Open Source & Cloud To Be Major Sources Of Software Revenue Growth

Private equity investment group, North Bridge Venture Partners, has released the results of its annual Future Of Open Source survey in conjunction with 20 collaborators.  Unlike previous years, the vendor/non-vendor split was 40/60 in favour of the latter.  The results indicate that within the next five years, it is expected that over half (56%) of all software purchased will be open source.  Much of the revenue growth from open source is seen to be lead by the opportunities offered by Cloud computing.

Some of the key points from the report include:

• 56 percent of respondents believe that more than half of software purchases made in the next five years will be open source.
• SaaS, cloud and mobile will have a dramatic impact on open source and that are driving growth.
• Over 470 open source projects are targeting cloud computing.
• Open source customers are more interested in mainstream technology issues such as support, product management, feature functionality and ROI rather than licensing concerns.
• 56% of the vendor respondents said that an annual, repeatable support and service agreement was their favoured revenue generation strategy.

More information is available on the North Bridge press release and a keynote speech by Michael Skok to the Computerworld OSBC Conference.

What is perhaps interesting is that software licenses are increasingly declining in significance and the industry is inexorably heading towards a service based revenue model.  In our view is a more realistic reflection of the value offered by software anyway – especially multi-user applications such as web based Digital Asset Management.

 

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