Oracle, Google and Aras’ 226% Growth

Oracle, Google and Aras’ 226% Growth

I read the following article “Oracle v Google: Why?“. I found it as a very deep analysis of the latest Oracle’s bold move against Google. It is hard to predict how this clash will be resolved and who will be a winner and loser or may be both. Read this article and make your opinion. My hunch is that there is a portion of the game related to Open Source. FOSS became stronger over the last years and drove multiple interest from vendors and user communities. Oracle (but not only) kingdom can be definitely impacted by a variety of Open Source initiatives growing in enterprise organizations these days.

In this context, I found a very interesting news came out of PLM Open Source provider Aras:  Aras Momentum Accelerates Driving 226% Sales Growth in First Half 2010. Here is the quote from Aras’s PR: Aras’s strong performance is driven by the continued growth in worldwide adoption of the Aras Innovator suite, and demonstrates mainstream acceptance of the Aras enterprise open source model and advanced PLM technology by Fortune 500 / Forbes Global 2000 companies.

What is my take? Open Source is definitely a long term target in Oracle lawsuit against Google. This is a beginning of the fight against the Open Source. Google is an easy, but intermediate target. Important.

Best, Oleg
Freebie. Aras didn’t pay me for this post.

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  • Ed A

    Oleg, I suspect most engineers reading a 226% sales growth claim, without any qualifying base, would LOL. Is that in revenue or in unit sales? Is that based on previous period sales of $100K or $100M? (Intuitively, you have to assume it’s much closer to the former than the latter.) There’s no way to validate that 226% (or 26% or 326% or -226%) is accurate. Unverifiable marketing puff, quite useless for determining the success of Aras’ shareware model vis-a-vis real open source or traditional software licensing.

  • beyondplm

    Ed, thanks for your comment. Aras claims 226% sales growth for first half of 2010. In my view, this is normal for a private company to claim their results in such a way. I had a chance to write about Open Source and how it related to the specific business model Aras developed on my blog before http://plmtwine.com/?s=Open+Source. What do you think about Aras model and differences to what you called “real open source”? Best, Oleg

  • Ed A

    Oleg, you’ve often speculated how open source software may challenge traditional PLM suppliers, and in this case offered the Aras press release as support. However, this Aras press release can’t provide any insight into your question because (1) the 226% figure is useless for determining sales success, and (2) Aras doesn’t offer a real open source product in any case.

    226%: Since Aras doesn’t publish any figures, we must make major assumptions to conclude they’re a competitive threat to providers of traditionally-licensed PLM. Are these assumptions realistic? By extrapolating sales volume from Aras’ published download lists and executives’ comments, we can guess that last year’s first half figures are closer to $1M than $10M, and so the press release might mean Aras increased sales by another $1M or $2M. Compare this with, say, PTC, which in the same period increased new Windchill license sales by $36.5M. Now add PTC services & support revenue, which should grow in lockstep. PTC, for one, should not be terribly concerned.

    Real OSS: I think it’s fair to characterize the Aras license model as a hybrid closed-/open-source, and the sales model as shareware (download to use it “as is”, opt-in for support & security patches). The product core, the Innovator framework, is both closed source and required, while the community complement is both open source and optional. Marc Lund, VP of Aras, has said this chart did “a particularly good job of characterizing” the Aras closed/open model: http://news.cnet.com/8301-13505_3-10244853-16.html

    The reason Aras can offer Innovator at all is not because their OSS community developed it cooperatively (a la Linux), but because their original investors spent millions funding a traditionally-licensed PLM software to compete with Agile. As Marc Lund once noted, the original Innovator PLM sold relatively few copies per quarter and Aras needed a new strategy. “Enterprise open source” was born. The original Aras PLM system was easily segmented into the proprietary Innovator framework and community-developed JavaScript and XML text files.

    Innovator is covered by the unusually broad Aras Innovator Agreement 3.0. This includes not just the usual closed-source stuff (“…may not reverse engineer, decompile, or disassemble the Licensed Software…”) but also inserts conditions on the optional service subscription (minimum two year commitment, renewal at list price, 90 day notice to cancel, etc.). Interestingly, the license further stipulates that any plug-ins developed by an Aras partner are incorporated into the Innovator closed license. You won’t find these terms in any open source license agreement.

    According to Aras’ marketing, the Innovator license, when coupled with community plug-ins published under an OSS license, makes Innovator “enterprise open source”. However, Aras is trying to redefine “enterprise open source” as a closed-source core with open source optional components. (Google the term, and you won’t see much acceptance of this definition outside of Aras.)

    To starkly out it: if Aras goes out of business, the Innovator code can’t be maintained by the community, ported to another database, use a different client or run on anything other than Windows. The licensing is closer to Microsoft Excel with community-provided spreadsheets, and pretty far from Linux, JBoss or Eclipse.

    Oleg, if the Aras hybrid license/shareware sales model is a competitive threat to traditional PLM suppliers, that could be an interesting discussion. There are relatively few successful shareware companies, and perhaps Aras has cracked the code.

    But I can’t agree with using them as the benchmark for how OSS may affect the PLM market. Building a “community” around a proprietary framework misses all points in favor of OSS.

    Aras didn’t pay me for this post. 🙂

    Kind regards.

  • beyondplm

    Ed, thanks for your deep inside. I’d like to give you my view on things you raised up.Open Source: There is an increased and notable interest in Open Source Software. I can see several factors that contributed to the OSS trend: Linux success, significant migration towards web development during the past 10 years, mature examples of available software (i.e. Drupal, Lucene/Solr, etc.). During the evaluation of FOSS models for enterprise and PLM, new models cane be created.PLM FOSS: I can see it relatively weak, for the moment. Knowledge barrier, protectiveness of vendors and lock-in data strategies are main reasons why FOSS isn’t broad. Nevertheless, FOSS model has a potential for the future as an alternative way opposite to traditional licensed apps.Aras: In my view, what Aras is doing related to a business model innovation that taking some bits and bytes from FOSS. This is not a clean community based development. The biggest potential for Aras, as I can see it, is to move their protected core to become FOSS and re-use some stable and available FOSS framework. During this process, Aras can leverage all experience in implementation and existing platform they developed. Aras is not a benchmark, since they are not publishing numbers. However, I can see it as a sign of interest in PLM community to accept something different from traditional licensed PLM systems.Just my view. YMMV.Best, Oleg

  • MarcL

    Ed,

    Thanks for the vote of confidence in our ability to ‘crack the code’ 🙂 You make some interesting points, albeit, often misleading. You’re point about the basis of our growth trajectory is valid. It comes off admittedly smaller numbers than PTC. However, that doesn’t detract from the fact that our business is growing rapidly and that adoption is even more pervasive because there are many companies that use the software and don’t pay, especially in emerging economies. As a private company we don’t publish our financials, but we do run our business in a professional manner including conformance to GAAP accounting rules. Those figures represent the continuing acceleration of companies around the world paying for our services.

    The comments about our combining multiple formats and therefore not “real open source” are spoken like a true FOSS zealot… it does make me wonder why if you believe so strongly you don’t open source you’re company’s proprietary PDM product at PDxpert? The comments somehow ring hollow when they’re ‘do as I say, not as I do’.

    As you correctly point out our solutions are open source (OSI licenses, source available, etc). As for our framework, your description is inaccurate. The source is available to subscribers, a defined community of users. The term commonly used for this is Community Source http://en.wikipedia.org/wiki/Community_source. It’s because we combine of these two formats that we use the term ‘enterprise open source’. We may be some of the first to use this language, however, the structure is so well suited for corporate users that I can’t imagine we’ll be the last. And it seems like the analysts agree http://www.the451group.com/report_view/report_view.php?entity_id=63442 (logon needed for this one).

    MarcL

    P.S. That’s Marc “Lind” 😉

  • MarcL

    Oleg – Now, to the real comment about your post. If Oracle’s claims are accurate… and that’s yet to be seen if this ever gets to court… it represents Google being overly cavalier in using open source code for their own purposes… and knowingly trying to side step associated licensing fees by writing their own ‘clean room’ version of the virtual machine (called “Dalvik”)… for more on the details see http://www.betaversion.org/~stefano/linotype/news/110/ – in fact this lawsuit was predicted long before Oracle even bought Sun.

    This isn’t alright in any context… whether proprietary or open source makes no difference. Somehow, I have a feeling that this dispute will simply be settled with a big check, but not before a lot of noise is made by both parties about whose right & wrong.

    It’s an example of the complications that arise out of embedding code from various different open source projects into a single product.

    This is one of the exact reasons that at Aras we DO NOT do this (can read more here http://aras.com/plm/001141)… while we get grief from guys like Ed A (and also from people who are real FOSS advocates), we understand that what global enterprises want is a secure and managed platform where they have source and control (i.e. Community Source) that provides them with flexibility and extensibility they need to drive process innovation in their business (i.e. pure Open Source at enterprise application level).

    We believe this is the format of the future… and based on the rate of adoption it looks like a lot of others do too.

    Just my perspective.

    MarcL

  • Ed A

    I’m sure that every software supplier frequently assesses alternative license & sales models. In a few cases, OSS may offer significant potential. However, PLM does not hold much promise for an OSS success story, as has been proven several times already.

    PLM requires deep technical and domain expertise, but today addresses a rather limited market. In comparison, Linux enjoys a very broad audience while Eclipse was initially funded by IBM and is maintained by software engineers for their own community. The closest parallels I can identify are Sugar CRM (not a conceptually difficult product), and OpenBravo ERP, which has a much wider constituency than PLM, while the closed-source ERP choices may be more hated than loved. Even so, all OSS revenues remain tiny compared to traditionally-licensed software.

    Market acceptance of PLM OSS seems more related to the “free, as in beer” idea, and not because OSS will provide a superior PLM experience. OSS projects must rely on the community for development resources, and will necessarily be limited to that community’s skills, time and motivation. In a narrow market like PLM, only well-funded, deeply-knowledgeable developers can explore innovative GUIs, assess different databases and operating systems, and experiment with radical data management approaches. OSS PLM will unavoidably lag better-funded alternatives.

    Commercial OSS (“COSS”) like SugarCRM is often provided in two fully-functional versions: feature-light and free; or feature-rich and paid. The supplier’s incentive is to provide a good quality experience in both versions, with the hope you’ll want to pay for the richer features.

    The Aras closed-core/open-complement model poses unique problems for both supplier and customer. In the CC/OC scheme, everyone downloads the same core and plug-ins, but only the service subscribers get bug fixes and security patches. The quality and stability of the code – not the features – is the differentiator.

    Obviously, neither the COSS nor CC/OC supplier can survive if non-subscribers enjoy the same software as paying subscribers. Clearly, the COSS guy shouldn’t add great new features to the free version. More seriously, the CC/OC vendor must avoid publishing core enhancements (including bug fixes and security patches), since each new release re-aligns the non-subscribers with the subscribers.

    I’m sure the Innovator framework can (slowly) evolve despite this inherent conflict. However, the longer the conflict remains, the more difficult it will be to offer a competitive feature set. I agree with you that Aras will ultimately become real OSS, but only because there’s no other alternative to resolving this conflict.

    Kind regards.

  • Ed A

    Marc, I apologize for misspelling your name.

    A closer reading of my comments shows I’m an OSS doubter, not zealot. Some of our engineering staff has worked on real OSS, so if we thought OSS PLM had more than limited financial viability, we’d already be there.

    But my point was that I have even more doubts about Aras’ hybrid model than about OSS. As I noted, (1) there are some inherent condradictions in your model (whatever you choose to call it), (2) that these tensions don’t exist in either OSS or in traditional closed source licensing models, and for that reason (3) I doubt few will choose follow the “Aras model”.

    Frankly, I love that you want to defend the Innovator Agreement as “open source”, it’s great fun. Let’s do this again next year.

    Kind regards.

  • beyondplm

    Ed, I agree with your identification of challenges in providing of free vs. paid/subscribed versions for commercials OSS. This is different from Linux is similar systems. However, the knowledge barrier and relatively small market is the top inhibitor. In my view, OSS stories are all different and there is no main-road-scenario how to build an open source project. In many cases OSS was funded by commercial companies (i.e. IBM, HP etc.). Aras story contains a sequence of events, and maybe these events can generate PLM OSS success. I don’t think we have answers, for the moment. The real challenge for Aras is OSS foundation and community building. In parallel, I can see Aras pseudo-OSS model as something that can generate future interest in PLM OSS projects. Just my opinion, of course… Best, Oleg

  • beyondplm

    Marc, thanks for your insight and examples. I think, the best protector of any OSS model (without going in details of “real OOS” and “Community Source”) is a stable and growing community. It can defend OSS project in case of turbulence. It will be interesting to see how Oracle/Google’s case will be closed and what will be the impact on Java and OSS communities. Best, Oleg

  • Nikkipolya

    Oleg – Have you seen the source code for Aras? I’ve looked hard for it all over the internet and had no luck with finding the source code for Aras. You have any idea?

  • beyondplm

    As far as I know there are two groups of modules in Aras – core and applications. This is part of Aras’ enterprise open source. Applications source code developed as part of Aras community is available. Core module source code is available only when you have a specific subscription level.