Open Source

The New Wave in Open Source

A flurry of open-source startups is coming on line. Here are profiles of some of the field's brightest sparks

Nearly 50 open-source startups have been funded in the last 18 months, and many are aiming to push the revolution deeper into corporate IT departments via business applications and services. Whether it's their sheer volume of downloads, like Portland-based Compiere, or investor and CEO star power like SpikeSource, the following eight companies are starting to stand out from the crowd.

Still, it's early in the game and challenges remain. No outfit has yet proved it can build a big business beyond supporting Linux. MySQL has come closest with its open-source database and $40 million in annual revenues, doubling year-over-year. These companies also have to walk a fine line between pleasing their investors and the open-source community. That means they have to give away enough valuable software code -- which a community of developers will help them test, debug, and evangelize -- while still holding back something important enough that some companies will want to pay for. And like the early days of the Web, eyeballs are everything. On average only 2% of companies that download open source programs end up paying for support or an enhanced version of the product.

These are potential landmines, no doubt about itbut the spoils are huge: Turning the $16 billion business software industry (excluding maintenance revenue) on its ear. Nothing has excited software venture capitalists this much in a long time. -Sarah Lacy

Special Report: Open Source

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