The destructive effect of open source movement

Editor's note: This article is from Tomasz Tunguz, the Chinese version is compiled by Heaven Zhuhai Branch Rudder.
Software open source movement began in the late 1990s, since then, open source software began to shoulder the mission of reforming the software industry. So far, many infrastructure-building software startups have introduced open-source software thinking patterns in their marketing strategies, leading to a large number of markets.

The introduction of open-source software thinking as a software release strategy by these software companies has proved to be a destructive ( Heaven Zhuhai Steering Note: Here the meaning of destructive and disruptive innovations ) is the release strategy. It allows potential users or buyers to try and even use your software for free, and then evaluate it in a soft, transparent sense of how your software works (because your software is open source). Open source software's market strategy is just what developers are good at – Code open source.

Once your open source software attracts a large number of users, your startups will start earning revenue from different channels and start making profits. For example, you can make a profit by providing services and support, and you can build on the open source software and develop the advanced capabilities of the closed sources to make money based on the needs of large companies. Here's a fresh roll of hot new profit model is the SaaS open source model.

Since the inception of the Open source software movement, the financing of open source projects has soared. This is because of the destructive nature of the open source software itself, as well as the reasons why buyers and users have a preference for open source software. This upward trend does not appear to be any downside or slowdown, for 20,141 years, 37 different open source projects (companies) have won the favor of VCs.

Some of these open-source companies have received a huge amount of funding of more than $100 million. Shows the situation of the top 10 companies raising funds. It can be seen that the enterprise of the file system that commercialized Hadoop (Cloudera, HORTONWORKS,MAPR) occupies 3 seats; the database type Enterprise occupies 2 seats (MongoDB and DataStax) Where Mulesoft provides cloud-based enterprise Integration Services; Kaltura is a video rental service. As you can see, open source software plays an important role in all areas of the software industry.

VC So for these open-source projects and enterprises so favored, mainly because when the enterprise is bigger, VC exit (exits, such as mergers and acquisitions and IPOs) brought about by the huge benefits of the drive. Shows the top 10 mergers and acquisitions of open source companies. Both Novell and MySQL have slashed their market capitalisation by at least $900 million, representing three different areas of the software industry: security, operating system, and database.

In addition, when it comes to software open source, there are two publicly-traded open source software companies we have to mention, that is Redhat and Hortonworks. They are "unicorns" worth more than $1 billion, of which Redhat's market capitalisation is $14.4 billion, higher than Splunnk and ServiceNow, and Workday's market capitalisation. But as you can see from the table, the gross margins of the two are vastly different. Redhat has a gross margin of 85% higher than most SaaS companies, while Hortonworks's gross margins for the previous year are negative because, in order to occupy more markets, they offer their clients professional services at a low price. As more and more companies engage in open-source software, open-source businesses will generate radically different business models and the resulting disparate profitability.

I can be very responsible to tell you that we will soon see the rise of more and more open source companies. The software open source movement has been developing for nearly 15 years, and the opportunity we bring is unprecedented. At the same time, the corresponding developers are now growing. Software companies in different fields have started to launch software open-source strategies to occupy the market, and the pace of innovation in infrastructure and software has been accelerating.

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The destructive effect of open source movement