Open Source: Sustaining Innovations, Saving Money

Open source software (OSS) represents the most significant all-encompassing and long-term trend that the software industry has seen since the early 1980s, and its affect on software industry revenue could be as high as 23% over the next 10 years.

“The question is as open source gains ground and more and more people use it and it permeates more of the conventional market, which it is doing … it’s really going to drag the industry down,” said Anthony Picardi, senior vice president of Global Software Research at IDC.

This is according to the study, Open Source in Global Software: Market Impact, Disruption, and Business Models release this week by IDC.

“The use of open source beyond Linux is pervasive, used by almost three-quarters of organizations and spanning hundreds of thousands of projects,” said Picardi, the report’s lead author.

IDC believes that open source will eventually play a role in the life-cycle of every major software category, and will fundamentally change the value proposition of packaged software for customers.

Although open source will significantly reduce industry revenue over the next ten years, the biggest impact of open source will be to sustain innovations in mature software markets, thus extending the useful life of software assets and saving customers money. This is, in part, because of the platform compatibility that OSS—much of which is based on Java or .NET—brings to the table.

Of the 5,000 survey respondents in 116 different countries, open source software is being used by 71% of the developers in the world and is in production at 54% of their organizations. In addition, half of the global developers claim that the use of open source is increasing in their organizations.

The study examined the future impact of open source in the software life-cycle, the emerging business models for open source software markets, and the potential for market disruption.

IDC identifies the following developments in the open source phenomenon:

  • Over the next ten years, open source will extract a revenues-toll on the industry in the low double digits, percentage-wise, led by vicious price competition.
  • Price effects are a less important impact of open source adoption than the effect of open source on the entire life-cycle of software invention and innovation.
  • Competitive success among vendors’ open source markets will be determined by a different set of core competencies than those required to invent and market a new product.
  • “As business requirements shift from acquiring new customers to sustaining existing ones, the competitive landscape will move towards costs savings and serving up sustaining innovations to savvy customers, along with providing mainstream software to new market segments that are willing to pay only a fraction of conventional software license fees, said Picardi.

    “Open source software is ultimately a resource for sustaining innovators.”