Open Source or Open Core: Why Should You Care?

"It’s never going to be used for real workloads."

Some form of that refrain was always bandied about as Linux gained popularity. It seemed incredible that a decade ago, software that was put together by a bunch of folks in their spare time, completely in the open - without a formal management structure to guide them and regular paychecks to incent them - would create the backbone of some of the world’s trading systems, powerful enterprise systems of record, and customer-facing applications. Linux is the most popular example, but it isn't the only one. Apache web server, MySQL and JBoss are just a few others that have been popularly adopted by large and small companies for large-scale deployments across the world.

It is no secret that open source communities and projects are a different breed of development. Different people drive them. Some have a benevolent dictator, and others are driven by like-minded individuals. What is common is that the participants have an itch to scratch. They were dissatisfied with the status quo, driven by a meritocracy, and wanted to shake the constraints of a slowly evolving proprietary software environment. Quality of code and contribution drove what ended up in a release, and transparency in software development is now a default in many modern enterprises.

Open source software has gained its significant foothold because the community development model works everywhere. Its momentum has moved it into the underlying infrastructure of some of the most sophisticated web scale companies, like Facebook and Google. Open source underpinnings now drive many of the most significant advances in the worlds of cloud and big data.

There are several true open source software providers helping to not only drive this innovation, but working to make open source mission critical and consumable by enterprise customers, Red Hat included. The Red Hat open source model of business is already well-known. Our financial statements reflect this by recognizing revenue on a daily basis, and we work to earn customer trust every single day, through a promise of open software with no barriers to entry or exit. Other companies, like Hortonworks, are successfully going down this path as well.

And, with open source now widely accepted in enterprises and governments on a departmental and full-scale deployment level, many traditional proprietary software companies now find little option but to engage with open communities. Some have done so by applying the veneer of open source to business models and pricing practices that hearken back to a different era. They have become “open core” software providers.

Vendors supplying software built on an open core model often encounter a hard transition in business models in that they are switching from large upfront license fees to much smaller subscription streams and succumb to developing closed, proprietary extensions to ensure a long running revenue opportunity. Customers start realizing that they are getting locked in and begin the process of prolonged and expensive migration of enterprise deployments. When these open core providers realize that enterprises want to move toward a true open source model, they face the reality of their new business model - offering a renewable subscription which relies on superior support, ongoing certifications and constant innovation. Organizations whose entire cost structures are based on an upfront payment of multi-year technology usage predictions have a difficult time competing with software sold as a subscription that more closely matches the annual maintenance cost. And that business has to drive considerable technology adoption by offering users the privilege and access to use your software for free.

The open core development model, where vendors open only portions of their software and then surround the remainder with proprietary-by-vendor offerings, simply does not work. It is a narrowly-cast version of open source that only stands as a matter of corporate convenience for technology providers who continue to hold on to antiquated proprietary offerings, delivering minimal innovation. When proprietary companies wade into industry groups promoting open source technologies, they seem to have accepted the premise that open source software will form the basis of the next generation of IT infrastructure. But is full commitment to open source a promise they can keep? Red Hat’s Paul Cormier has correctly likened this open core model to the fracturing of the UNIX market.

Open source is used prevalently in today’s enterprise, to the point where it can almost be assumed now in any major new undertaking. That is a great thing for both technology innovation and customers. But, the nuances in open source become important when organizations realize that not all that is called open source is actually open.