Urenio Watch Watch: Innovation ecosystems

Economic Impact of Open Source on Small Business

Open source is not only a catalyst for small business growth, but also a driver of future success for many startups today. Bringing together Bluehost anonymized customer data and trends with O’Reilly Media’s job market data, along with other sources of trend data, this report captures the current state of open source as it relates to small to medium-sized businesses.

Here are some of the report’s findings:

  • 60% of web hosting usage is by SMBs, 71% if you include non-profits. Only 22% of hosted sites are for personal use.
  • 75% of customers build their own site using simple sitebuilder tools. Another 6% have it built by a family member. Only 13% use professional web developers.
  • The majority of the websites are informational; only 14% have an online store (including non-profits that take donations online).
  • Nonetheless, nearly 20% of businesses in the survey say they derive more than 50% of their revenue from their website.
  • The majority of hosted businesses are very small. Only 15% have revenues in excess of $50,000/year, yet collectively, we believe these businesses represent a trillion dollars of economic output. PayPal is the dominant payment mechanism, outstripping direct credit card payments by nearly 2:1.
  • WordPress is a far more important open source product than most people give it credit for. In the SMB hosting market, it is as widely used as MySQL and PHP, far ahead of Joomla and Drupal, the other leading CMSs.
  • Languages commonly used by high-tech startups, such as Ruby and Python, have little usage in the SMB hosting market, which is dominated by PHP for server-side scripting and JavaScript for client-side scripting.
  • Open source hosting alternatives have at least a 2:1 cost advantage relative to proprietary solutions.

Given that SMBs are widely thought to generate as much as 50% of GDP, the productivity gains to the economy as a whole that can be attributed to open source software are significant. The most important open source programs contributing to this expansion of opportunity for small businesses include Linux, Apache, MySQL, PHP, JavaScript, and WordPress. The developers of these open source projects and the communities that support them are truly unsung heroes of the economy!

Download the Report