In this article James Gosling bashes us (OSS vendors) by basically saying that

"There are all these open source groups that have to figure out what their economic model is," Gosling told Computerworld. "Everyone that works on these open source projects [must] pay rent and buy lunch...so where does that money come from? Open source vendors also came under fire, with Gosling sideswiping MySQL, JBoss, and Red Hat: "They say that they are running their businesses based on services. "These businesses are more hype than reality. If they don't have a [longer term] economic model...they are going to have a really hard time."

Since I am an absolute fan of mr gosling, I take the criticism to heart. I just want to reassure him that our models are financially viable. The first dirty little secret of OSS models is that we keep the scalable part of the enterprise model intact, namely we are software vendors that focus on the maintenance part of the business and give the software away for free. It is financially sound in our case. If you look at RH growth since they went public you will see that with constant net new business (null second derivative == they don't accelerate their sales) they are capable of scaling because of a 65% renewal rate year to year. Subscription based revenue streams are nice because they are very predictable in their half life. Wall Street is warming up to that model and understands that you don't value the companies on P/E but rather free cash flow. It scales. JBoss for example was always cash flow positive, meaning that more money comes in that goes out and we haven't touched the VC money we raised a year ago. Basically we have grown on the cash generated by operations. Few startups can say the same in the traditional enterprise model.

I presume that Mr Gosling mistakes services businesses, which scale linearly with people (bad) with OSS services businesses which scale geometrically with people, as the traditional software businesses do (good). In other words, we pay for our rents, we pay for our kids through school. The model works and we are bringing it to other regions of software.

marcf