10 Open Source Companies Set to Dominate 2008

The VAR Guy spent most of 2007 blogging about open source start-ups and open source business models. As he looks ahead to 2008, The VAR Guy knows hundreds of open source software providers are seeking to catch on in the corporate market. Here are the top 10 open source providers and platforms that are set to succeed in 2008.

10. Red Hat: An obvious choice, so let’s address them right from the start. Even as Red Hat pushes beyond Linux, the company’s core operating system business hopes to achieve 50 percent server market share by 2015. In its quarter ended August 31, Red Hat’s revenue surged 28 percent to $127.3 million and net income improved to $18.2 million compared to $16.2 million in the corresponding quarter last year. Upside: Oracle’s move into the Linux market has had little — if any — impact on Red Hat. And the Microsoft-Novell alliance pushed many open source advocates into Red Hat’s camp. Challenges: Unlike much of the open source industry, some CIOs applaud the Microsoft-Novell alliance, meaning that Red Hat could face increased competition at the high-end of the market. In the applications and middleware space, Red Hat needs to keep Jboss evangelists happy. And Red Hat’s on-again, off-again, on-again desktop efforts have allowed Canonical Ubuntu (#5 on this list) to gain momentum on the desktop.

9. Untangle: The San Mateo, Calif., startup develops an open source gateway that blocks spam, spyware, viruses and adware. Upside: Alas, plenty of open source firms now compete in the security space. But Untangle is one of the first open source specialists to launch a managed services partner program — which should pave the way for more customer engagements. Challenges: Untangle isn’t a household name yet, and traditional security appliance makers are also moving into the managed services space.

8. WordPress: You may not have noticed, but The VAR Guy, MSPmentor and a growing number of Nine Lives Media sites are hosted on WordPress — an open source blogging platform. Upside: For anyone seeking to launch a personal, professional or commercial blog, WordPress is rapidly emerging as the de facto standard. Challenges: One word… Google. They’ve got a popular blogging platform as well. And you should never underestimate Google.

7. OpenBravo: Enterprise resource planning (ERP). The acronym itself suggests complexity and big expenses. But what if ERP software had an open source foundation available for on-site deployments or hosted deployments? That’s where OpenBravo enters the picture. Upside: Recent acquisition pushes OpenBravo into the point-of-sale market. That’s a natural extension to ERP. Challenges: Headquartered in Spain, OpenBravo needs to ramp up its U.S. operations in order to gain critical mass in North America.

6. JasperSoft: Big companies like Oracle and IBM are buying their way into the traditional business intelligence software market. In stark contrast, JasperSoft is attacking business intelligence using the open source model. Upside: JasperSoft is a natural extension to SugarCRM and MySQL environments (see #3 and #1 on this list). Challenges: Business intelligence isn’t an easy sell for integrators and solutions providers, so JasperSoft will need to work hard to continually extend its partner network.

5. Canonical: Once upon a time, Red Hat and Novell ignored the desktop Linux market, leaving an opportunity wide open to Canonical–promoter of Ubuntu Linux. Upside: Dell now preloads Ubuntu on selected PC desktops. Even The VAR Guy has one. Dell also plans to certify its servers to run Ubuntu. (Yes, an Ubuntu server push is coming.) And Canonical backer Mark Shuttleworth has deep pockets. If you’re new to Ubuntu, here are 50 things you need to know. Challenges: Red Hat and Novell have rediscovered the desktop and are moving back into the market. It’s unclear how much money Canonical makes from Dell preloads. Plus, Canonical needs more VARs to support and evangelize Ubuntu.

4 . Google Android: Get ready for an open software and applications platform that runs across hundreds — or thousands — of different cell phones and smart phones. Sounds pretty ambitious — perhaps too ambitious for most companies. But then again, Android is backed by Google. Upside: Dozens of service providers, software developers, chip makers and other tech companies have vowed to support Android when it debuts in 2008. And a first look at Android (check out this video clip) looks pretty wild. Challenges: We’ve all seen multi-vendor alliances collapse before. And it will be difficult for the 1.0 release of Android to match the initial hype — and quality — of the iPhone.

3. SugarCRM: Annual revenue will double to about $15 million in 2007, cash flow is now positive and company insiders are focused on a longer-term plan for SugarCRM. Upside: Plenty of businesses are frustrated with traditional customer relationship management (CRM) software. And SugarCRM functions well as a traditional on-site application or hosted application. Challenges: Managing growth is the big worry within SugarCRM. Getting to $25 million or $35 million in annual revenue is a near-term annual goal. But longer term, SugarCRM worries about scaling its business to $100 million in annual revenue. The VAR Guy wishes he had such problems.

2. Digium: Take one hot market (voice over IP) and meld it with another hot market (open source) and you’ve created the perfect storm. Digium promotes Asterisk, the open source IP telephony platform. The company recently opened a new headquarters and is expanding its base of channel partners. Upside: Asterisk has gained incredible momentum in recent months. Challenges: Small businesses don’t understand open source and they’ve never heard of Asterisk. Plus, Microsoft and Cisco are busy promoting unified communications to small, midsize and enterprise customers. All of that unified hype could overshadow Asterisk. (But we seriously doubt it.)

1. MySQL: The world’s most popular open source database is an insanely popular — and fast — platform for running Web 2.0 applications. Rumors of MySQL launching an initial public offering have circulated for months. But 2008 could finally be the year that MySQL makes its mark on Wall Street. Upside: MySQL has a customer list — CraigsList, Google, TicketMaster, Yahoo — to die for. Challenges: MySQL also has a rival list — Microsoft, Oracle — to fear.

There you have it. The VAR Guy’s top 10 Open Source Companies Set to Dominate 2008. Sure, he missed a few obvious candidates. And he ignored dozens of potential names. But ignoring vendor hype is one of The VAR Guy’s greatest strengths — or so he claims.