Monday, January 28, 2008

Another open source exit

Today another open source startup, Trolltech, announced its acquisition by Nokia. ts acquisition by Nokia. Interestingly, Trolltech had already IPO'd in 2006. The purchase price of €105 million is a tiny premium to the current stock price, but is relatively small amount for such an entrenched open source company. This suggests that the Qt middleware is being valued as a development tool rather than an application with significant remaining growth.

This means that all three of the companies that invented the dual license model have been acquired: Sleepycat (by Oracle), MySQL (by Sun) and now Trolltech. All three companies were profiled by Mikko Välimäki in his 2003 paper that introduced most of the world to the dual-license concept.

As with MySQL, I think this says more about the state of the software industry — unlike 30 or 20 or even 10 years ago, it’s nearly impossible to build a new stand-alone software company. Instead, companies need to be inhaled into the bowels of an established IT giant to survive. (Perhaps this suggests limits as to the open innovation paradigm?)

The timing of the acquisition has a small irony for me, as I was quoted yesterday in the San Diego Union-Tribune about how rare IPOs are in the San Diego telecom industry. (I sat down Monday and found 5-8 public companies left). The interview was done last summer, and recently I’ve come to conclude that because the ICT sector is maturing and entry barriers are rising, that very few large standalone ICT firms are being created — most will remain niche players, or need to be acquired to achieve economies of scope.

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