SugarCRM CEO Departs - Open Source SaaS Not Immune to Recession
SugarCRM (MGI-X:NR; pvt.), a leader in open source CRM software, announced on Thursday, May 7th, 2009 that its CEO John Roberts was leaving the business effective immediately. As MGI Research discussed in a note published on January 7, 2009, titled, "2009 Outlook for Open Source: Do or Die Time", the halcyon days of easy capital and low demand for near-term profitability for venture-backed open source companies were likely to come to an end this year. The implications of the abrupt CEO change underscore two realities that should replace the rose-colored lenses often applied to the open source market, namely 1) that the recession will benefit open source software (OSS), and 2) downloads are more important than bottomline profits. CEOs of OSS companies should take note of this event - it could be the first of many replacements this year. Investors should note that the success of Linux, and namely RedHat (MGI-X:840; NYSE:RHT) is not transitive - there are plenty of lackluster OSS results, and the OSS business model has not proven to be more efficient or even as profitable, as evidenced by RHT's and Novell's mediocre MGI-X scores.
