When Money's Tight, Go Open Source
Article by George Norman
On 22 Oct 2008
In times of economic crisis, such as the one we are experiencing now, it is important for any and all companies to take the appropriate measures so as not to go under. But how does that affect software? Jim Whitehurst says that what’s bad for the economy is good for open source.

The first course of action any company will take during a crisis is to reduce expenditures. The less you spend, the more you have left – it is as simple as that. Jim Whitehurst, Red Hat chief executive, says that this has two repercussions: software companies will halt investments for “new functionality” and consequently will start to consider open source software as a viable alternative. Open source will definitely be in better shape when the financial crisis is over, as opposed to the bountiful times leading to the crisis.

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It seems that some proprietary software customers have already seen the cost advantages of going for open source software. Red Hat’s financial results are proof of that – Red Hat has reported a 29% increase during the second quarter of 2008, compared to the same period of 2007. Red Hat’s subscription revenues have also increased considerably (in the double digit area to be more precise). Nobody, not even the analysts were expecting such a major increase.

“I've had a couple of conversations with CIOs who said 'we're a Microsoft shop and we don't use any open source whatsoever, but we're already getting pressure to reduce our operating costs and we need you to help put together a plan for us to help us use open source to reduce our costs,” said Whitehurst.

There are some that do not share Whitehurst’s enthusiasm. Kevin McIsaac, analyst with Intelligent Business Research Services, has a more pessimistic view on the matter. According to him, Red Hat’s market share will not go up and the financial crisis will not have a significant impact on open source software.



Tags: Open Source, Red hat, Microsoft
About the author: George Norman
George is a news editor.
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