Further transformation ahead for open source industry

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Muggie van Staden, MD of Obsidian Systems.
Muggie van Staden, MD of Obsidian Systems.

The open source community is undergoing one of its greatest transformative periods in the 20 years since the "open source" label was first coined. However, where this will end, or what the end result will look like, is anyone's guess.

This is the view of Muggie van Staden, MD of open source solutions company Obsidian Systems. While all eyes are on the $34 billion IBM-Red Hat acquisition, he says, this is only one (albeit the largest by far) of four major merger/acquisition moves in the open source arena in the past year.

The trend started in March with the announcement that global CRM software leader, Salesforce, would acquire open source company, MuleSoft, a provider of a platform for building application networks, for $6.5 billion.

Response to this was relatively muted, in contrast to the furore a few months later after Microsoft confirmed it would acquire GitHub, the world's largest repository of open source code and an essential tool for open source software coders, for $7.5 billion.

Horrified at what many open source adherents saw as the fox (Microsoft) being put in charge of the henhouse (GitHub), many threatened to move away from GitHub.

"That was pretty much a knee-jerk reaction and I think most people have calmed down and realised Microsoft today is a very different proposition to the vehemently anti-open source organisation it was a decade or so ago," says Van Staden.

In October came the announcement of a proposed merger between two significant open source companies: Hortonworks, which develops data management and processing software, and Cloudera, a founder of the Apache Hadoop project, an open source distributed processing framework that manages data processing and storage for big data applications.

This merger, billed as an 'all stock merger of equals' will result in an organisation with an estimated equity value of $5.2 billion.

Turning point

"All this activity, and particularly the IBM-Red Hat deal, marks a turning point for open source. Whether this will be good or bad for open source in the long-term is difficult to predict. I like to think it is an indication that everyone is at last coming to realise open source is the way software should be developed.

"Microsoft recently acknowledged that for the first time, there were more Linux workloads than Azure Microsoft workloads," notes Van Staden.

Everyone is at last coming to realise that open source is the way software should be developed.

At the time of the IBM-Red Hat deal announcement, Jim Whitehurst, president and CEO of Red Hat, said: "Open source is the default choice for modern IT solutions... Joining forces with IBM will provide us with a greater level of scale, resources and capabilities to accelerate the impact of open source as the basis for digital transformation and bring Red Hat to an even wider audience, all while preserving our unique culture and unwavering commitment to open source innovation."

Van Staden shares these sentiments: "There is a chance that some Red Hat culture will rub off on IBM and the result will be a fantastic organisation that adds real value to the community. However, there is always a risk that the acquisitions could have a negative outcome.

"With the deal itself unlikely to be finalised before mid- to late-2019, it could take at least 18 months before we are able to make a clear assessment of any changes that might be in the offing."

Looking ahead to 2019, Van Staden says the open source merger/acquisition trend could continue.

"It would not surprise me if companies like SUSE and Docker also find themselves targeted for merger or acquisition deals, potentially by some large 'proprietary' organisations. These are very interesting times for open source indeed," he concludes.

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