Europe leads the world in open source software adoption and development. Open source solutions have greater market share in Europe than the rest of the world, both on the server and the desktop, and more open source developers live in Europe than on any other continent including North America. Only 18% of the developers on SourceForge live in the United States, while 33% live in the European Union (EU). European firms that contribute to open source projects account for about 565,000 jobs and have combined annual revenues of over €260 billion ($350 billion).
Angel investor Larry Augustin said "Europe and most of the rest of the world is ahead of the US in Open Source adoption" in an often cited Weblog entry, and a report from Forrester Research showed that France and Germany lead in open source adoption.Illustration 1: Adoption statistics for FL/OSS in the EUGiven that open source offers companies and organizations a highly cost-effective route into international markets, Europe is a land of milk and honey due to its high adoption of open source software. This article outlines the differences between the US and Europe in order to help open source software vendors develop strategies to bridge the gap and begin testing and developing new markets and communities within Europe. The main focus of this article is on providing facts and sharing experiences that allow one to understand the European IT market. We'll outline the implications for marketing, communications, and community building within Europe in another article. Entrepreneurial and legal aspects are covered only as they provide valuable background information that can help one understand the implications for the primary topic of interest. In detail, this article concentrates on:
The information covered in this article applies to member states of the European Union as well as closely associated states such as Norway and Switzerland. En passant, we'll also take a quick look at Eastern European states.
Europe is the largest market in the world. Taken as a whole, the European Union has a GDP of over $18 trillion USD, $4 trillion more than the US. The EU's GDP accounts for 30% of world production, and the population of about 500 million people is over 60% larger than the US.
Illustration 2: GDP of EU and USA
RedHat published an open source activity map that indicates the hot spots of global open source software development. Europe is one of the most active regions, as are the US, Brazil, China, Australia, Japan, and South Africa.
Illustration 3: RedHat's Open Source Activity MapThe breakdown of market share by country for Firefox also helps illustrate how Europe compares to the US in terms of open source software adoption. Firefox serves as a good benchmark because its actual distribution can be measured quite reliably by tracking access to web sites through Firefox. Contrast this with OpenOffice, where the number of downloads does not directly translate into the number of installations because one could download OpenOffice once and install it on many desktops.As shown in the chart below, Firefox usage is clearly higher in France and Germany than the US, although all three countries are above the worldwide adoption average.Illustration 4: Average Firefox market share Nov 08 to Mar 09Looking at the worldwide distribution of contributors and users to open source projects on Ohloh, one gets the impression that there are in general more of them in Europe compared to the US. For example, the activity map for Debian shows significantly more contributors in Europe.Illustration 5: Debian contributorsHowever, we have to be careful about interpreting data on these maps, as they display only a fraction of only the contributors registered on Ohloh. Nevertheless, they indicate rough trends.Illustration 6: TYPO3 vs. Drupal usersComparing the distribution of TYPO3 and Drupal users on Ohloh, it's clear that TYPO3 has a stronger adoption in Europe than Drupal. On the other hand, Drupal has equally strong adoption rates in the US and Europe, while TYPO3 lacks adoption in the US. It would be out of the scope of this article to discuss the reasons for the diverging uptake, but vendors should note that when an abundance of open source alternatives has emerged (as is the case in the CMS market) regional preferences can develop, with certain regions favoring one open source system over the other.To get a more complete picture of open source software adoption in Europe, we assembled the following map based on reports, news coverage, Matt Aslett's tour of Europe, and the experience of the InitMarketing team. It is far from scientifically correct, but it nonetheless serves as a good start.Illustration 7: Open source software adoption in EuropeNote that European countries with lower GDP (mostly those in Eastern Europe) tend to have lower open source software adoption rates, although one of the major political arguments in favor of open source software is that it can help build a strong local IT economy with less initial investment. Some of the likely reasons for this disparity include:
In the above-mentioned Weblog post, Larry Augustin cites avoiding vendor lock-in as the primary reason behind open source software adoption in Europe. However, a study conducted in Germany by the major IT publisher Heise actually found that users adopt free and open source software (FOSS) to lower licensing costs, and less so to avoid vendor lock-in. Similarly, a Spanish report indicates that saving on software licenses is the main advantage of open source usage by Spanish public administrations.
Given the lack of similar reports (or at least the difficulty in finding them) for other European countries, Larry's assumption might still be valid for most European countries excluding Germany and Spain. On the other hand, Germany and Spain are at the forefront of open source software adoption in Europe, and saving on software licenses might also be (or soon become) the primary reason driving open source usage in all other European countries.It's worth noting here the German study revealed that saving on licensing costs is more important to those adopting open source software for the first time. The longer someone uses FOSS, the more important the "freedom" aspects become — namely open standards, vendor independence, and the free and open source software philosophy. Hence, open source vendors need to approach potential customers in Europe differently depending on how open source savvy these potentials are.
The title of this section says it all: there is no single European society, but rather many different European societies, cultures, and languages, all united in diversity. A classic cartoon entitled The Perfect European summarizes the diversity in a humorous and ironic way, with much truth.
Illustration 8: Cartoon, The Perfect EuropeanEspecially direct sales efforts in Europe must take into account important differences in communication. For example, German business persons typically like to do the work first and have fun later, while French business persons enjoy sharing a nice conversation before the work starts. However, the proximity of these diverse cultures adds yet another dimension. Most people in the European software business have traveled abroad for business trips or during university, and these experiences allow them to reflect upon their own culture's communication style and take into account the subtle differences.This is where things get complicated, yet funny. A French business person might suggest to a German that they complete the work before engaging in small talk in order to conform to the German's cultural expectations. That might confuse the German, who expected the Frenchman to want to schmooze first.
Cultural and geographic differences significantly shape the IT market in the EU, so understanding local language and culture is often a prerequisite to doing business with local firms. However, this is complicated by the fact that there are over 20 languages spoken across the EU, and in some cases there are language differences between regions in the same country.
Comparing the Information and Communication Technology (ICT) output in 2008 to the distribution of "mother tongue" languages in the EU, we can see that the European ICT market is actually quite fractured. For example, the most widespread mother tongue is German, which is the primary language spoken by 18% of EU inhabitants (spread amongst Germany, Austria, Switzerland, and a few small regions). However, the countries and regions where German is the mother tongue account for roughly 25% of ICT output.Illustration 9: ICT output in EU per language in 2008The good news for US-based vendors and communities is that English is the most widely-spoken language throughout much of Europe. 51% of EU inhabitants can carry on a conversation in English, either as their mother tongue, a second language, or a foreign language. Next in line are German and French, which are spoken in some capacity by 32% and 26% of the EU population, respectively.However, it would be false to assume that communicating in English, German and perhaps French will enable Americans to cover the entire European market. Some regions have a strong bias against particular languages, such as the Flemish community in Belgium where people speak Dutch and might not be amused if you tried to sell software in French. Similarly, some people in France will call you names if you speak in German. Luckily, most of these resentments are only a problem with older generations.The simple truth for open source vendors trying to get a foothold in the European market is that English should be fine as long as the focus is only on building an initial developer community and partner network. Once you decide to build a growing business in Europe, contracts written in English will be a show-stopper in countries where English is not the mother tongue — especially so to small and mid-sized enterprises.
The cultural diversity of Europe also impacts the type of business and community engagements you can find in various regions. In short, Europe is not a single market for open source. Open source adoption seems to be driven by commercial engagements in Northern Europe, while Southern and Eastern Europe is characterized by community-driven engagements.
Concerning the sales channel, Northern Europe seems to prefer direct sales — especially the UK. There, customers want to buy the product and less so services. At least in Germany, SMEs are fine with having system integrators implement projects, but large enterprises want to include the open source vendor in negotiations and have the vendor guarantee the success of the project, recommend system integrators, and perhaps even lead the project. In Italy and Spain, economic buyers might outright reject vendors and commercial editions of products because open source software is supposed to be available at no cost. There, the market prefers to buy services from system integrators.For open source software vendors, this means that commercial whole-product offerings and direct sales tactics could well work in Northern European countries, while in Southern and Eastern Europe they should leverage community development tactics and build a partner network. There is also the mushy middle of Mid Europe, such as Germany, where the appropriate sales or marketing approach depends on the project volume and type of customer.Illustration 10: Types of engagements in EuropeThe aforementioned Heise study on open source software adoption in Germany found that the main drivers are CIOs and CEOs. Although open source can still be introduced "through the back door" by developers and system administrators, it appears that, at least in Germany, open source software has won the hearts and minds of executives and become a strategic element of the corporate IT landscape.Illustration 11: Open source is highly relevant in Germany...It is hard to say if this is true for other EU countries as well because the data is missing. Our best educated guess is that the companies with highest open source software adoption in the EU are also those where executives increasingly regard open source as a strategic tool.
Europe is a gold mine for open source software vendors, but the gold is often deeply hidden in culturally diverse ground. The united market of the European Union is actually a fractured market that needs to be approached accordingly. Otherwise, community building efforts will run dry, marketing communications will make your company look outlandish, and sales will bounce off cultural barriers.
Although Europe is a fractured market, there are regional similarities that make the market less daunting to US-based businesses and communities seeking to gain a foothold in the EU. Two of these similarities will ultimately have to be addressed in any go-to-market strategy employed by US-based open source vendors casting an eye towards Europe:
In an upcoming article we'll take a look at how to test and develop new markets in Europe with effective outreach through marketing, community development, PR, and more, thus showcasing how open source offers companies and organizations a highly cost-effective route into international markets.
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