Proprietary vendors lose £30bn to open source

Researchers claim that if open-source products and services were calculated at commercial prices, they would exceed the combined income of Microsoft, Oracle and Computer Associates
Written by Matthew Broersma, Contributor

Open-source software is successfully displacing proprietary applications in many large companies and eating into the annual revenues of proprietary software vendors by $60bn (£30bn) a year, according to research.

According to the study from the Standish Group called Trends in Open Source, released this week, the losses of proprietary software makers are disproportionate to the actual spend on open-source software, which is a mere six percent of an estimated worldwide spend of $1 trillion per year. The researchers put this difference down to the fact that a large proportion of open source isn't paid for, an intended result of the open-source licensing structure.

"Open-source software is raising havoc throughout the software market," said Standish Group chairman Jim Johnson, in a statement. "It is the ultimate in disruptive technology."

The study, the result of five years of research, states that if open-source products and services were calculated at commercial prices, open source as a whole would be equivalent to the largest software company in the world, with revenues exceeding the combined income of Microsoft, Oracle and Computer Associates.

The open-source community's programmer-hours, if added up, would place it as the largest software employer in the world, the study said. The firm found that open-source software, once used primarily for low-level needs, has moved up the chain. Open source is often brought in to cover a project's basic requirements; creating a "baseline", using the terms of the report. But increasingly often, no further proprietary software is needed to fulfil more advanced requirements, the report found.

"In many cases, especially in infrastructure software, the baseline is a fully developed and working system," the study states. "Many applications and service components are fully functional and can be used immediately. Other applications and components provide a firm baseline around which to develop a more elaborate system."

The Standish Group found that 11 percent of all new commercial software requirements are satisfied by open-source solutions and components. That figure doesn't include application service providers (ASPs) that use open source to service their clients.

Such findings are a telling insight into the ways open source can be seen as a threat by large software companies such as IBM, according to Dave Rosenberg, chief executive of open-source start-up MuleSource.

"IBM is threatened by open-source SOA [service-oriented architecture] tools as many of them meet the full requirements enterprises look for," Rosenberg said in a commentary for ZDNet.co.uk's sister site, CNET News.com. "This baseline notion is interesting as products like JBoss used to be considered just for development with BEA for production, but over the last two years or so that sentiment has changed, with lots of JBoss in production."

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