How one vendor learned to love Microsoft

IDG News Service — Thu, 08 May 2008 07:54:18 -0700

Aras Corp. was a small, struggling software maker that stirred up a hornet's nest early last year, when it made a pair of seemingly contradictory decisions.

First, the Andover, Mass.-based company made its expensive -- we're talking up to a million dollars for a single license -- product life-cycle management (PLM) software available on a free and open-source basis.

Second, rather than trying to curry favor with the mainstream open-source community by making even a vague commitment to port its software to Linux, Aras said outright that it would continue developing only for Windows. And instead of distributing its wares through a mechanism such as the GNU General Public License, the company decided to use one of Microsoft's so-called shared-source licenses, which at the time had yet to be accepted by the Open Source Initiative (OSI) as legitimate open-source licenses.

The reaction, unsurprisingly, wasn't favorable. For example, Dave Rosenberg , an open-source executive who at the time was a columnist for Computerworld's sister publication Infoworld , described Aras as a "shill" for Microsoft's efforts to burnish its open-source image. Aras denied that, although the company later disclosed that it had received an "executive sponsorship" from Microsoft's open-source group.

"We knew this had the potential to be inflammatory," said Marc Lind, vice president of marketing at Aras, in an interview last week.

Plenty of other open-source proponents were also were running their software on Windows, though perhaps not such a bold fashion as Aras did. That includes vendors such as SugarCRM Inc., Terracotta Inc. and MySQL AB , plus OpenOffice.org and Mozilla Corp. with its Firefox browser. Even Linux standard-bearer Red Hat Inc. gets about half of the sales for its JBoss application server from Windows users.

Thanks partly to Microsoft's financial support, Aras held on, and the controversy around it was short-lived ? an indicator, perhaps, of how much open source has been transformed for many companies from a grass-roots social movement into simply a more agile way of bringing software to market.

Although Aras recorded less than $20 million in sales last year, the company's enterprise subscriptions ? now its only revenue source ? grew 180% last year. That number of new subscriptions was "over plan," CEO Peter Schroer said. "Our investors are very happy with that." Meanwhile, the company's expenses became a fraction of what they were in the past, thanks to Ara dumping all of its high-paid salesmen.

The total of 10,000 downloads reported by Aras for last year won't impress anyone familiar with Linux or MySQL stats. But Schroer said that downloaders of his company's software are much more likely to use it in production and eventually pay Aras for it.

To distribute its source code, Aras is using the OSI-approved Microsoft Public License, one of the few open-source licenses that don't require users to contribute their source code changes back to a vendor or open-source community. But why not choose the more-respected BSD license, which also doesn't have a source code contribution requirement.

"We knew what we were looking for, and Microsoft had it," Schroer said. "Our whole strategy is fairly well-aligned with Microsoft, so we thought we might as well use their license, too."

And despite the traditional conservatism of its large manufacturing customers, Aras has been getting new code back. Currently, there are 30 projects listed on the company's open-source community site , which is hosted by Microsoft. Major code contributors include Motorola Corp., the U.S. Army, Rolls-Royce PLC, Delphi Corp., Ingersoll-Rand Co. and Lockheed-Martin Corp. All of their code has been incorporated into Version 9 of Aras' Innovator software.

And while Aras might be an open-source heretic in some ways, it's a total convert in others.

For example, the company vows to maintain a Red Hat-like model of making all of its technology features available free of charge, and to not switch to a two-tier model that would let it charge for access to some features and their source code. Some other vendors are looking at the latter approach, most notably Sun Microsystems Inc. with the MySQL database, although Sun this week backed off an initial plan to charge for some upcoming data backup features.

The stand taken by Aras is a brave one, said Charles King , an analyst at Pund-It Inc. "Giving it away for free and hoping to make it up with services is a notoriously difficult way to succeed," said King, who was more bullish about the decision by Aras to remain Windows-only. "You go where the business is, and there are a lot more business opportunities for Windows than Linux," he noted.

Schroer said he has offered advice about going open source to other small, closed-source vendors, although none of them have made the leap thus far. But he thinks that all software vendors ? even the large ones that depend heavily on license revenues ? will have to make the switch eventually.

"Pick a date in the future, but all software vendors will be using this model at some point," Schroer said. "When you are literally spending as much money on selling as the license revenue [you bring in], it becomes a hostile way of selling. And it's not a healthy relationship anymore."

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How one vendor learned to love Microsoft