IT Investment Research

SAP Needs Some Shai-Agassi-Style Global Thinking Now

Just to add insult to injury in the recent shellacking SAP took in Oakland, former SAP VP Shai Agassi -- the man who would have been SAP's CEO now (or at least co-CEO) if he had just waited patiently in line like a good boy -- has just been named 28th leading "global thinker" on the Second Annual Annual Top 100 List of Global Thinkers. 

I can't actually find the actual list on the web site of the list maker, Foreign Policy magazine, but take my word for it. The above link takes you to the guys tied for number one in global thinking, Microsoft (MSFT) co-founder Bill Gates and that very successful tailor from Nebraska, the owner of the Berkshire Hathaway (BRK) shirt company. If you keep working your way through the web site using subsequent links you get to Shai. My guess is that this is the speaker list for the upcoming Davos convention. But I don't see Bono or Al Gore?

But back to the IT investment research implications... According to published reports during the recent damages-phase of the Oracle (ORCL)-SAP trial (that was the only phase of course), Agassi said in a two-year-old taped deposition that he led the evaluation of the TomorrowNow acquisition. Therefore presumably he recommended it to SAP's boards along with a caution that Oracle would maybe/likely/probably sue SAP. Also according to published reports, Agassi estimated in an email that IT investment analysts would quickly figure out that this idea would hurt Oracle future earnings so much that its market valuation would plummet because the big profits in enterprise software are on the services side of the income statement. (In reality, investment analysts yawned at the idea and although I have not read the transcripts and filings I would guess that back in 2006-2007, SAP's boards would have spent no more time thinking about this idea than on the annual SAP paper-clip budget.)

So that was the "global thinking" part of the TomorrowNow idea. I admired what Agassi was doing at the time with the SAP NetWeaver business. It was similarly wide in scope and potentially game changing for the enterprise software market. SAP's middleware business quickly but quietly passed the billion-dollar mark. The thinking was outside the box (shame on me) even if the TomorrowNow fiasco led to some inside the buoy sailing. 

As I said, I haven't studied the transcripts. Please correct me if the public record says I'm wrong about either SAP top-executive knowledge or Agassi's personal involvement:

• If SAP knew before the acquisition that wide scale theft was a matter of standard TomorrowNow business practice, that fact has implications for the Oracle-Rimini Street lawsuit as well. I'll explain why I think that if anyone wants to discuss.

• If Agassi personally was involved in the subsequent TomorrowNow operations (he says he was not), including the illegal downloading of Oracle software to which SAP has admitted and about which SAP executives have admitted knowing post acquisition, than the whole global thinker thing takes on a different dimension.

[SIDENOTE: From an IT perspective, working through the list to Shai you also find Amazon's (AMZN) Jeff Bezos and Apple (APPL) co-founder Steve Jobs, and the Google (GOOG) Boys. Eric Schmidt did not appear to make it; it sucks to be just the hired hand. And why do non-IT people like Foreign Policy magazine keeping assuming there is some meaningful link between a retailer, Amazon, and an IT device development/marketing firm, Apple.  Is it just because some of the Apple devices are for sale at the Amazon retail store? No it's because a Kindle is like an iPad.  Gee, and a calculator is like a supercomputer too.

[Second SIDENOTE: Speaking of shellacking's, President Obama came in at number three after Buffet/Gates at number 1 and the leaders of the International Monetary Fund and World Bank.  In golf, that would put Obama in fifth place instead of third but apparently the rules are different in foreign policy.]

-- Dennis Byron

(no financial interest in companies mentioned)

SAP: Pay Oracle the Billion-Three and Get Out of Dodge

What should SAP do now? It should write the check for a billion-three and get out of Dodge. I said shortly after SAP filed its first response in July 2007 that it needed to settle quickly.  I understand that Oracle wouldn't let SAP do that so I can't blame SAP for not taking my advice.  But prolonging this catastrophe further to save a few hundred million may ruin SAP in the U.S. for decades.

 

Although I did not read the Oracle expert's testimony or filings, it looks like his and the jury's logic is that SAP should pay the U.S. full price-list line-item charge for each piece of software Oracle offered for sale in 2006/2007 TIMES MAYBE A 1000 MULTIPLIER. The Oracle price list was publicly available on line at the time but this is mosty related to PeopleSoft and JDE software and I don't have anything in my files about their prices from that period right before they were acquired. (The current Oracle price lists are available here now.) The multiplier would likely simply be the number of unauthorized downloads or the number of TommorowNow users or some such metric. 

 

Is that logical? No one pays full price-list but SAP before and after it acquired TomorrowNow supposedly stole everything Oracle had for sale (even things SAP/TomorrowNow didn't need it) so it should pay full price list. There's a good joke about a guy stealing a $2000 watch, pawning it for $200, and then telling the judge when found guilty for the crime that he should only have to pay $200 in restitution.  That was SAP's defense.

 

It would be interesting to understand whether the Oracle expert's calculation was based on SAP paying just the perpetual license fee or whether there is some formula built in for the much higher recurring maintenance fee -- much higher that is over a number of years.  I presume SAP argued that it shouldn't have to pay the mainentnance fee because that is what TomorrowNow did but as noted on this blog frequently maintenance in an enterprise software sense is about content, not fixing things.  If TomorrowNow was stealing the tax-table updates and other content-related real value of maintenance, then I really have no problem with the billion-three verdict.

 

What does this mean for Rimini Street? Its defense against a similar theft-related lawsuit by Oracle is different than SAP's. For starters, Rimini Street is going to argue that it didn't steal anything; SAP didn't even try to make that argument. Rimini is also going to argue that it has authorization from its clients to log in to Oracle's servers on behalf of its clients, the people who paid the perpetual license fee to Oracle, and that everyone has the right to retain a company like Rimini; Oracle is going to argue they don't. Oracle is going to use the SAP verdict as ammunition in sales situations against Rimini but Rimini has countersued Oracle.  This is going to be interesting.

 

(SIDENOTE: I have no knowledge of this but perhaps -- like a lot of less publicized law suits -- an insurance company -- an about to be much poorer insurance company -- was running the defense, not SAP. That might explain what looks on the surface like poor SAP courtroom tactics. If I were a juror I would have been insulted by Werner Brandt trying to parse SAP's contributory responsiblity statement into a non-admission of guilt and the SAP expert claiming SAP only owed Oracle $40 million.)

 

-- Dennis Byron

 

(No financial interest in companies mentioned although I have done consulting for all of the above.)

Microsoft Strips Novell for Parts before Tow to Junkyard

I feel there is some IT investment aspect I should pontificate about in the assumption of Novell's (NOVL) disparate businesses by private equity firms but instead I am just sitting here thinking longingly about my '55 Chevy. I should have kept that beautiful car after I got married.  Think what it would be worth today.  My new wife -- who had to have a station wagon -- was clearly selfish. Novell's demise is billed as a takeover by Attachmate, but it is really just a case of two old wrecks being kept in the same private-equity-firm junkyard -- my '55 Chevy over there where I parked it more than 40 years ago beside an Edsel. 

The idea of junkyards back in the day was that you could go in and get replacement parts on the cheap.  As I explained in March, that was the idea of Elliot's initial offer for Novell. I didn't think it was an especially great idea then but it was the only game in town for Novell shareholders and held some promise for Novell users. Now -- instead -- Novell is going to be stripped of its useful parts, its patent portfolio, before it gets towed. No one gets the bittersweet satisfaction I had of at least driving my Chevy into the junkyard.

The takeover was apparently orchestrated by Microsoft (MSFT). The amount Microsoft paid for the patents probably drove the Novell share price up a measly 10% from the Elliot offer in some way I can't figure that makes it look better than the March 2010 offer. But does that mean that without Microsoft's $450 million, Novell management would have taken 10% less than Elliot offered? Maybe Elliot's funding came from Irish banks and that offer was off the table?

I can't figure out the patent-portfolio deal itself either. I haven't seen a good explanation but don't want to bother trying to figure it out. Instead I think I'll go see some grandkids for Thanksgiving so I can get groped by TSA.  The deals seems to have something to do with the Novell-Microsoft joint development arrangements of 2006 and probably in some backroom way also settles the Wordperfect lawsuit. But I don't think it matters to Microsoft shorterm. Microsoft probably has had the money reserved against losing to Novell since Alan Ashton and Bruce Bastian first fired up the minicomputers on which they founded SSI.

But because I don't think the original idea was a good one, I don't think Microsoft makes out very well either.  Certainly the Novell users don't make out.  And the open source community thinks it's being bamboozled somehow. These zealots are always convinced that they're being screwed in some way even though they claimed the Microsoft-Novell deal had no value in the first place.  Maybe the zealots can get Neelie Kroes to investigate the deal and hold it up for a year. 

As for Novell, what a way to end a great run, parked over there by the Edsel. But in a way taking it off to the private-equity-firm junkyard was sort of a humane thing to do in a Software Museum sort of way. Without it, Novell would have just been left in the back of the parking lot in Bear Hill Industrial Park in Waltham until the rust turned to dust. Instead I imagine the wreck of Novell sitting in the junkyard getting the beautiful view of the Wastach it deserves.

-- Dennis Byron

(No financial interest in companies mentioned)

Beware of Apples vs. Oranges in Enterprise-Software Market Research

A blog post about a quarterly enterprise software market tracker called the Software Insider Index popped up in my inbox this weekend.  I don't know what the numbers are indexing because the entire tracker is not provided. (The blog post is a promo for purchasing the index, which is good marketing of course.) And the source, Ray Wang, is a respected enterprise-software product analyst whose posts I regularly follow because they provide anecdotal backup to our statistical demand-side research about enterprise software users.

However the Software Insider Index post reminds me to remind IT investors again, as I said in this recent post about the Software 100, that it's important to compare apples and oranges in these listings and indices and any other supply-side software-market research device purporting to size or forecast software market growth. IT investors need to realize that if the Software Insider Index is supposed to illustrate software market growth (and I don't know if that is its intention; very few enterprise software suppliers are followed by the analyst according to his post -- 27, he says), the implication of double-digit growth based on the numbers provided in the blog post overstate what is really happening in the market. 

The problem is that the research does not appear to adjust for same-store sales. I did not check every supplier mentioned but -- for example -- the growth-rate numbers shown for JDA (JDAS), SAP, and Oracle (ORCL) appear not to take into account the previous year's comparable enterprise software revenues of i2, Sybase and Sun. There's nothing wrong with that under generally accepted accounting principles but it completely screws up any attempt to size the market and estimate historic quarterly growth rates unless the underlying research also has a -$300 million entry for Sun and -$100 million entries for the other two acquired companies.

And if you can't size the market and understand past growth parameters, you can't forecast it.

There are some other obvious apples vs. oranges problem in the article but again that could be because I am not looking at the entire underlying report. Here are some of the problems I see just based on the publicly available information:

• Odd categorizations.  How is the company CA Technologies (CA), formerly known as CA after it was formerly known as Computer Associates and CAI (and maybe by a few other names that can't be printed uttered by angry investors), all of a sudden an "on premise apps vendor?" I haven't looked at them in a while but their website still says they are in the IT Management sector. So why wasn't BMC included?  Maybe because its license sales were pretty good in its most recent quarter and that arithmetic would ruin the meme about so-called software as a service (SaaS) vs. on-premise vendors?
• Mixing revenue streams. The Oracle (ORCL) number shown under "on premise apps" has some estimation of the Oracle apps group's share of professional services built into it but doesn't seem to include Oracle's $100-million-plus (quarterly) OnDemand revenue. Nor does that revenue show up in the table of so-called SaaS vendors. And why isn't most of Oracle's revenue showing up in the Middleware vendors table? (And does the underlying index capture the Oracle software revenue buried in the new Oracle Hardware Systems category?)  
• Speaking of so-called SaaS vendors. Apparently the bar to getting into this category is pretty low because the analysis accepts all the guys like NetSuite (N), RightNow (RNOW), and Taleo (TLEO) that failed to make it in the real enterprise-software market about 10 years ago -- and therefore slowly morphed to SaaS (as I described here in August 2009) -- but it also includes 20-year-old companies such as Ultimate (ULTI) that just abruptly called its license and maintenance revenue SaaS in 2009 or Ariba (ARBA) that apparently didn't even stop using a license revenue bucket in its accounting but just stopped reporting one.

So are enterprise software suppliers doing better than the disaster that was 2009?  Of course. But if you really want to understand what is happening in the market (and do not want to purchase syndicated research), a better source for likely 2010 market growth is the data coming out of Gartner, predicting growth under 5% for 2010. And if you need company by company outlooks, Gartner and IDC and similar quant firms don't give their research away for free of course but if you are a subscriber they can also discuss individual company chances. 

They will also tell you that a quarter is too short a window and obtuse categorizations are not the way the world works.

-- Dennis Byron

(No financial interest in companies mentioned)

Manzi Right about Enterprise Software Economy for Wrong Reason

Jim Manzi released a criticism November 18 of economists of the liberal persuasion. 

I agree with his conclusion but I'm not being intellectually honest because I disagree with his major proofpoint, which -- naturally -- is based on his experience in enterprise software. Note that this Jim Manzi is not the Manzi of Lotus fame. That Manzi would know better because he was in the thick of the enterprise software industry back in the day. 

Here is the observations that bothers me:

"A series of technical/business-model innovations — most prominently, Software-as-a-Service (SaaS) and open-source — is transforming the software industry, but the rational incentive of the incumbent managers is to suppress the innovations or, at best, slow-walk them and channel them in directions consistent with their current business models. So, right now, entrepreneurs, incumbent company management teams, and the capital markets are jockeying to seize the potential value that these innovations are unleashing. 

"Large company growth will disproportionately come from adding not just more of the current “capacity” (mostly people) but the different kinds of capacity that are required for these new business models. For example, more software engineers trained in traditional languages and accustomed to working on large, structured projects are less useful for  growth than engineers with experience in web-focused technologies and used to working in a so-called agile development environment. And it’s not as simple as incumbent companies simply changing their hiring specs; it’s difficult to transform settled company expertise, systems, compensation plans, culture, and so forth to operate in this new environment." 

As I've written often here, including most recently concerning Red Hat (RHAT), neither supply side nor demand side market research back up the other Jim Manzi's observation.

Addressing Manzi's statements just from the demand side, there is simply no way you can say that IBM slow walked adoption of and adaptation to open source license terms and conditions given its seminal support of the Linux Foundation and the Apache Software Foundation over 15 years ago. Instead IBM -- and most other enterprise software market leaders -- co-opted the open source licensing approach in the mid 1990s as a brilliant way to control through-the-roof software development costs and to increase profits. As a result, IBM has surpassed Red Hat in that (I contend artificial) market. Microsoft (MSFT) was late to that party because it had an open-source-like community of its own given its desktop market dominance but even Microsoft had pretty much come around by the mid 2000s.

Similarly it's hard to question Oracle (ORCL) sofware as a service (SaaS) bonafides when you look at how early it co-opted the IBM term OnDemand to mean SaaS and how Oracle invested in -- not surpressed -- Siebel's struggling SaaS efforts after the acquisition.  As a result Oracle will do about $500 million in SaaS revenue in 2010 and is likely second only to salesforce.com (CRM) by that metric. There is a tendency of armchair analysts to accept the propaganda of the salesforce.com CEO about such things rather than digging into the data (by the way, I have no problem with Benioff's propagandizing and have complimented it often).

I find no indication that these software market leaders are having trouble adopting web-based technologies (they invented most of them), hiring agile developers (another crock buzzword anyways), or otherwise given the user what he or she wants. There is much data from the demand side to knock down Manzi's assertions.

The one issue that open source and SaaS caused for many of these leaders (not IBM) is that they have slowly had to change their revenue recognition away from a balance of one-time upfront perpetual license streams and subscription services streams to a heavy does of the latter. (IBM was always heavily rental so the change was not a big deal and so insignifcant to its overall revenue that it is not reported anyways.)  They still recognize that same amount of revenue (with a little lag) but just to have put it in a different bucket.  Pay me now or pay me later as the old motor oil ad used to say. Services -- including professional services -- always made up 70% of most of these companies' revenue -- with the exception of the company formerly called CA after it was called Computer Associates -- so the transition has been no big deal.

And as I said, I still agree with the conclusion of Manzi's blog post:

"Despite the confident assertions of academicians, the Law of Unintended Consequences remains in force."

In this case, the unintended consequence was that the market leaders quickly took over tactical innovations that the venture capitalists thought would spawn new IBMs or new Oracles.

-- Dennis Byron

(no financial interest in companies mentioned)

Kerry to Move NFL to PBS from Fox; Rockefeller Says Fox Makes Americans Dumb

What's next in terms of the Democrat party take-over of the open market and the U.S. economy? Not willing to settle for the 20% of the economy represented by healthcare delivery the Democrats are holding a hearing as of 3:00 pm November 17 on TV cable retransmission charges. What's that got to do with jobs?

It looks like John Kerry -- the Senator from Massachusetts except when he sails his yacht at which time he moves up the coast to Rhode Island so as to cheat Nantucket, MA out of personal property tax -- just wants to pass a law that baseball and NFL games will only be seen on American public broadcasting. The issue that these bozos are wasting their time and our dollars on is the fact that Cablevision would not pay Fox what it wanted back during the World Series.  That's Fox as in the network, not the home of Glenn Beck.

But the real stunner is that that man of the people -- Rockefeller of West VA -- is using the World Series negotiations stand off to complain that Fox -- not meaning the network, but meaning the home of Glenn Beck -- is responsible for the "dumbing down of America." I guess he did not like the results of the recent election (when dumb Americans kicked his party out of much of its power). Even his new co-senator from West VA said Obama was wrong and ran ads shooting an arrow (or a rifle/can't remember which) through  a copy of Obamacare set up like a bullseye. Rockefeller seems to think it's Fox's fault that the American people rejected his philosophy of the government taking over all markets and running the economy. This includes even who can run whose broadcast content.

It has nothing to do with the stupidity of his ideas. This guy has been heading toward dementia for years and it looks like he's finally ready to be moved to the top floor of the nursing home.

For those of you outside the U.S., we still have to put up with bozos like Kerry and Rockefeller as committee chairmen because they are Senators that are only elected every six years.  It was the bums in the House of Representatives, who have to stand for election every two years, that we kicked out two weeks ago.

 -- Dennis Byron

Facebook Email Attacks Human Nature, Not Google, IBM or Microsoft

I see a lot of commentary that Facebook's non-email email -- that is either a new email is or a new paradigm for what used to be email -- isn't a Google (GOOG) g-mail email killer.  I don't see much commentary that it is an IBM Lotus Notes email killer or a Microsoft (MSFT) Outlook/Hotmail/LiveMail (whatever Microsoft calls all this stuff these days) email killer.

I guess that IBM and Microsoft email are already considered dead? Or is it because Notes and Microsoft already have all the features that the mainstream media is wetting its pants over? And that Notes and Office and their predecessors such as Digital's All-in-One have had such features for forever, going back to when Jit Saxena and his team brought the Data General/Comprehensive Electroic Office out of the lab in 1979.  Admittedly "seamless messaging" meant PBXs in those days.  And "conversational history" required the onerous task of creating a folder (although I think Notes might have done this automatically too; I just can't remember back that far).

What really indicates how trivial this overhyped Facebook announcement is the NY TImes quote from Facebook

"The 15-month effort to develop Messages was the biggest engineering project that Facebook had undertaken, involving 15 engineers..."

Fifteen whole engineers.  Wow. That kind of gives the mythical manyear a whole new meaning.

The real question from an IT investment standpoint (assuming you can invest in it at some point) is whether you think people want to keep all this stuff on Facebook's constantly failing public-in-all-senses-of-the-word servers or in their own possession?Do they want to take the chance that Facebook pulls a Coghead and absconds with all their seamlessly organized social history or do they want to control their own destinies? 

The answer from time immemorial has been keep it personal. That's not a technical question.  That is a human-nature question.

-- Dennis Byron

(no financial interest in companies mentioned)

Obama Contributor Fleeces Immigrant Piano Player of $60 Million Plus

OK, that headline is just a hit-meter grabber. 

But my headline is as accurate as the others I've seen on this story, with the lower-Hudson-Valley Journal News doing the best job of stirring the bottom of a very small pot in a pot boiler that mixes information technology (emails and viruses) with Barack Obama, Schlumberger (SLB), the Catholic Church, Liberace and Wachovia. I'm between books right now but who needs a Ludlum novel with this story.

Give me a little more time and I think I can work in the Gulf oil spill (SLB did some work for BP on the Deepwater Horizon but had not been involved in the final fatal events of April 20, 2010), Honduran communists (allegedly Honduras was the source of the victim's virus-infected PC hard drive), and Boston politics (the Rasky connection--Rasky is the alleged victim's PR firm, a group that keeps saying that the Paris-born heir to the Schlumberger fortune is a pianist and also a group whose founder, Larry Rasky, is closely connected to Massachusetts Democratic congressmen). 

I'm with Mary Landesman of Cisco and anti-virus blogging fame in thinking the scam here may be on the press and the prosecutors in the Westchester County district attorney's office. I'd prefer that that office spend more time getting out the details concerning the events of the night of October 17, 2010 involving the death of Pace University student and Massachusetts resident Danroy Henry at the hands of lower-Hudson-Valley police officers.

-- Dennis Byron

(no financial interest in companies mentioned)

OK, Mitt, What Is "The Truth About Massachusetts Health Care?"

I don't think this is a joke or dirty politics.  There is a web site called Mitt Romney Central. It appears to be a legitimate web site (or as legitimate as such sites could be) designed to help Mitt Romney become U.S. President.

If so, hint guys.  You need help!

Currently there is a blog post or web page on the site under the headline

"RomneyCare — The Truth About Massachusetts Health Care"

But under it are the words "Coming soon."

Really?  Coming soon, after four years, we got much more expensive healthcare and healthcare insurance (those are two different things--something that neither Democrats nor Republicans ever make clear) here in Massachusetts, rising Massachusetts state taxes, reduced choice for individuals and small business people when it comes to doctors and insurance plans, doctors quitting and/or moving out of state, and the whole host of other problems that everyone fears will come from Obamacare. But sometime "coming soon" Romney is going to explain what it was all about.

The simple truth about Massachusetts healthcare is that Romney and Massachusetts Democrats in an attempt to have their cake and eat it too back in 2005/2006 ruined one of the best healthcare delivery systems in the U.S. (perhaps the world since so many rich people come to Boston to get health care from all around the world) so that they could say that Massachusetts had "near universal health care." 

In fact, what they did was take the money in what was called the Free Care Pool (designed to pay providers to help a few hundred thousand people in need) and gave it to insurers instead so that they could say those couple of hundred thousand needy people were insured instead of needy.  For these couple of hundred thousand people (over half of whom still won't sign up for the free insurance), Romney and the Democrats completely screwed up health care options and costs for the other 6,000,000 of us that live here in Massachusetts.

How to go, Mitt. 

-- Dennis Byron

(Note: if anything ever gets put into the Coming Soon box on the web page, I'll update this post.  In the meantime, see the information technology implications of Romneycare as they relate to Dell and its Perot subsidiary as explained here.)

Red Hat Is Last Man Standing

I took flak recently concerning a blog post that said that Red Hat (RHAT) was no different than IBM, Microsoft (MSFT), Oracle (ORCL), and most other enterprise software suppliers in terms of business model, despite statements to the contrary by Red Hat CEO James Whitehurst. My blog post was not a criticism of Red Hat, just an observation.

Most of the flak was knee-jerk open-source-zealot stuff with no IT investment research implications. But the comments got me thinking back to a more than three-year-old IT investment research project in which a client asked me to provide various investment-related characteristics of the then “leading” open source projects.   In doing the research I could define “leading” anyway I wanted to but I knew the client was looking for ways to cash in on the then imminent boom in “open-source-software vendor” IPOs. Therefore some of the most important characteristics were that the “open source software” was not managed by a company that was already publicly held and that the software participated in a part of the software market characterized by growth and vitality. 

I identified about 100 projects to look at as part of a first cut. (During 2007, non-client-protected versions of this research showed up on ebizQ.net, research 2.0, and my own web site and the original sanitized research is still sitting out on the web at slideshare.net.) I had to tell the client that he was out of luck on both major fronts. I hope he took my findings to heart although I never know if clients accept the research except in the general sense that they come back for more. 

The problem for so-called open source software vendors was that most of their projects were in un-dynamic, commoditized sectors of the software market and worst still, the leading enterprise software suppliers had already co-opted the concept as of early 2007 (Microsoft had not yet announced its then-new position vis a vis open source terms and conditions but it was clear that they were about to do so).  The way I expressed it at the time is

“There is no open source market.”

I later added

“There is no such thing as an open source supplier.” 

Of course only a few open source “products” are ever intended to be productized in the commercial sense of that word. Most are one-off activities in support of a specific enterprise’s specific need. Estimates at the time said there were as many as 100,000 open source “products” but Optaros had identified about 300 as enterprise ready. As an indicator of what happened in the intervening three years, Optaros now seems to downplay its open-source-culture roots on its web site although it still maintains the enterprise open source directory which I used to cross-check my work at the time.

As mentioned there were about 100 projects in my original study and the 2007 table referenced above boiled that down to about 50 I saw as having some chance of going public some day. Compiere, Greenplum, Logicblaze (and then Iona, which acquired Logicblaze before itself being acquired by Progress (PROG)), MySQL, Xensource, and Zimbra have all been acquired. Canonical, Jaspersoft (backed by Red Hat and SAP), OpenBravo, Pentaho, Sugar and a few others are still going through the motions.  And I still see possibilities for Alfresco, Acquia, whomever is trying to monetize Ruby, and a few others that were not on my original list because they didn’t exist yet. 

But Red Hat -- which of course was already public -- is the exception that proves the rule. In fact it has made a few of its own acquisitions since then, including acquiring closed-source products and re-releasing them under open source terms and conditions.  Based on the table that you can look up on slideshare.net, I find that Red Hat is in fact the “last man standing.” One general rule of market dynamics is that if there is only one participant in a market it is not a market. Put the idea of an open source market (or business model or supplier) on the same shelf as the open source desktop.

-- Dennis Byron

(no financial interest in companies mentioned although I have done recent consulting work for Red Hat)