The almighty $1 billion has lost its open source value

Matt Asay thinks that achieving $1 billion for open-source companies isn't as big of a deal as it used to be. Do you agree?


Open source money

Kickstarter just passed $1 billion in pledges. While it's great that Kickstarter corralled 5.7 million people to help fund a heck of a lot of documentaries, tech startups, and more, $1 billion isn't what it used to be.

Open source and the $1 billion barrier

For years, $1 billion was the goal for open-source companies. Back in 2006, RedMonk analyst Stephen O'Grady suggested that it wasn't necessarily the ultimate goal, but he also pondered whether open-source economics could measure up to $1 billion. Then, in 2012, Red Hat surpassed $1 billion in annual revenue, and as an industry, we largely gave up the goal of there ever being another.

In fact, former XenSource CEO Peter Levine argued that there will never be another $1 billion Red Hat (echoing my thoughts back in 2011). It's not that companies using open source won’t make a lot of money, but they won’t make $1 billion selling support.

We'll continue to see plenty of billion-dollar companies making money with open source. In fact, if you peruse The Wall Street Journal's list of the billion-dollar startups, most of them heavily use open source (like Instagram, which was sold for $1 billion and built on open-source and cloud technologies).

More billion-dollar bets

Back in 2000, IBM announced that it was going to invest $1 billion in Linux. It completely changed the industry. I worked for an embedded Linux company at the time, and IBM's commitment changed every conversation from "Trust me, Linux's free software license won't kill you" to "How many systems would you like to order?"

It was groundbreaking.

This isn't so today. Recently, IBM pledged $1 billion to prop up Linux on its Power systems. Few seem to have noticed. That's because, as RedMonk's Donnie Berkholz pointed out, IBM makes a lot of billion-dollar commitments these days. They just don't resonate as much as they used to.

And why would they? In addition to billion-dollar valuations, billion-dollar commitments, and billion-dollar revenue companies, we also have a $1 billion open-source hardware market, the OpenStack ecosystem nearing a $1 billion valuation, Facebook saving $1 billion by developing and then open-sourcing its own data centers, and more.

"Billion" is now common, at least when it comes to open source and open innovation. It may not generate page views, but it remains a symbol of just how much value open technology creates.

Do you agree that the almighty billion has lost its value? Share your thoughts in the discussion thread below.