There’s big money in open source software and, as a result, the very foundation of open source as the free, collaborative development of software through the sharing of source code is changing, and may even be in danger of disappearing.
Market analytics and intelligence company CB Insights predicts that the open source services industry market – a market that has grown up over the years to support open source software itself – will reach $33bn by 2022. That’s almost double the $17bn it is expected to reach this year.
That value excludes what CB Insights estimates is the 'hundreds of billions” the broader market is estimated to be worth when one considers the recent acquisitions of RedHat by IBM ($34bn) and GitHub by Microsoft ($7.5bn); as well as public market valuations of companies like MongoDB ($7.9bn) and Elastic ($7.3bn).
In its research report on the future of open source, CB Insights notes that while the modifying and redistribution of source code became an established practice in the 1960s, the concept of open source software development only became widely popular with the advent of the Internet in the 1990s. Today, open source software, which is characterised by code that is publicly accessible and can be exchanged in a transparent and collaborative fashion with over 30 million developers contributing to community-based platforms like GitHub, is almost synonymous with software development.
However, CB Insights indicates that things started to sour (if you’re an open source purist) when projects began to be monetised and commercialised, despite the fact that this would have made them more sustainable. Few open source projects start with the goal of monetisation and scale, yet revenue-generating businesses usually have to be established to support their growth, particularly in the enterprise environment.
According to the report, open source monetisation strategies vary and evolve. One of the most popular models at present is what is referred to as “open core”. This involves a blend of free open source and proprietary software, with different levels of openness within the model. Docker, Elastic, GitLab, MongoDB and Redis are all identifiable as open core companies.
Another open source monetisation strategy is the development of a corporate-sponsored open source project which is often used as a business development resource rather than as the company’s primary offering. An example of this is Kubernetes, which has been developed primarily by Google and which, through its widespread adoption, has boosted awareness of Google Cloud Platform.
“Within the increasingly competitive cloud services market, building developer trust with open source initiatives (like Kubernetes) provides valuable differentiation,” CB Insights comments.
The report points out that any of today’s largest open source projects are products from the world’s largest tech companies: eight of the 10 most popular GitHub projects are the products of big tech companies such as Microsoft, Facebook, Google and IBM, yet only a small number of the contributions to these projects come from company employees.
So while these projects are not directly monetised, they are “incredibly valuable assets to the sponsoring company. With thousands of developers contributing, these tech giants benefit from the free developer input and direct user feedback. This allows them to build better software, faster.”
In addition, the research report claims that the giant cloud companies are also benefiting from popular projects hosted on GitHub by copying the source code of people projects, making minimal – if any – changes, rebranding it and offering it to their own customers as proprietary services.
As a result, CB Insights warns that independent, open source software providers are becoming increasingly guarded about their contributions and are starting to use more restrictive licensing to try and protect themselves against this type of exploitation.
“At scale, software services will continue to face a difficult decision: remain loyal to the (open source) community or limit abuse from cloud providers? There is no clear answer at this time, but recent actions point to the latter,” the report concludes.
Share