Jonathan Schwartz writes one of the only open source blogs worth reading. The other day he had a particularly insightful post, but I'm still trying to figure out just how far the insight goes. Clearly, free software is a complement to Sun's hardware, and neither Sun's hardware nor software is likely to be used without a support contract.
But would the same hold true for a CRM system? How about ECM? ERP? Probably. But what about email? (Mission imperative - what else would we waste our time on? - but mission critical?) Etc. The point is, how far can we extend this simple proposition that one can open source everything, and give it away for free, because serious customers will always pay for support?
(One of the industry's top open source startups, as I've noted in this blog before, actually has a serious problem with this today, because the product is good enough that customers are not renewing support contracts, if they buy them in the first place.)
Anyway, to Jonathan's blog post. I think he's going to address this topic at the Open Source Business Conference in February. He was worth the price of admission last year. You should plan to listen to him in 2006.
...[M]ost folks, especially some journalists, have [fundamental misunderstandings] about free software in the enterprise - that it somehow implies a sacrifice in revenue....So I thought I'd tell my most representative free software story, and highlight why free software GROWS revenue, not diminishes it.A while back, nearly three years ago, I was visiting a very fast growing customer. It was not a pleasant meeting - we'd had quality problems in the account, service problems, and a variety of price/performance problems - all of which had made the life of the CIO and CTO squarely miserable.
After talking the customer off the ceiling for an hour or so, the lead executive in the meeting looked at me and said, "we're about to go into our Christmas season. We'll sign up more customers on that one day than in the rest of the year combined." Fair enough. Sounds like a good business opportunity. "So give me your home phone number."
"What?" I said? "Why do you want it?" He had a perfectly logical answer. "Because I'm betting on you. And if I have any issue whatsoever on Christmas Day, I'm calling you at home, and I want you on the hook with me." Ok, fine. I gave him my number. (After I reassured myself I had every one of my staff member's home phone numbers on speed dial.)
Christmas came. He didn't call. Whew.
Just a few weeks ago, I met with this same customer in my office. He's had two years of huge growth (and an account team that's done a stellar job creating a partnership between our two companies).
He'd come in to drop off a big order, and to get caught up. In the process of delivering the order, he'd inquired about a Sun software product he'd begun using. We talked for a while, and said he'd like to include it on the order. To manage his expectations, I let him know it was about to go to free/open source. He looked to his sales rep and said "HA! I'm not paying you $500K for something that's free!" The Sun sales rep looked at me like I'd gone insane.
So I looked at the customer and said, "Oh, there's only one little thing you should know.""If you're using the free product without a support contract, don't bother calling me on Christmas Day. You'll have to look to the community."
The customer paused, smiled, and said "Ok, ok - put it back on the order."
The point being, Sun doesn't have a single customer, worldwide, that will run an unsupported product in their datacenter. Do such customers exist? Surely. They're called developers. Or startups. Or companies or economies that want to build their own internal support teams. That's the target for the Solaris Enterprise System. That's who uses free software without support contracts. And you're not going to win them over if you don't provide them with free and open source products. And if you don't provide them with the technology to use, they'll find someone else's free products.
Posted by Matt Asay on December 4, 2005 01:30 PM
