How can something given away for free end up being the world's largest industry of its type? Well, according to open source content management vendor Alfresco CEO John Powell the value of open source is not what it generates, but what it saves, and that's worth billions.
"Open source is now the world's largest software industry," Powell declared during his keynote address as the first Alfresco community conference in Sydney, Australia.
"You measure it in the savings people are making in licence fees," he said. "Licence fees don't add any value to the product and are purely a transfer of wealth from consumers to software vendors."
By that rationale, the open source software industry is worth $60 billion - not from sales but from what customers have saved by choosing an open source product over a proprietary one with hefty licence fees attached.
"Open source itself is powered by people and it is allowing software to be deployed in a way that hasn't been possible before, and what that is doing is commoditizing the industry," Powell said. "If the database industry is worth $10 billion, the open source database industry might be worth $1 billion and the nine billion left over stays with the customer to help make the product work."
Powell boldly remarked that open source is not just software, it's "the most profound change in the computer industry since its inception".
"In the last couple of years it has moved from being the province of geeky individuals to becoming mainstream," he said. "Sun bought MySQL, Yahoo bought Zimbra, and Citrix bought XenSource for $500 million - a company with less than $1 million in revenues showing open source is about more than the traditional revenues of proprietary software companies."
Powell also talked up the success of the Alfresco open source content management system, saying the product has been downloaded over a million times and is running on some 30,000 production servers.
"We now have over 500 enterprise customers and to acquire this customer base in the traditional way would have been virtually impossible," he said. "We've gained some of the largest enterprises in the world. Governments love alfresco because of the economic benefit. If you buy proprietary the economic benefit directly goes to the vendor because the only people that can change the binaries of the code is the vendor. With open source local companies can support the product which helps the local economy."
Locally, Alfresco claims to have chalked up 1500 installations of its community edition in addition to a number of paying enterprise edition customers it has acquired with Sydney-based partner Lateral Minds, including Mincom, Sensis, ANU, and Leighton Contractors.
"Alfresco is the fastest, most scalable CMS on the planet," Powell said. "A large retail bank is using Alfresco for loading 80 faxes per second and an unnamed US government agency - one that takes pictures of eyeballs at airports - is loading 200 million objects into Alfresco."
Powell also digressed into a lengthy discourse as to why classical enterprise content management is the wrong vision that was "artificially constructed by content management vendors in the 90s to sell more product".
"ECM implies silos of information," he said. "People want transparency and trust, and rather than thinking about ECM as a product, think about content services delivered to users on demand in the application of their choice. It should be available to everyone. Open source is driving this change and so is the Web 2.0 revolution. The open source model is built on the Internet and collaboration. ECM leaves the boundaries of the enterprise and can be used through Facebook or Google."
Powell touted Alfresco as "the open source alternative to Microsoft's SharePoint", saying it is the only software distribution model that will level the playing field.
"Many organizations are deploying SharePoint because it's included in the Microsoft distribution, and suddenly I need SQL Server, SharePoint Portal, and I'm locked in the Windows platform and you must pay licence fees," he said.
"We don't care what the operating systems is, what the database is, whether it's Java or .Net, so there is no hidden lock in and you won't end up in a position you will regret."