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Over the past few weeks, I've talked to a variety of players in the open source world, including people at EnterpriseDB. No doubt, it's a powerful force -- and that's attracting a good amount of venture capital. What's more, companies like Red Hat (NYSE: RHT) have shown that there's money to be made.
But is it possible for a mainstream software company to offer open source? Well, there's no clear-cut answer yet. After all, it's tough to sell a customer expensive software but at the same time offer a free version.
Yet, as history has shown, the software industry can be nimble.
Take Day Software. Based in Switzerland, the company has built a franchise in the content management space. Revenues are growing nicely and the company drops a lot of cash flow.
At the same time, Day has invested in open source technologies. For example, the company recently purchased Mindquarry, which is a provider of collaboration technologies.
"We are still in the early stages of open source," said Chris Harano, who is the CFO of Day, in an interview with me. "I can't say there are any definite answers. Perhaps the software company of the future will have a combination of approaches, such as open source and on-demand."
Although, it looks like open source can be a powerful way to turbocharge marketing. "In enterprise software, the sales cycle can be long," said Harano. "But with open source, potential customers will often download the software and start using it. It actually cuts down the traditional cycle."
In fact, in one case, Day Software snagged a customer without any face-to-face contact. "The prospect downloaded the software and contacted us via email," said Harano. "They wanted to buy our professional version. So far, it's resulted in over $1 million in licenses. I can't say it proves that there's synergy between mainstream and open source, but this is the kind of sale I'll take any time."
Tom Taulli is the author of various books, including The Complete M&A Handbook
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