Open Source Startups Cautioned on Enterprise Application Market

"A series of social and technological forces are converging to permanently change the way software is developed, delivered and managed. These changes are tearing down the barriers that existed between the commercial software industry and end users and fostering an era of participation, while empowering these businesses through greater access to information."

Jeff Nolan comments on the foregoing statement quoted from an article on Sandhill.com:

"I think it's fair to say that the reason you don't see a lot of open source enterprise application companies getting funded is that the bigger problem with enterpise software is not the manufacturing but the sales and distribution, and open source does nothing to fix this. Large enterprise IT just won't adopt open source application products, broadly, if a supporting organization is not behind it...

There is gold in them hills but the simple fact of the matter is that open source and subscription licensing, two completely separate trends that often get lumped together, are not silver bullets for emerging companies. Furthermore, each of these trends imposes risks on buyers that are emerging as the market evolves, and in the case of open source there is no turning back. Proceed with caution would be my advice to startups considering either option for building an enterprise software company on, and don't lose sight of the fundamentals of building and delivering great software to customers."