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JBoss' Open Source Plans
$10M In Funding, Now What?
March 18, 2004
Fueled by a $10 million injection of investment capital, JBoss plans to keep offering its J2EE application server and other open source software for free.
At the same time, JBoss and partners such as Iona and Unisys are now charging financial institutions, government agencies, and other enterprises for professional services, according to JBoss Founder and CEO Marc Fleury.
Fleury sees JBoss's emerging software/services business model as "complementary" to those of other evolving open source players, particularly Novell. JBoss is also in hiring mode, but only for certain sorts of "professional developers."
Formerly known as JBoss LLC, JBoss was renamed JBoss Inc. after receiving the funds last month. In an interview this week, Fleury said that JBoss is now focusing on deriving further revenues from services, while at the same time building an "incubation' environment for carefully chosen open source projects.
"Our strategy is to grow a federation of open source projects, (but with) the ambition of making a living and paying the bills," Fleury said.
Last summer, JBoss began to add lead developers from open source projects to its payroll. Meanwhile, over the past year or so, JBoss has forged partnerships with ISV/IHVs that include Hewlett-Packard, Iona, Unisys and MySQL, for instance, as well as with systems integrators in Europe. HP is now reselling the JBoss app server in a package that includes Linux and MySQL. Apple is reselling the Jboss server with its "Panther" OS X Server.
Several other partners are giving JBoss entree into new vertical and geographic markets, while also performing "first-line" implementation services. For its part, JBoss then kicks in with "second-line developer-to-developer services" such as consulting and training, Implementation partners are now getting 50 percent of JBoss' take from these second-line services, along with 100 percent of the implementation revenues, Fleury said.
Some analysts are quite optimistic over JBoss's chances of success, partly because J2EE applications are easily portable across operating environments.
"There's a lot of demand right now for J2EE. BEA and IBM are out there with products, but the cost of entry (for customers) is still relatively high. JBoss is coming on strong at the second tier, as is Sun, with its Java Enterprise System," said Pierre Fricke, executive VP, Web Application Infrastructure, for D H Brown Associates.
"Still, J2EE has a very significant learning curve," the analyst added. Fricke pointed to needs for services ranging from J2EE implementation, basic tech support, and maintenance to training and custom application development.
According to a study by another analyst group, BZ Research, adoption of the JBoss server rose from 13.9 percent in 2002 to 26.9 percent in 2003, for the highest percentage growth of any major application server, including BEA WebLogic and IBM WebSphere.
Fleury credited JBoss's new partner Unisys for helping to move JBoss into government agencies. "Iona is helping us to crack open the financial (services) market," he added.
The European integrators, on the other hand, tend to concentrate on localized implementations. "If you speak Dutch, you want to talk first to someone from the Netherlands," he noted.
JBoss's recent hires include Remy Maucherat, lead developer for the Tomcat project; Gavin King, lead developer for Hibernate, a mapping and persistence product; and Bela Ban, lead developer for JGroups, a multicast communications server. JBoss is paying the salaries by reinvesting revenues from the services side, according to Fleury.
"Typically, we will seek the top one to three developers on a project," he said. Stock options are one perq. Developers need to be willing to make long-term commitments. 'These aren't projects that will last three months."
JBoss is especially interested in projects with business potential, which produce software that fits in well with JBoss's evolving open source suite.
"What we're doing is a little more stringent, however, than just sponsoring a project. We like to have a measure of control. Our message is to make things safer," Fleury said. JBoss asks for "control of 75 to 80 of source code," leaving the rest of the process, including bug reporting, to the open source community.
JBoss's recent $10 million funding round was led by Matrix Partners, with participation from Accel Partners. One key individual involved, Matrix General Partner David Skok, was formerly founder and CEO of SilverStream, a software firm bought by Novell several years ago.
"Novell is not a competitor," according to Fleury. Instead, JBoss's approach is "complementary" to Novell's open source stack stategy, he maintained, dubbing Novell's strategy "a very sexy ambition."
"We're a little bit like BEA, without the software (fees). Our revenues are strictly from maintenance," he added. Red Hat, on the other hand, "really just sells the software, without taking accountability for maintenance," Fleury charged.
Acknowledging that JBoss,Inc. is still a very young entity, Fleury gave about 30 percent odds on a future IPO for JBoss, and 30 percent odds on acquisition by another company. "The other (40) percent is, 'Who knows?'"