A new trend among enterprises to make open source software a priority in their criteria for new infrastructure and application use will impact venture capital investments, startups, established IT vendors and cloud providers, writes Wikibon Lead Cloud Analyst Brian Gracely in “Open Source Software: Reshaping Vendor Business Models” on Wikibon.com. In this second part of Gracely’s examination of the impacts of open source, he looks at all four of these aspects of the vendor ecosystem.

Open source companies, with the exception of Red Hat Inc., have struggled to achieve profitability, making venture capitalists less willing to invest in them. Open source-centric startups that already have achieved their initial funding now must find a way to monetize the business as they approach new funding rounds. An increasing number of established IT providers are becoming heavily involved in open source, while their proprietary solutions face increasing pricing pressure from open source competition.

Vendors are changing their business models, building new business models combining open source and cloud services. This creates several challenges for vendors that Gracely discusses in this Professional Alert.  But the new approach may also provide a pathway for software providers in traditional markets that are being eroded by open source as well as in new ones such as big data where the core technology is open source.

The full alert, available to Wikibon Premium subscribers, discusses these and related issues in detail and looks at the strategies of leading vendors.