2010 is promising to be a big year for technology IPOs, but will open source join the party?IBM Laptop Battery Probably not. Not yet, anyway.
Noted finance blogger Paul Kedrosky speculates that "it may start with Twitter, or Facebook, or Zynga (or even Yelp), but an IPO wave is coming and all it requires is a Netscape moment."
While I (along with Tom Foremski) believe there's more IPO smoke than fire, IBM 02K6928 Battery, IBM 02K6620 Battery, IBM 02K7039 Batteryit does feel like we're due for a big year of technology IPOs. "Big" as in "more than the last few years."
I guess that would require just one. Or so.
But what about open source? It seems clear to me that we're entering a phase in commercial open source when the best businesses will grow, rather than explode into $300 million to $400 million acquisitions. (Yes, I'm weeping as I write this.)
Ingres CEO Roger Burkhardt disagrees. As he writes in Dr. Dobb's Journal, 2010 should see the IPO of a non-Linux open-source company:
The growth rates of certain open source companies has been impressive (50%+). We also believe a few have crossed the Wall Street friendly $50 million in run rate Billings barrier. The investment community is itching for new ideas and open source has been a theme (along with cloud computing) that resonates well with investors due to its highly visible model.IBM 02K7039 Battery The open source Enterprise Content Management (ECM) space has been hot and we would not be surprised to see an IPO candidate emerge from that area in 2010.
I don't think so. I don't believe we'll see an open source IPO until a company crosses the $100 million threshold, and we're simply not there yet. Growth rates are great. SugarCRM, a company I advise, is promising 100 percent growth in 2010. But profitability and long-term proof of company viability, as measured by revenue, is what will sell to institutional investors.
Hence, I can't see a still-skittish Wall Street buying into an open-source IPO in the absence of the psychologically pleasing $100 million revenue figure.
Once we get an open-source company in that frame,IBM 02K6928 Battery, IBM 02K6620 Battery, IBM 02K7039 Battery I think we'll see a real boom of open-source IPOs. With the cost of IT project failure estimated at $6.2 billion, and open source serving up a great remedy, the conditions are right for the market to embrace open source.
Once that embrace translates into $100 million in revenue, we'll see Wall Street embrace open source again, too.
Even Google, born in the cloud, recognizes this. Instead of forcing government customers into its public cloud, the company is building a dedicated cloud for government organizations in the U.S. Google's reasoning?
We also want to do our part to make it easier for government to transition to cloud computing.IBM 02K6620 Battery, We recognize that government agencies have unique regulatory and compliance requirements for IT systems, and cloud computing is no exception. So we've invested a lot of time in understanding government's needs and how they relate to cloud computing. To help meet those requirements we're taking two important steps....
One step is certification, and the other is dedicated hosting. As much as Google may hope that its other prospective Google Apps customers won't have "unique...requirements," they do (or think they do). it's a losing battle to tell them otherwise, at least in the short term. If an enterprise giant like GE demands a private cloud, GE is going to get it.
This same pragmatism will drive Google and other cloud-infrastructure providers to build out their application suites. Why? Because enterprises that move to the cloud expect to see applications follow them there. Today, however, IBM 02K6928 Battery, IBM 02K6620 Battery, IBM 02K7039 Batterymost enterprise applications don't work well in the cloud, leaving would-be enterprises buyers all dressed up with nowhere to go, in terms of the ability to run desired applications.
Vendors are jockeying to satisfy this demand for cloud-based applications. Google is already well on its way with Gmail and the rest of its Apps, and has been in the market lately for more, but others like Cisco, Microsoft, VMware, and IBM will be jumping into the M&A market to round out their offerings in order to deliver increasingly full application suites.
Microsoft has been actively courting developers to build cloud-ready applications for its Azure platform, IBM 02K6928 Battery, while VMware bought into the Spring developer community for the same purpose. But in the winner-takes-most cloud platform war, the best short-term strategy is to provide applications, and not simply hope they get built.
Perhaps this is one reason IBM CEO Sam Palmisano claims to be undisturbed by Google's rise. IBM already has Lotus and more running in the cloud, and has a strong hold on enterprise wallets.