Open source start-ups make their pitch - in public

Three open source start-up executives Tuesday showed their daring by making  pitches to potential customers. What made them daring is that they did it in front of dozens of attendees at the Open Source Business Conference in Newton, Mass.

The presenting companies were ActiveGrid, EnterpriseDB and XenSource. Customer panelists hailed from the Commonwealth of Massachusetts, Fannie Mae and financial firms Fidelity Investments, Putnam Investments and State Street.

Not surprisingly, the customer panelists who agreed to participate are from organizations that use open source software, though some to much larger extents than others. Their responses to the new companies ranged from practically inviting them in to show off their software to telling them to get back in a couple of years.

First up was Peter Yared, CEO of ActiveGrid, which is offering application servers designed to talk to multiple data sources (including Web services) and that boast rich user interfaces.

Fidelity's Charles Brenner, senior vice president with the company's applied technology center, immediately poked fun at ActiveGrid, noting that he used to tell people never to buy anything from companies with the word "open" in their names because the products always turn out to be closed. "Now I tell people don't buy anything with the word 'grid' in it," he said.

But Brenner said one concern he has with any open source technology is, "What happens if it dies?" In the case of ActiveGrid, he wondered what the output of its application builder would be and whether it would be something his team could recode by hand if need be. Yared assured him that the software would deliver largely standards-based applications.

Fannie Mae's Rick Carey, a vice president in the office of the CIO,  called ActiveGrid's idea interesting but said, "I worry…  that your space is being commoditized already."

Tim Vaverchak, director of Massachusetts' IT Division, was curious about how the company would work with the open source community and integrate that into its business model.

Next up among the vendors was Andy Astor, president and CEO of EnterpriseDB, which sells database software that it positions somewhere in between the PostgreSQL open source database it is based on and traditional proprietary databases, such as those from Oracle.  Astor claims EnterpriseDB's offering is more robust than bare bones PostgreSQL and far less expensive than Oracle's software.

State Street Vice President and Chief Applications Architect Jin Chun, said his organization doesn't much care whose databases it uses as long as they are fast, transactional, replicate well and are reliable. He said doing a pilot at his company might do wonders to win over skeptics.

Massachusetts' Vaverchak said such a new database might get a mixed reception at his organization given lingering religious wars over software development tools. He also expressed reservations about Astor's ease of use claims.

"Too many times we've heard from organizations that sure, just drop it in and it will replace completely everything you have," he said. "There's a lot more that goes on there."

Fannie Mae's Carey said that like others on the panel, he isn't sure the per CPU price of a database is that big of a deal, and otherwise wasn't clear from Astor's short pitch how the company would really differentiate itself.  He also said he would have concerns about application vendors certifying that their programs work with the database. "What we get for that extra buck [with some of the database vendors that charge more] is they've done their due diligence and have got lots of third-party certifications."

EnterpriseDB's Astor said that while per-CPU pricing isn't always a deal maker or breaker, in his company's case it can be since EnterpriseDB's price can come in at 90% less than competitors when you start looking at bigger systems, such as 8-way boxes. He acknowledged the customers' concerns about lack of third-party support and said that building up an "ecosystem" of partners is the company's big challenge.

The final vendor to give his schpiel was Moshe Bar, CTO of XenSource, which offers technology and support to optimize virtualization software called Xen.

Fannie Mae's Carey said he is interested in virtualization technology but questioned whether an organization such as XenSource would be better off targeting server vendors instead of server customers. He compared the situation to one he saw a number of years back when a bunch of database acceleration companies popped up, but he felt that the technology was more suited to be part of the database software.

Also, Carey said that while virtualization of applications sounds great, the technology won't really pay off until storage virtualization is further along.

Putnam's Maurizio Ferconi, managing director of financial engineering, said his reservations surrounding virtualization software have to do with a need for good management tools to track application and system health and how the two affect each other. He also raised concern about the widely varying software licensing approaches being taken by application and operating system vendors, and whether those approaches might nix some of the anticipated benefits of virtualization.

Fidelity's Brenner said that his company has been doing virtualization of one kind or another for years and noted that "the economic push within the business is for a reduction in the number of boxes." Still, he said Fidelity would need to see a lot of maturity in such a product before putting it into production. "It's a heart transplant basically and you want to get that from a reputable [manufacturer]," he said.

Bar responded to the customers by saying that XenSource has been working with hardware vendors to have them offer its software with their systems and with other companies to deliver management and other tools.

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