• Print

Economic impact of open source on small business

Results from an in-depth study of open source's role in small and medium businesses.

A few months back, Tim O’Reilly and Hari Ravichandran, founder and CEO of Endurance International Group (EIG), had a discussion about the web hosting business. They talked specifically about how much of Hari’s success had been enabled by open source software. But Hari wasn’t just telling his success story to Tim, but rather was more interested in finding ways to give back to the communities that made his success possible. The two agreed that both companies would work together to produce a report making clear just how much of a role open source software plays in the hosting industry, and by extension, in enabling the web presence of millions of small businesses.

We hope you will read this free report while thinking about all the open source projects, teams and communities that have contributed to the economic succes of small businesses or local governments, yet it’s hard to measure their true economic impact. We combed through mountains of data, built economic models, surveyed customers and had discussions with small and medium businesses (SMB) to pull together a fairly broad-reaching dataset on which to base our study. The results are what you will find in this report.

Here are a few of the findings we derived from Bluehost data (an EIG company) and follow-on research:

  • 60% of web hosting usage is by SMBs, 71% if you include non-profits. Only 22% of hosted sites are for personal use.
  • WordPress is a far more important open source product than most people give it credit for. In the SMB hosting market, it is as widely used as MySQL and PHP, far ahead of Joomla and Drupal, the other leading content management systems.
  • Languages commonly used by high-tech startups, such as Ruby and Python, have little usage in the SMB hosting market, which is dominated by PHP for server-side scripting and JavaScript for client-side scripting.
  • Open source hosting alternatives have at least a 2:1 cost advantage relative to proprietary solutions.

Given that SMBs are widely thought to generate as much as 50% of GDP, the productivity gains to the economy as a whole that can be attributed to open source software are significant. The most important open source programs contributing to this expansion of opportunity for small businesses include Linux, Apache, MySQL, PHP, JavaScript, and WordPress. The developers of these open source projects and the communities that support them are truly unsung heroes of the economy!


Tim O’Reilly hosted a discussion at OSCON 2012 to examine the report’s findings. He was joined by Dan Handy, CEO of Bluehost; John Mone, EVP Technology at Endurance International Group; Roger Magoulas, Director of Market Research at O’Reilly; and Mike Hendrickson, VP of Content Strategy at O’Reilly. The following video contains the full discussion:

Related:

tags: , , , ,