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How Does Open Source Technology Affect Marketing?

  |  September 20, 2004   |  Comments

Open source software is changing the rules for IT. Next, it will change the rules for marketing.

Linux and other open source software are a major disruptive force in IT. Big industry players such as IBM and Novell have aligned their businesses behind open source, while Microsoft views it as a threat to its hegemony. New business models are being invented and reinvented daily as companies new and old try to figure out how they make money when core elements of the software stack are free.

So far, there's little consensus on where things will settle. Naturally, Linux itself is "just" an operating system. It's the applications and service providers around it, the Linux ecosystem, that will drive adoption and define the viability and success of Linux as an alternate flavor to Unix and Windows.

Open source software took time to become mainstream. Linux adoption in the corporate world was originally seen as a replacement or substitute for existing, non-mission-critical Unix installations, but this has been changing. Though Linux on the desktop is still an anomaly mostly reserved for supergeeks and hobbyists (Microsoft isn't being kicked out yet), the trend in the back office is clearer. In Netcraft's October 2003 Web Server Survey, the open source Web server Apache accounted for 64 percent of all Web servers on the Internet. Google is a very public example of an application built ground up on the Linux platform with great cost advantages.

Recent statistics garnered from Engadget's Web logs show Microsoft's Internet Explorer (IE) representing 57 percent of the browsers visiting the site, down from 95 percent two years ago. Firefox, a popular open source browser from the Mozilla Organization, and Apple's Safari browser (built on open source technology) are rapidly gaining in popularity. They constitute approximately 30 percent of Engadget's traffic!

By most accounts, open source initiatives such as Apache and Mozilla deserve much credit. They're a strong counterbalance to the proprietary approach vendors naturally tend to take. The result is very likely been a much lower level of fragmentation, lock-in, and incompatibilities in the Web site and application space from what we might have seen if vendors were allowed to dominate the market with their own "client-server" solutions.

Companies such as MySQL (database software), JBoss (application server), Scalix (Linux-based email and collaboration platform), RedHat (Linux distributor), and SugarCRM (sales force automation) and open source development efforts such as OpenOffice, GNOME, Mozilla, and many others demonstrate a vibrant, rapidly growing infrastructure is evolving to capitalize on Linux's disruption.

Is the open source movement having an effect on the marketing software, application, and services infrastructure? I believe it is. It's having some effect today, and that's only the beginning. Consider the following two examples:

Loyalty Matrix Inc. (LMI) is a three-year-old San Francisco-based company specializing in customer intelligence. It leverages open source to great advantage. (Disclosure: The author is on LMI's board of directors.) LMI created a customer intelligence platform called the MatrixOptimizer. It can offer its tools and customer intelligence services to clients at highly competitive prices because it doesn't pay steep software and maintenance licenses to Oracle, SAS, and their like.

Sandeep Giri, cofounder and VP of research and development, says, "Our needs for complex data mining and statistical analysis are increasing. The open source R Project for Statistical Computing has proved to be ideal for us. R provides the state-of-the-art tools and technology, and we can tap into R experts from all over the world and let them contribute to build better and more comprehensive models."

LMI's next step will be to contribute by making its own extensions to the R code base and move other components of its platform to open source.

Another example is Uptilt, a five-year-old software company that built its marketing and CRM applications on an Linux platform. Its EmailLabs and SalesCenter solutions were developed with open source software using PHP, MySQL, qmail, and Apache. It runs its hosted email marketing and CRM applications exclusively on low-cost, Intel-based hardware.

According to Dave Sousa, cofounder and CEO of EmailLabs, the company had no choice but to develop the application using "free" software. It has barely any outside funding, so it couldn't spend big bucks on expensive enterprise applications. It was forced to develop a low-cost infrastructure, something it now uses to its advantage when competing in the low-end and mid-market segment against players that used more traditional tools and technologies to develop their email marketing applications.

Open source initiatives initially saw the most success in software market segments that have become commodities. The Apache Web server and Web browsers are good examples. But it's far too simplistic to think of open source as applicable only in commoditized markets. The open source community is ripe with innovation, on both the technology and business model fronts.

If you're considering buying a technology-enabled marketing service or building a new marketing application, you'll probably want to evaluate open-source-based alternatives. They may not yet be mature enough for some large-scale applications, but that's changing fast. Open source is changing the IT rules. I guarantee it will soon change the rules in marketing software and services, too.

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ABOUT THE AUTHOR

Hans-Peter Brøndmo

Hans Peter BrØndmo has spent his career at the intersection of technological innovation and consumer empowerment. He is a successful serial entrepreneur and a recognized thought leader. His latest company, Plum, is a consumer service with big plans to make the Web easier to use. In 1996, he founded pioneering e-mail marketing company Post Communications. His recent book, "The Engaged Customer," is a national bestseller and widely recognized as the bible of e-mail relationship marketing. As a sought-after keynote speaker, he has addressed more than 50 conferences in the past three years, is often featured in national media, and has been invited to testify at two U.S. Senate hearings and an FCC hearing on Internet privacy and spam. Hans Peter is on the board of the online privacy certification and seal program of TRUSTe and several companies. He performed his undergraduate and graduate studies at MIT.

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