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JBoss VP: Why CIOs save big bucks with open source licenses

JBoss Inc. vice president Bob Bickel describes the inherent savings in software built on open source licenses, and the industry changes that have made support for commercial open source software strong enough for corporate users.

Businesses can save a bundle by combining the best of both the open source software and commercial software worlds, says Bob Bickel, vice president of corporate strategy and development at JBoss Inc., which has flourished doing just that.

In part one of this interview, Bickel describes the cost savings inherent in software built on open source licenses and the changes that have made commercial open source software support strong enough for corporate users. In part two, he reveals the latest trends in the middleware market.

Bickel has experience in both the proprietary and commercial open source software worlds. Before joining JBoss, a commercial open source middleware vendor based in Atlanta, he was general manager of Hewlett-Packard's middleware division.

On Tuesday, JBoss introduced a new migration program -- including a methodology, toolkit and assessment model -- to help customers move their business applications onto the JBoss Application Server. At LinuxWorld last week, Novell Inc. announced stronger support for the JBoss Enterprise Middleware System, which includes the JBoss Application Server, a Java 2 Enterprise Edition (J2EE) server.

What JBoss has done, unlike the vast majority of open source companies, is choose to indemnify our customers to protect them. This is an important checkbox for CIOs.
Bob Bickel,
vice president of corporate strategy,JBoss Inc.

What can businesses gain from using a product built on an open source license?

Bob Bickel: The main difference between an open source license and a proprietary license is, of course, clear -- it's a matter of cost.

Open source licenses allow use of software without paying a royalty. Proprietary licenses, as we all know, require payment and in the case of server software, it's normally charged on a per CPU basis. JBoss has had customers switch to JBoss Application Server from a proprietary platform, running 60 servers and 120 CPUs, and realize an immediate savings of $1 million.

Besides costs, are there other advantages?

Bickel: Another advantage open source licensing has over proprietary licensing is volume distribution.

Most proprietary software vendors offer trial versions of their software, limited versions essentially, whereas open source software can be readily downloaded by anyone for 'trial.'

The open source license, which does not require royalties, makes it easy for users to download and play with open source software. It's not unlikely that an open source software product with mass-market appeal like JBoss Application Server, with over 6 million downloads, has a higher installation base than BEA WebLogic or IBM WebSphere.

Are there any advantages to buying products built on proprietary licenses?

Bickel: One advantage of commercial software licensing is that proprietary vendors' contracts typically provide indemnification support, which protects customers against intellectual property claims. In contrast, the major open source licenses, including GPL [General Public License], LGPL, Apache and BSD, don't indemnify customers. This is largely to protect developers.

What JBoss has done, unlike the vast majority of open source companies, is choose to indemnify our customers to protect them. This is an important check box for CIOs.

How does an open source software vendor get by without money gained from license fees?

Bickel: Wall Street and industry analysts seem fixated on software licensing, when the reality is that open source is bringing about its own end. IBM used to give away free software with its mainframes. Microsoft invented the software license, making customers pay up front to use the software. This was done in part to pay for development costs and to show revenue on the balance sheet.

It's often written into licensing contracts that the customer will pay up to 20% on top of licensing charges for maintenance. This is why Wall Street penalizes software companies when new licensing revenue begins to drop. But if you look at the lifecycle of a typical commercial software vendor, you'll see that declining licensing revenue is a natural progression of growth. In the early years, software vendors will show an 80/20 split on software licensing and maintenance revenue. By mid-life, it's usually 50/50 and, when they're a mature vendor, the split changes to 20/80.

For JBoss, our revenue mix is that of a mature company. By not charging for software licenses, we leapfrogged the growing pains typical to software companies and make money off renewable, high-margin subscription services. Because we don't have licensing revenue to fall back on, JBoss has to consistently deliver on our Professional Support Services. It's our bread and butter, and it's how we will renew our customer support contracts.

Is there a danger that open source will be co-opted by proprietary vendors in such a way that lock-in will be possible?

Bickel: This is possible. However, I do not think the market and customers will be fooled by this.

Can the free community support model work effectively for corporate users?

Bickel: Many open source projects, including JBoss, evolve as a hobby. They may have great technology, but they can quickly become victims of their success. More downloads mean more users, and more users mean more requests for support. And because it's free software, people want free support, too. That won't work long term, so you can see that voluntary open source is not a very scalable business.

To bring some order to this market, several companies are now packaging open source software and offering support. Dealing with such a company may be a good solution for many CIOs.

Early open source businesses were essentially software packagers. What we've seen in the last few years, and what's pushed open source to wider deployment, is second-generation open source software companies like JBoss and MySQL that support what they develop.

JBoss' success stems from the quality of our Professional Support Services and the strength of the JEMS technologies. Because we've been growing our partner ecosystem, enterprises deploying on JEMS can now get Professional Support Services directly through JBoss or indirectly through our authorized service partners.

[Today, businesses can get] the best of both worlds: the zero-cost software license and transparency of open source and the enterprise-quality support and accountability expected of commercial software.

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