Open Source Software Growing Faster Than Expected: IDC

Published: August 18, 2009

by Alex Woodie

A short time ago, the words "open source software" conjured images of disheveled tech enthusiasts writing geeky utilities from their parents' basements while slurping Diet Coke by the liter. That image has changed dramatically, and today open source software has become a profitable industry that's populated by businessmen wearing Armani suits. In fact, open source software is growing faster than previously expected, according to a new report from the IDC.

The IDC forecast concluded that, from 2009 to 2013, worldwide revenue from open source software will grow at a 22 percent compound annual growth rate (CAGR) to reach $8.1 billion by 2013. That growth figure is "considerably higher" than previous growth estimates from 2008, IDC says. However, it's not considerably higher than a report from 2007. In fact, the 2009 study basically mirrors the growth forecasts that IDC's own analysts produced in 2007.

IDC says there are three main reasons for the big uptick in predicted revenue for open source software, or OSS, as the analyst group likes to call it. First, the level of acceptance of OSS among enterprises over the last 12 months is "much higher" than what IDC previously expected. Second, the poor economy is driving enterprises to seek alternatives in OSS (which is not to be confused with "free software," but which is often sold at a steep discount to proprietary alternatives). Lastly, IDC recently completed an "exhaustive" search for revenue-producing OSS projects, so apparently it has a better gauge on the breadth and depth of the overall OSS landscape.

Michael Fauscette, group vice president of IDC's software business solutions group, says the poor economy has had a lot to do with the uptick. "OSS is increasingly a part of the enterprise software strategy of leading businesses and is seeing mainstream adoption at a strong pace," he says. "As the overall software industry continues to consolidate, it will be key for OSS vendors to reach scale if they plan to continue as a standalone business."

That OSS has become mainstream should not come as a shock to anybody. After all, with IT giants like Dell, IBM, Hewlett-Packard, and Oracle backing OSS, acceptance of the software was bound to increase.

The IDC sees OSS as one of the disrupting factors in enterprise IT, along with software as a service (SaaS). So-called "hybrid" business models will become the norm, according to IDC, with SaaS providers offering on-premise options, on-premise software providers offering SaaS options, closed source software providers offering more open source options, and (yes) OSS developers offering some closed-source capabilities.

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