How time flies.
It has been six years since I wrote about Network management’s “new wave” and thought it would be interesting to go back and see what has happened. We are now at the outer envelope of the VC funding cycle so things should be sorting themselves out one way or another.
The “new wave” was Hyperic, Zenoss and Groundwork Open Source VC funded, open source network management companies.
Open source wasn’t new to the network management scene in 2007, there had been well known projects, like Nagios, MRTG and OpenNMS, around for a number of years prior to that.
What was different was combining open source licensing with big wads of venture capital. A total of $79.2M has been invested into the “new wave” over the last 9 years.
What has been the effect on network management software of the combinaton of open source licensing and oodles of venture capital?
Current state of play
My first impression is that not much has changed. Let’s dig a little deeper and see.
Hyperic was founded in 2004 and purchased by SpringSource in 2009 after having raised a total of $9.9M in two rounds of fund raising.
Zenoss was founded in 2005 and has raised a total of $40.8M in three rounds over the last eight years, the most recent being in September 2012 when Zenoss raised a further $25M.
Groundwork Open Source was founded in 2004 and has raised a total of $28.5M in four rounds, the most recent being in October 2009 when Groundwork raised $5M.
Are they still open
Looks like Groundwork isn’t that open. Groundwork Monitor Core product is restricted to 50 devices. The license doesn’t look at all open.
The open source moniker has gone. Hard to tell that, say Zenoss for instance, is actually open source by looking at their home page. If you were an alien just off the mother ship and only had the home page to look at, you wouldn’t know that the core product is open source.
Effects upon closed source competitors
I suggested that the “new wave” would have the effect of opening up the “big 4″. I can see no evidence of this at all. I also thought that the “big 4″ would be good candidates to buy the “new wave” and that hasn’t happened either.
Effects upon consumers
The one big winner has been users. Open source network management software ten years ago could be hard work with no proper packaging and woeful documentation. Now, there are some really nice options that are much easier to work with. There are also large communities as well to offer support and guidance where necessary.
Conclusion
I find it hard to believe that too many people would consider the “new wave” experiment to be a major success story. I’m not saying it has failed, but venture capitalists invest money to win big, and the investment hasn’t won big. It probably didn’t help that the financial meltdown happened.
There are a number of winners, not least among the many users who have high quality software to use at minimal cost.
I doubt that venture capitalists will be rushing to find their cheque books to fund another round of open source network management companies.
Had the same wave of money been invested in closed source companies doing the same thing I’d bet that they would have been more successful in strictly money terms at least. If a user jumps on board your ecosystem for the sole reason they can get your core offering for free, is that user going to be worth the same in the long term as a customer who literally bought into the ecosystem? My expectation is that they are not.
I am not saying that open source businesses aren’t perfectly viable businesses. It just means they may not be as profitable as an equivalent closed source business. And money in the end of the day is what venture capitalists are interested in.
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