Everybody loves free. It is the best marketing term one could use. Once you say “FREE” the people come running. Free makes you very popular. Whether you are a politician offering something for free, or a company providing free stuff, you gain instant popularity.
Xeround is shutting down their MySQL Database as a Service
(DBaaS) because their free instances, while popular, simply did not convert
into sufficient paid instances to support the company. While I am sad to see them
fail, because I appreciate the hard work required to deliver database
technology, this announcement was not unexpected.
My company was at Percona Live, the MySQL conference, and I
had some additional conversations along these same lines. One previously closed
source company announced that they were open sourcing their code, it was a very
popular announcement. A keynote speaker mentioned it and the crowd clapped
excitedly. Was it because they couldn’t wait to edit the code? Probably not. Was
it because now the code would evolve faster? Probably not, since it is very
low-level and niche oriented, and there will be few committers. No, I think it
was the excitement of “free”. The company was excited about a 49X increase in
web traffic, but had no idea what the impact would be on actual revenues.
I spoke with another company, also a low-level and niche
product, and they have been open source from the start. I asked about their
revenues, they are essentially non-existent. Bottom line is that the plan was
for them to make money on services…well Percona, Pythian, SkySQL and others
have the customer relationships and they scoop up all of the consulting and
support revenue while this company makes bupkis. I feel for them.
I had a friend tell me that ScaleDB should open source our
code to get more customers. Yes open source gets you a lot of free users…not
customers. It is a hard path to sell your first 10...25…50…etc. customers, but
the revenue from those customers fuels additional development and makes you a
fountain of technology. Open source and free are great for getting big quickly
and getting acquired, but it seems that if the acquisition doesn’t happen, then
you can quickly run out of money using this model (see Xeround).
I realize that this is an unpopular position. I realize that
everybody loves free. I realize that open source has additional advantages (no
lock-in, rapid development, etc.), but in my opinion, open source works in only
two scenarios: (1) where the absolute volume is huge, creating a funnel for
conversion (e.g. Linux); (2) where you need to unseat an entrenched competitor and
you have other sources of revenue (e.g. OpenStack).
I look forward to your comments. We also look forward to working with Xeround customers who are looking for another solution.