Given time and the efforts of some very bright and altruistic people, an open source solution can be highly competitive. The good news for Sugar and its customers is that they have been down the curve with their open source solution. As open source rises in prominence, established players face painful changes, but for new entrants like Sugar, there is little or no transition.

SugarCon, the SugarCRM user meeting held in San Francisco a couple of weeks ago, did some important things for Sugar. It was a coming out party of sorts for a company with a distinct business model and strategy, namely open source. It was also validation of that strategy and, for many, a new realization of what open source means.

In my discussions with CEO Larry Augustin and CTO and cofounder Clint Oram, I got a new sense of how pervasive open source really is in the software marketplace. Many of us might have gotten a glimpse of open source as an industry force reading Don Tapscott’s book Wikinomics, in which he discussed the Linux operating system and the Apache Web server products. Each product is referenced as an open source project in which hundreds of professional developers contribute ideas and code to build and improve product features at no cost.

But our attention might have drifted after Wikinomics, leaving us with an outdated idea that open source is fine for things way down in the stack but not so important for higher-tier products that drive today’s technologies. That would be a mistake.

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