Software analysts at Deutsche Bank (AG) recently sent around a list of 2016 predictions, and one caught my eye: “Open source keeps eating the world.” Open source is more-or-less free software that developers share with each other for the good of nerdmanity.
Open-source software has been around for years. But the difference now, in the words of the Deutsche Bank seers, is that “there are open source rivals for almost every major infrastructure and data management software market.”
The analysts published an accompanying chart that shows that for every important category of business software produced by the likes of Oracle (ORCL), VMware (VMW), Microsoft (MSFT), and others there is a corresponding open-source alternative. What’s more, the analysts spoke to corporate chief information officers and reported a newfound willingness to try this newfangled software. “This accelerates the onslaught of price deflation across the entire enterprise software industry, pressuring top-line growth rates as well as margins,” they wrote to clients.
What’s happening here is revolutionary. Even as Amazon (AMZN), Microsoft, Google (GOOG) and a few others are riding a rocket-ship trend of providing software services on the Internet, programmers are cobbling together industrial-grade programs that big companies are using.
It is a classic strategic inflection point that students of the great, former Intel CEO Andy Grove will understand can make or break not just companies, but industries. For software users and developers, it’s an exciting moment. For incumbent suppliers, it must be terrifying.
This article first appeared in the daily Fortune newsletter Data Sheet. Subscribe here for a daily dose of analysis from Adam Lashinsky and a curation of the day’s technology news from Heather Clancy.