Eye on Oracle

Apr 27 2009   6:26PM GMT

Will Oracle be the good shepherd for open source?

Ed Scannell Ed Scannell Profile: Ed Scannell

With its acquisition of Sun, Oracle, like it or not sports fans, is now the steward of the open source community. It is now Oracle’s opportunity to take open source technologies up to the next level of acceptance in corporate America — or not.

My guess is they will pursue that opportunity. Not necessarily out of any sense of contributing to the greater good by encouraging the spread of free software to IT shops strapped for cash in recessionary times, for instance. It would have more to do with the fact that there is money, good money, to be made by committing more deeply to open source technologies.

This should not surprise anyone. After all, this is the company that jacked up its licensing fees some 15 to 20 percent last year, right around the time the recession was crushing the economy.

I really don’t have any problems with vendors large or small, making as much money as they can from open source. If Oracle can intelligently and fairly find a way to charge Oracle and Sun users for open source products and associated technical services, it could lay down a business model that the rest of the open source world could follow. With greater revenue streams generated, more jobs can be created among both vendor and IT companies, which would result in more useful products delivered and greater productivity.

Lord knows many Linux distributors and other open source software developers have had their chance over the past decade to establish growing and profitable businesses. But with the exception of Red Hat and possibly Novell, none have succeeded at sustaining a largely open source business capable of generating hundreds of millions in revenues. Sun is the other possible exception here. A recent Goldman Sachs report estimated that the company’s Java-based revenues could approach $300 million in the current fiscal year ending in June, but even that tidy sum was enough to allow the company to continue under its own steam.

But Oracle, with revenues of $25 billion and significant market share in multiple enterprise software markets, is in a strong enough position to show the industry how real money can be made in open source world.

The biggest change Oracle has to make to achieve this goal doesn’t depend largely on clever ways of blending of open source and its proprietary products, although it will have to do some of that vis-à-vis positioning and pricing strategies, but on taking a more enlightened approach to attracting new customers. Yes, I’ll say it, we need to see a kinder, gentler Oracle coming into this market.

There is a way to achieve a balance that allows the company to continue to compete aggressively without trying to win the Albert Schweitzer Award for Humanitarianism .

And why not be kinder? The company can’t charge major companies such as IBM or SAP any more for licensing Java. Those licensing fees are protected under long term contracts and can’t be touched until they come up for renewal. The same goes for Sun’s corporate users, particularly those locked into multi-year support and maintenance deals.

Instead of tossing aside good products from Sun such as the MySQL and Glassfish, Oracle could put development monies into enhancing them and making them even more useful to customers. In doing so they could also serve as effective weapons against Microsoft in the lower end of the market. More than a few open source users have told me they would be willing to pay for products such as MySQL and Glassfish if they can continue to deliver good ROI and be properly maintained for a reasonable fee.

There is no need for Oracle to be overly protective (read greedy) of its higher end proprietary databases and applications. That business is solid and under no immediate competitive threats, even from IBM.

I’ll give Oracle the benefit of doubt here; it is still early in a process that will take a year or two to fully play out. The company may find the right balance between its software-as-a-contact sport approach and being a more enlightened leader that could bring the open source and proprietary worlds together in a way that profits everyone.

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