The Financial Crisis Cries for More Open Source

In the last major economic downturn, Linux established itself as a widely-accepted enterprise operating system, benefiting a lively ecosystem of vendors such as Red Hat and Novell. The return of tough economic times puts the open source alternative again front and center, this time with focus on databases and higher-level software applications.

I believe we've entered another era for open-source companies of all stripes. IT decision makers need to fight the financial crisis and they need a more efficient solution for critical enterprise system and IT needs.

As IT costs grow and the economic crisis puts pressure on global IT budgets, open source becomes irresistibly attractive to developers and IT decision makers who are being asked to do more with a whole lot less. Meanwhile, proprietary vendors react by increasing license fees by 15 percent to 45 percent, they continue to lock-in their customers, and they take away independence regarding choice and flexibility across the enterprise technology infrastructure.
 

That's why open-source solutions are more attractive than ever.

During the last economic downturn in 2001-2002, open-source usage and adoption was on an upward curve. Red Hat, for example, began winning large customer accounts that are now the backbone of their customer base. CIOs and CTOs were on the lookout for innovative ways to save costs both from a technology and people perspective, and open source was a great solution. Just like it is today.

Red Hat began to see the fruits of their labor in late 2002; the company grew revenue 14 percent for the year and that growth improved to 38 percent and 58 percent in 2003 and 2004 respectively. Given the timing of subscription revenues and long sales cycles, it is not hard to conclude that during the 2001-2002 economic downturn, large corporations made the decision to switch to open-source technologies. It also explains why Novell paid $200 million for Suse Linux in late 2003, which at the time, was roughly 20 times its revenues.

Sign up for ITworld's Daily newsletter
Follow ITworld on Twitter @IT_world

• Email
• Print
• Share
  • Slashdot
  • Digg
  • Stumble
  • Reddit
  • Newsvine