# Jive Software started IPO at $12 a share, closing the day up nearly 30%.

# HP announced that it plans to release webOS under an open source license. Details are thin on the ground, although Fedora is reportedly an inspiration. Joel West’s post pretty much summed up my thoughts.

# Tier 3 announced that it has created Iron Foundry, and open source .NET Framework implementation of Cloud Foundry.

# Xeround raised $9m funding for its MySQL-as-a-service cloud database.

# Microsoft released the Windows Azure SDK for Node.js as open source and made available a preview of the Apache Hadoop on Windows Azure, amongst a slew of other open source-related announcements.

# Red Hat, Canonical, Cisco, IBM, Intel, NetApp, and SUSE created the oVirt project, based around Red Hat’s Enterprise Virtualization technology for managing KVM environments.

# Nuxeo announced the availability of Nuxeo Platform 5.5.

# Joyent launched its SmartMachine Appliance for MongoDB.

Red Hat announced JBoss Enterprise Portal Platform 5.2 and JBoss Operations Network 3.0.

# Novell announced the availability of Novell Open Enterprise Server 11.

# Couchbase claimed thousands of open source deployments and 150 commercial deployments, but has rethought its product line-up for 2012, having “confused the heck” out of potential users in 2011.

# Univention released Univention Corporate Server 3.0.

# SuccessBricks announced that its ClearDB distributed MySQL-based database service is now available through Heroku.

# Ember.js is the new name for the SproutCore 2.0 JavaScript framework.

# HEnrik Ingo examined the recent spate of MySQL authentication plug-ins.

*The latest in VC funding for open source
*VMware’s SpringSource buys cloud messenger Rabbit
*Open source monitoring vendors’ key cloud partnershps
*Oracle moves ahead, back on MySQL, OpenSolaris

iTunes or direct download (25:38, 7MB)

It ought to be simple: either the software meets the Open Source Definition or it does not. But it is not always easy to tell what license is being used, and in the case of software being delivered as a service, does it matter anyway?

The ability to deliver software as a hosted service enables some companies that are claimed to be 100% open source to offer customers software for which the source code is not available. Coincidentally, James Dixon has this week highlighted one example in the form of Nuxeo Studio, a configuration and customization environment for the Nuxeo ECM offerings, which is delivered as a hosted service to Nuxeo’s Connect – Developer subscribers.

The nature of Studio’s license came up in a conversation I had recently with Nuxeo CMO Cheryl McKinnon, and I had been meaning to write a post on the subject of hosted subscription services ever since.

Nuxeo Studio is the latest in a line of value-added subscription services that blur the lines between open and closed. It started, arguably, back in 2001 with Red Hat Network, a hosted monitoring and management service. The stand alone Red Hat Network Satellite followed two years later but it wasn’t until June 2008 that the code officially became open source, as project Spacewalk.

Similarly, JBoss Operations Network was first introduced as JBoss Network, part of the JBoss subscription, in March 2005. The code for that was made available in the form of the Jopr project in 2008.

Meanwhile MySQL introduced MySQL Network Monitoring and Advisory Services as part of MySQL Enterprise in October 2006 as it continued its shift towards subscription revenue (and away from its traditional dual licensing approach).

More recent examples include Nuxeo Studio and Acquia Network’s remote site management services.

In his post James Dixon argues that the delivery of a service like Nuxeo Studio is effectively the same as the open core licensing model, in that it is the delivery of proprietary extensions to an open source core. Florent Guillaume, director of R&D at Nuxeo, and Eric Barroca, Nuxeo CEO, have responded in the comments to that post and Eric’s original to argue that it is not.

My own feeling is that Nuxeo’s approach is not open core, since the original definition of open core concerned proprietary products. However, the existence of Nuxeo Studio means that Nuxeo is clearly not 100% open source.

For that reason, I have come to believe that we need to add a new revenue trigger category to our open source business strategy model, that makes a clear distinction between support subscriptions for 100% open source code, and value-add subscriptions that offer additional hosted services.

It is also a reminder of the importance of transparency. Open core vendors are regularly attacked for misleading potential customers with the promise of open source while delivering traditional licensing. Our recent transparency test indicated that for the most part open core vendors are clear about what features are in which version, and with which license.

I spent some time the other day investigating the web sites of various OSS-related vendors and unfortunately the same cannot be said of all vendors (whether they are open core or “pure” open source).

Too often phrases like “open source subscription license”, “commercial open source license” and “value-added component” are thrown around without any explanation of what exactly is meant, and the so-called open source purists are not immune to glossing over the details.

Simon Crosby recently commented that everybody making money with open source actually has a proprietary angle. I don’t think that is 100% true, but it is getting harder and harder to identify the open source purists.

WordPress Foundation formed
# Matt Mullenwag launched the WordPress Foundation.

Reaction to Oracle-Sun’s EC approval
# In a memo Sun CEO Jonathan Schwartz encouraged the company’s employees to emotionally resign from Sun.

# EnterpriseDB and PostgreSQL co-founder Bruce Momjian issued a statement on the EC’s decision to approve Oracle-Sun.

# Mike Hogan asked, did Oracle make concessions to the EU?

# Savio Rodrigues discussed Sun & Oracle’s impact on open source acquisitions.

# Save MySQL campaigner Florian Mueller commented following the EC’s clearance of the Oracle-Sun deal.

# Josh Berkus clarified his presentation on Sun and ten ways to destroy a community.

# Ingres CEO Roger Buckhardt analyzed the impact of Oracle-Sun on the database market.

Best of the rest
# Internetnews.com reported on Red Hat’s plans for JBoss in 2010.

# Red Hat’s opensource.com community site is now live.

# Talend introduced and open source Master Data Management (MDM) product.

# Joe “Zonker” Brockmeier, openSUSE community manager, is leaving Novell.

# JavaWorld compared JBoss and SpringSource.

# MuleSoft updated Tcat Server with support for the newest version of Apache Tomcat 6.0.24.

#OSS Watch discussed control versus community.

# McObject’s Perst open source, object-oriented embedded database now supports Microsoft’s Silverlight technology.

# GigaOM discussed how Red Hat has avoided the recession.

# Carlo Daffara discussed how open source enables new ways of cooperating.

He wrote:

“as Open Core becomes the default business model for ‘pure-play’ open-source companies, we will see more software licensed under the Apache license”

I don’t doubt that we will see more software licensed under the Apache license, and also more vendors making use of permissively-licensed code, but I don’t see a correlation with the Open-Core model.

In our report, “Open Source is Not a Business Model“, report we found that 23.7% of the 114 vendors we covered were using Open-Core as a vendor licensing strategy. Looking at the stats, over 70% of Open-Core strategy users also used a variant of the GPL or LGPL.

The main reason for the correlation of the L/GPL and Open-Core is, as Matt notes, that “the GPL makes sense in a world where vendors hope to exercise control over their communities”. Carlo Daffara agrees: “the GPL is not a barrier in adopting this new style of open core model, and certainly creates a barrier for potential freeriding by competitors”.

Carlo cites as an example the use of the GPL by the usually Apache-focused SpringSource for its SpringSource dm Server as a means of restricting the commercial opportunities for potential rivals, something that we covered here.

As Matt explains, however, “if the desire is to foster unfettered growth, Apache licensing offers a better path”. Savio Rodrigues offers an example of a usually L/GPL-focused company - Red Hat/JBoss - choosing the Apache License for its new HornetQ messaging software because “the project team felt that the Apache license would ensure that the project’s code could be more easily included into products from the ecosystem.”

1-1 then. But this isn’t about point scoring. What the examples demonstrate is that vendors choose licenses for individual projects/products based on pragmatic business reasons rather than dogmatic commitment to licensing philosophy, and that - as we previously suggested - there is actually some benefit in the proliferation of different licenses.

Of course it is also important to remember that many vendors don’t have the luxury or choosing a license for the project they attempt to commercialize. Mike Olson notes that adoption has been a factor related to the Apache licensed Hadoop project - but what came first commercialization or adoption?

I believe we are seeing increased adoption of permissively-licensed open source software by both new open source specialists, such as Mike’s Cloudera, and also proprietary vendors such as Oracle, SAP and - as recently discussed - Day Software.

In these cases, the commercial vendor doesn’t choose the Apache license for software to encourage widespread adoption, it is encouraged to choose Apache-licensed software because of widespread adoption (not to mention the low cost and high quality advantages of being part of a true developer *community*).

That has more to do with the patron model, as discussed by Day Software’s chief marketing officer, Kevin Cochrane, than it does Open-Core.

Additionally, as Carlo notes, it is a product of the shift towards what he calls “consortia-managed projects”. Or as I previously stated: “if Open-Core was a significant revenue strategy of open source 3.0 (vendor-dominated open source projects such as MySQL, JasperSoft), then Embedded [as I was referring to the patron model at the time] is one of the commercial open source strategies of open source 4.0 (vendor-dominated open source communities such as Eclipse, Symbian).”

So while we expect Open-Core to remain a significant business model for ‘pure-play’ open-source companies, and we expect to see more software licensed under the Apache license, we don’t see the two as being directly related.

Anyway, this was supposed to be a quick post. That’s enough for now.

For some perspective it is worth noting that while Red Hat’s revenue has been growing steadily:

The rate of growth has been in decline for some time:

We have also noted (451 Group clients only) that the company will in all likelihood have to invest in inorganic growth if it is to meet its ambitious targets (such as 50% of server operating system market share by 2015, and growing to $1bn in revenue over three years - from February 2008).

Unfortunately for Red Hat its opportunities for inorganic growth in its core Linux market are limited since its dominance of the enterprise Linux market means that very few vendors would help it gain serious Linux market share. While there are multiple opportunities for the company to expand into new markets one problem that the company has is that would-be acquisition targets (MySQL, Hyperic) keep getting snapped up by its rivals.

(This isn’t a post about inorganic growth opportunities, but given our suggestion that open source can serve as an on-ramp to the cloud I would suggest that Red Hat could do a lot worse than look at Eucalyptus Systems as a long-term growth opportunity).

Fortunately for Red Hat the two major acquisitions that it has made in recent years (JBoss and Qumranet) both provide the company with opportunities to drive organic growth. Indeed, looking at the company’s business it is interesting to note quite how many opportunities for organic growth are at its disposal:

* JBoss - Red Hat’s middleware business continues to grow faster than the Linux business, albeit still not as a reportable segment of the company’s revenue. The company noted that 30% of its largest deals involved a middleware is fiscal 2009, there is still a lot of opportunity for greater cross-selling. The acquisition of systems integration and consulting firm Amentra was designed to help it deliver better value to JBoss customers. That and the JBoss MASS migration tools should start to deliver.

* The channel - 61% of deals came from the channel in Q1, up from 56% Q4. Red Hat more than doubled channel partners to 4,500 in 2009. Advanced Partners - VARs/SIs - grew from about 100 to about 350 in 09. Additionally the company has noted that while its renewal rates for its biggest accounts are close to 100% (”I think the only one that didn’t in the last couple of years was Oracle itself”, noted Jim Whitehurst in June) renewal rates from channel deals tend to be lower. It has put a program in place to rectify that.

* Increased penetration into existing accounts - Red Hat had 40,000 new customers in FY09. As the Eclipse Foundation’s Donald Smith noted, that means the company has a low revenue per customer. However, it also suggests huge opportunity for increased penetration into existing customers.

* Up-selling to Advanced Platform - traditionally, 70% of Red Hat’s Linux users have been on what was Red Hat Enterprise Linux ES. However, 50% of renewals in FY09 upgraded to the higher price Advanced Platform, rather than going for the standard Enterprise Linux Server.

* Virtualization - One of the drivers for AP is that it includes the advanced virtualization capabilities. Interest in virtualization is not only generating demand for the higher-priced RHEL variant but also helps Red Hat to avoid spending freezes on new hardware by de-coupling RHEL adoption from new hardware spending.

* Free to fee - Matt Asay noted recently that “nonpaid usage of Red Hat’s software that may well pose a bigger risk” to Red Hat than its chief rival Novell. That is something that the company is aware of, and it has been auditing customers to ensure that the amount of RHEL systems they have running is suitable for their subscription level. The company also sees a significant opportunity in converting users of community Linux distributions - such as CentOS or Ubuntu - to RHEL subscribers, and in 4Q09 landed a multi-year, multi-million dollar free-to-paid deal.

Will those be enough to help the company achieve its ambitious goals? Possibly not, and we do believe that Red Hat needs to expand its addressable market, but it is clear that even without acquisitions Red Hat has multiple opportunities for growing revenue in the next couple of years.