IBM, Sun Look Out: Open Source Has a Flip Side Too

Last week we heard from IDC that the Linux-based software market (including both the open source and proprietary products within it) would more than double over the next few years. That was good news for those IT suppliers who have crossed over from a dependence on legacy and Unix-based solutions. That company list includes IBM (IBM), Sun (JAVA) and others.

This week, we see an indication of the flip side of the ongoing transition from Unix/legacy software ecosystems to open-source-based ecosystems. The Standish Group says:

"... while it is only 6% of estimated trillion dollars IT budgeted annually, it (open source) represents a real loss of $60 billion in annual revenues to software companies."

The software companies so affected are all on that same list.

As I indicated on ebizQ in January, I have not seen signs from the supply side of that kind of fall off in software-related services revenues. But the Standish Group has been doing its sort of user-based research for almost 25 years so I don't discount it. In fact, as I said back in January:

"In IT market research, it is important to understand if true free-as-in-air OSS is displacing traditional subscription maintenance or SaaS revenue streams, and thereby decreasing overall software market size. From current ebizQ research, there is no indication that such displacement is happening but the market will never get a truly accurate picture unless a census includes all software, not just software licensed under one set of terms and conditions or another. "

It's just coincidence that on April 16, OpenLogic formally kicked off the census project it had announced in October 2007. It promises to make the aggregate census data publicly available so sometime sooner rather than later we can begin to see if what the Standish Group is seeing plays out in the market. I'd rather have a total census but the OpenLogic effort is a good start.