|The only publication dedicated to OSS Volume 1, Issue 1 - May 2004|
OSS Suffers its Adolescence
By Edward J. Finegold
The OSS market reveals its immaturity in ghastly ways. Having only emerged in 1996 - at least in its current form - OSS is a young market and lacks many of the forces necessary to bring it to order. More often than not, outsiders coming into OSS from more established industries are surprised at how inconsistent pricing is, at the difficulties even in simple customer-vendor interactions, and at how unnecessarily slow, lengthy and political OSS sales cycles can be. Further, from customers' perspectives the majority of OSS vendors still carry a reputation for over-promising and under-delivering, and OSS is still viewed largely as a cost center. All of these factors - and more - result in a market that is suffering its adolescence while reaping that which it has sown.
OSS vendors' customers - both start up and established service providers - in an overwhelming number of cases paid too much for OSS and received too little. They saw millions of dollars take them into dead-end projects, products and architectures. Right or wrong, they blame much of it on vendors for overstating their capabilities and failing to deliver capable solutions. Remember that reputations - even when embellished - are rooted in truth. Now that the leverage has changed and OSS is a buyer's market, all vendors are paying for their colleagues' past, and continuing, misdeeds with grinding sales cycles that often result in unfavorable contracts and declining pricing. And in the meantime, many vendors continue to offer capabilities they can sell, but have not built and cannot reliably deliver.
From an investment perspective, there is relatively little interest among venture firms to invest new money in OSS. Some vendors have gained investments recently, but many of the firms that were once active in OSS have lost their appetite for the market. Many venture investors are hoping for their investments to pay off modestly, or to execute an exit strategy that is not entirely unfavorable. When venture investors become disinterested, and customers lend little credibility to vendor's promises, it becomes very difficult for innovative young companies to introduce new technology into a market that needs it desperately. It also means that publicly held OSS firms are likely to continue suffering poor valuations from disinterested investors.
Discovery: Today's Great Over-Promise
© 2004, All information contained herein is the sole property of Pipeline Publishing, LLC. Pipeline Publishing LLC reserves all rights and privileges regarding the use of this information. Any unauthorized use, such as copying, modifying, or reprinting, will be prosecuted under the fullest extent under the governing law.