JBoss hints at financial success

JBoss World: The open source model of billing for services rather than charging licence fees seems to be working for JBoss
Written by Ingrid Marson, Contributor

JBoss executives have hinted that the company is generating strong revenues through its business model of charging for services on the back of its open source application server software.

Shaun Connolly, vice-president of product management at JBoss, told ZDNet UK on Tuesday that the company has around 500 customers and made an average of $25,000 to $35,000 (roughly £13,000 to £18,000) in annual support fees from each customer. This indicates that the company is bringing in $12.5m to $17.5m annually from support fees alone. It is understood that JBoss is hoping to make $30m to $50m in this financial year.

Last week the company announced that it had experienced its most successful year since the company was founded in 2001. In the opening speech of the JBoss World conference on Tuesday, JBoss founder and chief executive Marc Fleury pointed out the company had grown from just two people to a staff of 100 today.

He said the open source business model, where companies make money from services rather than licence fees, is proving successful.

"Going with professional open source is enabling IT teams to take ownership of the software. They are not buying a black box, they are buying a transparent box," said Fleury. "It's a model that works -- its cash flow positive. It’s a very stable business as it’s a business that has renewals. Although obviously we need to keep all of you happy so you renew," he told an audience of customers.

The company generates additional revenues from its partners, which include HP, Novell, Computer Associates and Unisys. It also brings in revenue from other services such as consulting and training. Fleury told ZDNet UK that it makes approximately 30 percent of its revenue from services and that its partners feed both its support and services revenue streams.

Sacha Labourey, JBoss' European general manager, was unwilling to give more information on the company's revenues, but said that over the past year it had grown fourfold, from 25 employees to 100, while remaining cashflow positive. The company secured $10m in venture capital funding earlier this month , which Labourey said will be used for infrastructure or strategic investments.

This estimated revenue compares favourably with other companies that make money from open source software, particularly given that JBoss was founded only four years ago.

French Linux vendor Mandrakesoft announced €5.18m in revenues (£3.56m) at the end of last year. Earlier this month, Novell said it had generated $15m of revenue from its SuSE Linux business in the first fiscal quarter of 2005, of which $7m came from the 21,000 support subscriptions Novell sold for SuSE Linux Enterprise Server. Rival Linux vendor Red Hat generated $124m in revenue in 2004, according to the company's Web site.

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