Bob Young recently spoke at the TriLUG Linux Users Group in Raleigh, North Carolina. His talk covered several topics, from why he founded Red Hat, to his latest online publishing venture, Lulu (www.lulu.com), to the need for greater public debate about copyright and patent law. In response to a question from the audience about where he thinks Open Source Software (OSS) will dominate and where Proprietary, Closed Source software will excel, Mr. Young offered a very useful commentary.

In his estimation, OSS will tend to dominate in customer environments that are relatively tech savvy and in application areas that are relatively industry-independent. On the other hand, closed source software will tend to be more successful with customers who are relatively non-tech savvy and in application areas that are industry-specific (see Figure 1). He used his own company, Lulu, as an example of one where OSS tends to dominate. At Lulu, his staff is very tech savvy due to the critical nature of technology to their business operations. On the flip side, Mr. Young provided an example of a dentist office software suite as one where closed source tools would tend to dominate. The IT staff in dentist offices tend to be less tech savvy, and the application is indeed industry-specific. These two factors - application type and customer type - can be thought of as driving the supply and demand side, respectively, of the OSS penetration equation.

Supply
In application areas that are substantially industry-independent, there will be a tendency for more and better Open Source applications to exist. One reason for this is that the Open Source development model relies on a large number of developers to work collaboratively on a particular piece of software. Furthermore, often the developers of a particular Open Source project are also users of that application. Clearly, the less industry-specific an application, the larger the available pool of developers will be. Think about the well-known OSS projects, and they seem to fit this model. Linux, Apache, BIND, Samba, Sendmail, MySQL, PostgreSQL, iptables, Snort, Asterisk - all, it seems to me, equally fit the needs of organizations across all industries.

Demand
On the demand side, customers who are relatively tech savvy, such as companies in the telecommunications, high-tech, and new media industries, will have a higher propensity to prefer Open Source alternatives since their IT staff tend to have the technical wherewithal to capitalize on the benefits that access to the source code brings. These benefits include the ability to customize the application to suit their exact needs, as well as the ability to troubleshoot problems they may encounter with the application.

As shown in Figure 1, the penetration rates of the Linux operating system across different vertical segments seems to substantiate Mr. Young's observation. In terms of application type, operating systems should be located near the top of the vertical axis because they are not industry-specific. Databases are another application that would seem to be, by-and-large, industry-independent and therefore would fit closer to the top of the vertical axis. Hard data on penetration rates of open source databases by customer type was not readily available. However, on their Web site MySQL provides a list of their customers, which include Alcatel, Bloomberg, BusinessObjects, Cendant, Cisco, Fujitsu, McClatchy, Micromuse, Scholastic, Sourcefire, Vonage, Wachovia, and WebTrends. A quick glance reveals that many, if not most, of the companies listed would be aptly described as tech-savvy.

This can be thought of as a framework for analyzing where OSS is likely to be successful, and where traditional, proprietary software solutions will tend have success. While this is only one of many factors influencing the ultimate success of any particular software company, at least this model does shed some light on the degree of vulnerability to Open Source competition that proprietary vendors are likely to face.