Lock-in is what people love, not open source
Why would anyone ever choose Salesforce, Amazon Web Services (AWS), or any number of proprietary companies? After all, each of these companies, in their way, stands for proprietary, choice-limiting software services that minimize customer creativity.
This may, it turns out, be precisely why they’re so successful.
In a world awash in amazing open-source software, it’s telling that closed-source products continue to boom, especially in the “as-a-Service” category, be it SaaS, IaaS, or PaaS. The reason, as Redmonk analyst Stephen O’Grady posits, may be that the “biggest potential differentiator” for such companies today is the “absence of choice.”
In other words, customers are crying out for many IT decisions to be made for them.
The golden age of open source
It wasn’t supposed to be like this. For decades, the software industry muddled along under the lash of IT hegemons (think: IBM, HP, Oracle). While companies sometimes complained about being locked into their vendors, there was also safety. “No one ever got fired for buying IBM,” the saying went.
Or, as O’Grady notes, “As much as organizations didn’t appreciate only being able to choose from a small handful of expensive application servers, that was an approachable, manageable choice. There was one model and two or three vendors.”
Eventually, the strategy of playing these vendors off of one another to get a better deal led to companies turning to open source or, at least, threatening to do so.
In these heady days of the mid-2000s, startups claiming to be the “open-source alternative to” Salesforce, Documentum, Business Objects, and more arose. While these were moderately successful, the real change came nearly 10 years later with a rush of cloud and data infrastructure, nearly all of it open source, and some of it incredibly good.
Which, ironically, may be a problem.
Choice, it turns out, isn’t always an unalloyed good, O’Grady points out: “[T]he increasing volume of high quality open-source software is bringing with it unintended consequences, among them lengthier and more challenging evaluations.”
In other words, it’s really hard to sift through all of this great software.
Wait, this is a problem?
Not everyone is complaining. As O’Grady highlights, “For organizations that are both capable and view their technical infrastructure as a competitive edge, this is a golden age. Never before has so much high quality engineering—tech that would been unimaginably expensive even a decade ago—been available at no cost. And free to modify.”
But guess what? Most companies aren’t like this.
For every technically savvy Twitter that can swim in the deep end of open-source infrastructure, there are 100,000 companies that “are doing well today to merely keep their heads above water with a well thought out and accepted public vs. private infrastructure strategy.”
Selling an absence of choice
This brings us to the crux of O’Grady’s argument: “Very few vendors want to go to market saying ‘no more choices for you.’ But the time is coming, quickly, when this might be exactly the right message.”
Of course, SaaS has always had this theme running through it. Salesforce CEO Marc Benioff famously challenged his alma mater, Oracle, with a “No software” slogan. His point was that running Salesforce’s CRM product as a service meant that companies didn’t have to futz with picking out servers, operating systems, application servers, databases, and more. Salesforce took care of those choices for the customer.
That value proposition has only become more pronounced of late, as O’Grady argues, but it’s not one that most “as-a-Service” companies tout sufficiently.
A few years back, then-Wall Street analyst Peter Goldmacher described three kinds of winners in big data: those that sell access to the underlying infrastructure (“arms dealers” like Cloudera and Hortonworks); application companies that use this infrastructure as the foundation for easy-to-use applications for enterprises; and the mainstream enterprises that take this infrastructure and use it to build consumer-facing applications.
In Goldmacher’s view, the last category comprises the biggest opportunity (think Uber or Facebook), and he’s probably right.
But for many companies still struggling to master all of this great open-source infrastructure, that second category of winner looks very promising, and it’s one that they’d be happy to fund so that they don’t have to invest the bother in choosing between the first group.
In sum, while we’ve spent the last decade or so raging against the lock-in machine, the companies that offer the most comforting story of choice-free IT decisions may be the biggest winners of all.