March 3rd, 2008
Time to call the Red Hat-JBOSS deal a failure?
One of the first in-person interviews I did for this blog was with Marc Fleury, then CEO of JBOSS.
He was celebrating a business deal, but soon after had much more to celebrate, the acquisition of JBOSS by RedHat for $350 million.
Fleury left Red Hat in 2007, and since then I’ve gotten a steady parade of news releases, about former JBOSS executives starting brand new companies. In fact, I am overdue for a visit to one of those companies.
Meanwhile, JBOSS rival SpringSource has gone from strength to strength. Its latest acquisition is Covalent. It’s hosting user meetings in five-star resorts.
Springsource is rapidly becoming what JBOSS sought to become, proving that an open source business model based on enterprise Java middleware can work. And when I talk to SpringSource officers, they often brag about taking deals and market share from JBOSS.
I think this represents a cautionary tale about the difference between open source and proprietary business models.
When you buy a proprietary software company you’re getting its contracts, its people, its goodwill, and its code base, along with all the copyright and patent protections of that code base.
Integrating such an acquisition is fairly simple. A customer’s costs of switching vendors is high. Employees lose access to the code base when they leave.
None of this is true in open source. Integration can be complex. Customers’ costs for switching vendors is low. Employees can fork your code at will.
I can’t tell you whether Red Hat has made a profit from JBOSS. It does seem obvious they have missed opportunities, and key assets have dribbled away.
So is it time to call this deal a failure?
Dana Blankenhorn has been a business journalist for 30 years, a tech freelancer since 1983. You can follow Dana on Twitter. See his full profile and disclosure of his industry affiliations.
Subscribe to Linux and Open Source via Email alerts or RSS.
| 03/04/08
