I met both Aras and MindTouch last year. They are interesting companies because their business model is open source but their platform is the Microsoft stack. Oxymoronic?  Surprisingly, no. 

I met Mark Lind, VP Marketing of Aras, last May at Software 2007. I was intrigued by Aras’s commitment to open sourcing their high end enterprise products built on the Microsoft stack.  Our team (the Emerging Business Team – works with startups and VCs) had written a success story about Aras earlier in the year because of its SaaS delivery model.  Aras chose open source because they believe that is the way all software will go. They chose Microsoft because they could see their customers moving to Microsoft in the backoffice for server applications.

From a blog by Paula Rooney, ZD Net, November 2007 – talking about a speech by Mark Lind in Boston:

But why would any commercially successful ISV take this path [moving to an open source model], especially one that competes against big companies such as Oracle and SAP?

Faster innovation, for one. Aras, for instance, recently became one of only 10 ISVs to gain full certification for its software running on Microsoft’s forthcoming Windows Server 2008 and SQL Server 2008, a feat which would not have been possible without the open source development model, Lind claims. Those Microsoft products will ship in February.

In 2005, Aras saw two seemingly disparate market trends emerging and the possibility of carving out a differentiated business model from its competitors.

 “At one point, we were supporting J2EE on Websphere and we were multi-platform. But we were seeing clear indicators that customers were beginning to make a pervasive corporate commitment to Microsoft in the backoffice for server apps,” he said.

At the same time, Aras was seeing increased customer interest – especially its military customers — in open source because of its licensing and deployment flexibility and better control over IT costs. “In open source, we saw undeniable momentum and increasing corporate appeal for open source as a format..."

And, insight into the value of a subscription business model (charging for services)—which I experienced first-hand while VP marketing at McAfee (it’s marvelous having 50% of your revenue roll-in automatically at the start of every month!):

“The subscription model has a beautiful cumulative effect; it is very predictable. Its very profitable and highly scalable. It just keeps growing and has very nice deferred revenues stream. You know you have numbers in bank before you start the quarter. The investors like this model. ”

In 2007 I also met Steve Bjorg at a Red Herring conference. Steve is  founder and CTO of MindTouch, makers of Deki Wiki, also using an open source model.  MindTouch’s CEO says in a case study:
"With .NET, MindTouch is out-innovating the competition and delivering a better solution to the Open Source community."
—Aaron Fulkerson, Cofounder and CEO, MindTouch

These two companies both have an unusual perspective on open source and using Microsoft’s stack. Will it become more common?

You can read more about MindTouch, Aras and Microsoft’s involvement with Open Source below.

Aras Success Story

ComputerWorld article on Aras:  “How one vendor learned to stop worrying (about open source) and love Microsoft”

MindTouch Video Interview

MindTouch Case Study

Microsoft Open Source Resources

Lynda Ting: Open Source—What are the Driving Factors?

Weaving in Open Source Code

Microsoft Open Source Community and Partnership