On September 13, 2006, Prashant Shah of Hummer Winblad Venture Partners, gave a talk in Mountain View, CA on open source business models. Shah is a principal at Hummer Winblad Venture Partners. Prior to his appointment, he was with enCommerce (acquired by Entrust), where his background spanned all seven layers of the OSI stack.
He announced that Hummer Winblad Venture Partners was currently seeking companies for Series A investments.
He noted that Hummer Winblad Venture Partners did not invest in open source itself. Open source was not a business. The firm looked at companies as investments, whether or not they engaged in open source. Examples of open source business investments included: MuleSource which uses the dual license model, and Palamida, a company that provided an intellectual property management solution.
Shah observed a trend away from the GNU GPL and LGPL. Customers desired to purchase commercial licenses because they might not understand the GNU GPL or LGPL. However, they did not want the provider to license their free version with the GNU GPL or LGPL leading to other licenses such as Mozilla, Apache, BSD.
Open source businesses faced commodization challenges because most customers had legacy products such as SAP which were difficult to migrate from just because there was a less expensive or free version in the market. Open source products needed to be better in features not just less expensive already in existence.
Shah stated that in the application software space especially, people did not care whether something was open source. People did not buy software. They bought solutions to problems.
There was a trend towards investments in sales and marketing. JBoss, Inc. for example did not increase its connections to its community through free downloads of its products. Downloads stayed consistent. The company increased its revenues when it started to invest in sales and marketing.
Comment Preview