Proprietary Software Strikes Back?

Something very interesting has been happening just below the surface in the commercial software world over the past few weeks, something very quiet and timid but something that also has the potential to be as important as Microsoft’s decision to include a web browser with its operating system or the decision of MySQL AB to go open-source or the migration from NCSA to Apache. OK, well, the last two really require a geek’s outlook, but I think they will all stand out as time passes.

I am referring to the fact that several of the biggest names in commercial, proprietary software have recently announced “free” editions of the most popular, and profitable, products:

    Oracle announced the 10g Database XE Edition, a free (but crippled – only uses 1 GB of RAM and 1 processor, 4 GB max DB file size) version of their powerful and widely used core database product;

    Microsoft has started pushing its “free” SQL Server 2005 Express Edition, more commonly called its previous name of MSDE.

In the background, you can see the consolidation in the enterprise application space has left few big prized left to claim by large companies looking to expand their revenue streams. Also, MySQL 5 has been called “Production Ready,” bringing stored procedures, views, and triggers to the popular open-source database. And, acting as a dull roar beneath it all, AJAX-based productivity apps are all the buzz, even though one has yet to break out to compete with expensive desktop software, like MS Office.

What is going on here? Well, I think that the big proprietary software companies are actually starting to realize that they actually are starting to compete with tested and proven open source software in a way that really will, eventually affect the bottom line. That’s nothing new, though. Look at Apache and IIS. It is also not necessarily new that the open source product actually out-performs the proprietary offering, making it more desirable, even if price wasn’t an issue. What is new is that customers are running out of features that exist in proprietary software that do not exist in best-of-breed open source offerings. And if customers don’t need it, the developers won’t be willing to split their fees with the big software publishing houses as part of software tax on their development.

Oracle is probably the one that has the most to lose in the short run. More than 90% of its core features now exist in MySQL, and if you were a large software developer looking to choose a database, why would you want make your customer cut a check to Oracle that they could be cutting to you?

It isn’t like this is anything new. Oracle’s strategy of buying firms like PeopleSoft, its development of more tiers of software layers above the database designed to lock you in, and its marketing of “grid” databases (i.e. something that most of its customers couldn’t care less about) rather than focusing on making its security and bug patches easier to apply as been designed for some time to head off and envitable decision: open source your own technology, going into business as a service, or continue to squeeze your customers for every last dime while your stock and company slowly sinks and becomes less relevant. (Novell, anyone?)

And, while Microsoft may be smiling now, the future doesn’t look too good for it, either. Regardless of what the brains in Redmond think, the operating system you run, and even the computing device you use, is becoming less relevant. Subscription software, at least how they would like to sell it, is not the answer to what is probably coming in 8-10 years: a bleed of capital under the weight of a top-heavy organization that was never able to really innovate but poorly copy.

We are witnessing some of the first ripples of what could turn out to be a larger tsunami.

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