The one thing I wanted to really comment on is a sentence thrown out there by Matt:
The investment, however, is very telling. When one of the top venture capital firms on the planet puts hard dollars behind a support model, it's significant. It becomes doubly so when the firm (or its investors) in question previously invested in JBoss, MySQL, SpringSource (Interface21), and other support-based open-source companies.
It may mean that Benchmark knows something that the rest of the industry seems determined to ignore: services-based businesses may well be the future of the software industry.
a/ A point of detail: Benchmark didn't invest in JBoss. Matrix, out of Boston, did, with David Skok. Peter took a secondary investment with Accel, before transitioning to Benchmark, and I find the constant taking of credit in the press misleading and distasteful. There I said it.
b/ FALSE: the future of the software industry (as a whole) is services. I always enjoy it when in debate people mention the case of VMWare to evangelical OSS zealots. Here is a company that is creating vasts amount of technological innovation and money with a classic licensing model of software. When asked why they didn't go OSS, the CEO responded "why would I do that?" It is embarrassing for the zealots that in this day and age one of the most successful companies is a proprietary software model. What? my ideology is not perfect? the good old model is still kicking arse? by orders of magnitude in terms of technology and, it goes without saying, financial value creation? I enjoy the squirming. The problem with the generalization above is that it assumes that proprietary license models are dying. That is just false, period. That ship is still sailing. Oracle, Microsoft, IBM, SAP are all growing healthily and running the money presses. The proprietary model is alive and kicking. The existence of OSS models DO NOT negate the proprietary models. GET OVER IT, both models will co-exist and thrive sometimes at the expense of each other, sometimes independently of each other. It is not a zero-sum game, there is value being created in both.
d/ In fact, witness the RUSH of OSS companies to emulate the proprietary licensing models to monetize their bases. The VC's may have invested in service based companies but they are all becoming product license companies. It is not that they know something we don't, au contraire, they are rediscovering what we all know: that giving away your core competency is a tough way of making money and nothing beats the good old proprietary licensing model. JBoss, MySQL have followed the example of RedHat with the "RHEL/FEDORA" split. AND THAT IS A GOOD THING, don't get me wrong. That model is a proprietary distribution of OSS codebases. That is the engine that ignited RedHat's revenue. The proprietary licensing model is still top dog and the OSS guys are falling all over themselves to emulate it. BTW, on this topic, I find that Savio Rodrigues, the "community blogger" from IBM is a more enlightened read. Maybe because he is from IBM and they literally wrote the book over the past 50 years? Going back to software as a driver for services and hardware? no problem it is called Global Services. Milking software licenses for all it is worth? no problem it is called WebSphere. Giving it all away? huh... no thank you, no!
e/ I don't read this particular announcement as an announcement in a services model: these guys do run-time, and if they do run-time they will gravitate towards licensing models as ways to supplement revenue... why? just watch!
f/ TRUE: there is a viable niche in the future of OSS software in services. Note the 2 qualifiers to Matt's blanket statement. 1/ niche 2/OSS not 1/all 2/of software. The services models will scale. I always find myself amused when people broadly claim that 'Services don't scale, everyone knows that'. Because you know, IBM GS, McKinsey, Bain, Accenture, Atos Origin, CapGemini, you name it, these are all 2 bit little shitty companies, right? No, what they mean when they say "it won't scale" that is that the speed at which these businesses grow (slow) and the margins with which they grow (low) do not suit the private money timelines. THAT IS A VC MONEY PROBLEM, NOT AN INTRINSIC INDUSTRY PROBLEM!!!!
g/ Also, to do a services model, and to a lesser extent a product model, you need the heads of projects. That was the professional OSS pitch at JBoss. I am SICK AND TIRED of seeing 2 bit consultancies claim to be the "best/sole/main" source of consulting on project X/Y/Z. You see these greasy haired car-salesman running with dollar signs in their eyes, because you know the software is out there, those poor chums wrote it for free and we get to reap the rewards. The developers of X/Y/Z are the best source of consulting. Period. That is what is fair, ethical and in fact workable from a business standpoint (JBoss, MySQL, Spring).
h/ To do a licensing model with products, you need to be in operations. Operations is where the runtime/product money is. If you are selling services like training and consulting then you are happy surviving in development circles outside of runtime (old JBoss/Spring). But selling a product is done in production with runtime offerings. This is where this new company is strong (they host and scale the runtime). JBoss, MySQL, RedHat are all very strong in this runtime as well, that is where they all make their money. Spring ironically is struggling to transition to monetizing the runtime, since their value is mostly at development time.
I wish them good luck, I always want to see the business of OSS making progress.