Open source's future: More Microsoft, bigger talent shortages

The open source industry in 2008 will be marked by more news out of Microsoft, IBM, Oracle and other big IT vendors, less start-up funding, more M&A activity, and an increasingly serious talent shortage.

That’s all according to Raven Zachary, open source research director for The 451 Group,  which is holding its 2nd Annual Client Conference in Boston this week.

Zachary said during a presentation at the event that overall, he is bullish on the market. His optimism is fueled in part by the fact that the traditional bottom-up adoption of open source by developers and systems management pros in enterprises is being complemented in many cases by top-down adoption driven by CIOs and executive committees sold on the potential cost reductions. What’s more, companies are deploying open source not just at the browser and operating system levels, but also across various vertical applications, said Zachary, whose experience in the industry includes once serving as director of Internet technology for La Quinta Inns, where he implemented an open source e-commerce system

The analyst said he is also optimistic because big-name IT vendors known best for their proprietary technologies are embracing open source and collaborative development systems involving ISVs and customers. Open source is “a disruptive force” that has big vendors re-evaluating their business models, licensing schemes and product plans, Zachary said.

He described how active companies like IBM and Oracle have become in open source organizations such as the Eclipse Foundation, how Microsoft has cozied up to Novell and how Sun has finally gone the open source route with Java. He also said he anticipates Microsoft becoming increasingly busy in open source, since it “has a vested interest in making sure open source works well on Windows.” However, he noted it could be well into the next decade before we see something as dramatic as an actual Linux distribution from Microsoft. “Microsoft is still trying to work out its strategy,” he said. “Ultimately, I think we’ll see them embrace open source much more.”

The interest by Microsoft and other big companies in open source should fuel more M&A activity in 2008, Zachary said. He said there were 16 deals in 2006 and have been 25 to date in 2007, while funding for new open source companies has plunged ($513 million for 53 companies in 2006 vs. $270 million for 39 companies so far this year).

But not all the news for 2008 will be good if the market watcher is correct.

The current shortage of open source talent will only worsen as demand skyrockets for internal open source support and developers, Zachary said. One example of such a shortage will be people with expertise in the open source Java servlet middleware called Tomcat that comes from the Apache Foundation. “There are 25 or so core contributors to that project,” Zachary said. “Over the past four or five years that number has stayed virtually identical…but the growth of Tomcat has been astronomical.”

Zachary said companies increasingly have been hiring Linux know-it-alls, but he advised them also to focus on identifying which open source projects have big potential and hiring talent early on before the going price gets too high (One audience member cited an example of Ajax developers being offered as much as $600 to consult, the sort of offer that is drawing them away from contributing to open source projects.)