hunting.

Free software is maturing and growing still. In ten years....

Hans

Its not an "OSS bubble"... its a "Google bubble" (0)

Anonymous Coward | more than 8 years ago | (#13973063)

Can anyone name a so-called "overvalued OSS stock" other than Google?

Look, I like Google as much as the next guy, but they are extremely overvalued. No they are not eToys and will probably not be on FuckedCompany.com [slashdot.org] any time soon, but they cannot justify their current market cap. And no, we are not in another major stock bubble. Where are the billion dollar aquisitions? Where are the companies not making any money being sold for jillions? Well, other than Google?

In other news... (0, Offtopic)

Xarius (691264) | more than 8 years ago | (#13973085)

The sky is falling!

Open source models have real sustainability (1)

shanecoughlan (902917) | more than 8 years ago | (#13973087)

Hi there

I've working on a project designed to bring together various open source software applications, add useful extensions, add documentation, and provide both free and commercial support packages. One of the things we're working on at the moment is Mobility Email (http://mobility.shaneland.co.uk/ [shaneland.co.uk] ), a portable version of Thunderbird.

I believe that we can find a way to balance a genuine open development model (where source code is altered with a community, people share ideas, and solutions are evolved rather than dictated) along with a combined free and commercial (business) support model.

It takes a level head, and planning with realistic goals. We're working with Firefox, Thunderbird, OpenOffice, NVU, Gaim and FileZilla. We're not trying to reinvent the wheel, but rather to create a unified (community) front that is sponsored by a company that will make money from passing on expert advice to companies who wish to adopt these technologies.

Regards

Shane Coughlan

It can't burst (1)

PurpleWizard (643191) | more than 8 years ago | (#13973089)

at least not the way the dot com stuff did. Simply because open source is built to withstand the destruction of its creators. Others can continue the work. So the actual substance will remain.

Mean while the actual financial love affair and cash influx could of course bomb. Then things would be just like they were for the previous twenty years just with the aftermath of an expansion bulge, lots of new code and tools sitting around forming part of the common code available for use.

Worst case doesn't sound too bad?

Open Source for Profit? (1)

aoptik (792350) | more than 8 years ago | (#13973145)

This is not a new topic many big guys have already used the Open Source to make profit. Take a look at Apple's Darwin project or Novell(SuSE). These companies can now focus more on there business's goals instead of working out bugs within operating system and spend extra resources to devote to coding the OS ,instead ,they use the Open Source Community to do it.
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