Open Source In a Cloud Computing Environment.

Software pricing has always presented an issue for both vendors and customers alike. In the pre-Internet days software pricing on computer servers was roughly proportional to the cost of the hardware they were running on. In the days of mainframes and minicomputers this balance was fine but as the servers moved on from a lonely Intel box to a high-end cluster, things began to get complicated. It was quite possible that with expensive software such as well known database products, the massive price of software could limit the amount of money invested in hardware.

For example, Oracle’s database technology was specifically designed to run on inexpensive commodity servers (via Oracle’s RAC technology), with the idea that if the hardware costs are low, the overall ticket price is lower. This would be fine if all vendors stayed completely in step in terms of pricing policy. But that didn’t happen.

So the corporate technology buyers had a huge task on their hands in trying to build rational and reasonably priced business networks. Licensing is a potential nightmare that completely distorts the costs of purchasing software for business.

Once a vendor gets into a position of significant leverage, it tends to maintain the price of its product and seek to commoditise everything around it but the customer rarely sees any benefit from this.

This is one of the reasons that Open Source is important and why corporations really should take a punt and start using it. I’m not just talking Linux here, I mean the LAMP stack plus the JBOSS stack and a little bit of Open Office plus anything else that can deliver benefit. Oh and by the way, most open source software is good quality by the way.

Cloud Computing On The Horizon.

Open source software has been a viable option within the corporation, but it is now becoming a force of change. For better or worse, it is now part of the fabric of the IT industry. The area of the IT industry that was never been backward in adopting Open Source, and were instrumental in establishing it, are the xSPs, now referred to generally service providers. They have always been enthusiastic users of free software and web hosting companies seem to use almost nothing else.

Open Source imposes a constraining business model on anyone who wants to make a business out of selling the Open Source software. The GPL pretty much torpedoes any business model based on the direct software sales of the Open Source product. But the GPL doesn’t and cannot prevent people renting the software out, no matter whether the company doing the renting simply claims to be charging for support or claims to be offering Software As A Service (SaaS). When you buy SaaS you do not contract to use specific products, you simply contract to use an application or a set of applications – and, at the end of the day, applications are what IT is about.

If you use Salesforce.com for example, you may well use software written by the company itself, but it is possible that you’ll also be using some software provided by their partners plus Open Source products. You just won’t know and you won’t care either. You’ll only care if the software fails to deliver the contracted service in any way. There are no simple and generally agreed models for pricing SaaS, primarily because its major competition is not other SaaS. Its major competition is in-house software and it only has to cost less than that, and be reasonably easy to implement, in order to establish a market.

The costs of cloud computing network services will follow a similar model to licensed software because as the cloud business grows it will need to invest more in the platform. Open Source is particularly appealing to SaaS vendors, because its costs flat-line as the business continues to grow.

As software moves towards a different model, the market impact of the Open Source GPL will diminish on one side of the equation, because it will become easier to exploit commercially. However, it will also force it competition into a difficult position – because their costs don’t flat-line. The natural impact of this will be to encourage proprietary software products to establish a SaaS market as quickly as they can – before it gets taken by an Open Source option. If an open source option gets established it will be difficult to compete with.

Resources:

IT Support company that provide both Open Siurce and Cloud Computing support.