Are proprietary firms paying gringo price?

If you don't know how to run your new open source business well, a competitor can appear out of nowhere, with the same code, in an Internet minute. And the proprietary operators have no history managing these open source operations -- the trend is too new.

Gringo price t-shirt from FrenchyÂ’s
The open source discount, the lower price one would pay to acquire an open source company because its code is not proprietary, seems to be going away.

Yahoo paid $350 million for Zimbra. That sounds like full price to me. Citrix spent $500 million on XenSource, which also sounds like full price. (Hope they at least got this lovely t-shirt.)

Matt Asay calls the result an open source diaspora, with proprietary firms buying up their open source brethren and reducing competition.

Earlier Matt, who works at open source start-up Alfresco, speculated on the possible terms of an open source acquisition. Price meant less to him then than fit.

But price is powerful. And many proprietary firms seem eager to buy-out the open source movement for top dollar, paying much more than an open source competitor could pay since they lack the older firms' history of profits.

The question becomes, is this smart? If you don't know how to run your new open source business well, a competitor can appear out of nowhere, with the same code, in an Internet minute. And the proprietary operators have no history managing these open source operations -- the trend is too new.

So the discount, if it exists, is the difference between what an open source company will pay for an acqusition and what a proprietary firm will pay for the same acquisition. Rather than being a discount, it could be the "gringo price," a higher price charged because you know the buyer doesn't properly value what he's seeing.

Which means, to me, that this high take-out and high buy-out rate could be just a fad, like Michael Vick jerseys were in 2004. It will be if the new acquisitions don't perform on the bottom line.

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