Open source software catches on with local firms.

When the technology bubble burst approximately five years ago, many people dismissed open source software technology as another failed panacea that hadn't been able to live up to its initial promise. But as the technology has matured, it has increasingly made moves toward the mainstream, even attracting attention from once-skeptical venture capitalists.

Locally, numerous Valley companies have begun using the technology, allowing them to cut costs and in some cases produce new software products for resale.

Benjamin Kuo, the publisher of Westlake Village-based technology website, Socaltech.com likens the malleability of open source technology to a car.

In the past, you could buy a car and pick its color; perhaps you'd decide you'd like leather seats instead of fabric; and if you were really ambitious you could put in a better stereo," Kuo said. "Open source is much more. It's deciding what kind of engine you want; supercharging the engine; replacing the body with an entirely new one, and adding custom seats and upholstery."

But in an increasingly bottom-line driven world, the facet of open source software that businessmen like best is its cost: most of the software is readily available for little or nothing. In comparison, similar software programs from Oracle or Microsoft can cost companies well into six figures.

Currently, most companies have been utilizing open source technology either for databases or web servers. Kuo, himself, has used open source technology to build the comprehensive database on his website.

"I've built many applications for my site's database with open source technology. This is something which never would have been possible without spending thousands of dollars on run time licenses from a database company," Kuo said. "Open source creates the ability for companies and individuals to create software applications which would have cost them millions of dollars in development and years of development time if they were to follow the old software model."

Making money

Essentially, the primary difference between open source software and closed source software, boils down to the source code. If the source code is "open," programmers have free rein to peer into the inner workings of a software program and customize, modify, or add to it, at no cost. Typical examples of "closed" software are programs from Microsoft or Oracle, which do not provide a source code and therefore cannot be altered.

But companies aren't only using open source technology to reduce costs, some are using it to make profits. Oak Grove Systems, a Calabasas-based spin-off from the Jet Propulsion Laboratory in Pasadena, sells business process software programs by utilizing open source software components. Oak Grove's programs coordinate activity flows for large companies such as Sun Microsystems, the United States Navy and Plumtree Software.

"We are a hybrid vendor. We use quite a lot of open source components in our solutions. We take other open source products and then make a new program, giving our customers a copy of our source code (a detail that allows buyers to further customize the product), "Charles Ames, Oak Grove's founder and CEO said. "Companies like us are taking full advantage of open source because of the economic benefits and it also helps us bring products to market more quickly."

Woodland Hills-based consumer Internet subscription firm United Online, Inc. made its name off of the concept of providing low-cost Internet to the masses. In order to maintain its low prices, the company has found that it needs to employ extreme fiscal prudence at all times. Accordingly, it has found open source software to be an effective means to reach that end.

"We employ a mix of open source software that we've written ourselves and other proprietary software that we've licensed from third parties like Oracle," Randy Tamura, United Online's vice-president of software, said. "It's hard to quantify how much we've saved but it's a significant savings each year. We try to pick the best technology for the cheapest price and open source software tends to be very very inexpensive. We started off as NetZero and we had to build very inexpensively. It's part of our heritage."

Yet not everyone is a staunch proponent of open source technology. Mike Newman, the business development manager for Northridge-based IT support company Cal Net Technology Group, advises companies to avoid open source software.

"You get what you pay for. Microsoft makes good stuff and with every piece of software you get a support guarantee, meaning you know what's going to go on down the road when you need an upgrade or support," Newman said. "That's why software manufacturers charge what they do, for the security and the support that they provide. Because they don't charge money for their products, open source companies usually don't have the money to support their programs adequately."

For the most part, North Hills-based toy manufacturer MGA Entertainment would seem to be following Newman's advice, considering that they generally avoid using open source products. However, the company does use open source software in moderate amounts, and Ken Lockhart, MGA's vice president and chief information officer, admits that his previous company, Encino-based Sequoia Broadband Inc., relied heavily on the fast-growing technology.

"We're primarily a Microsoft shop because we're growing so fast and replacing our systems so often that we need a sort of interoperability. However, there are a lot of good open source products around. My old firm, Sequoia Broadband, used open source for almost all of our servers," Lockhardt said. "MGA does use a little bit of open source software for utilities for the technical staff and for network monitoring tools. They are quite safe when you need something for a special purpose."

The most glaring sign of open source software's entry into the mainstream might be the attention that open source software companies have been receiving from venture capitalists. According to research firm VentureOne, open source technology companies raised $149 million in venture money in 2004. And at least three open-source start-ups raised $20 million in March alone.

Perhaps Arno Azarian, the IT manager for Woodland Hills-based International Laser Group, best summed up the sentiment that open source acolytes feel for the technology.

"All of our web servers utilize open source. It works well and it provides stable benefits. We haven't had any problems with it yet and it's a lot cheaper than the Microsoft products," Azarian said.

Open Source Software

What it is: A type of software with an "open" source code that allows for revision, modification and improvements on the original program

What Advocates Say: It allows for greater versatility and customization, allowing a company to produce tailor-made software to its liking. Additionally, it is widely available at tittle to no cost.

What Detractors Say: It does not have the guaranteed support that one would get if they purchased similar programs from Microsoft or Oracle. Using open source leaves one vulnerable if the IT person who altered the software leaves the company.

What It's Most Commonly Used For: Web servers and databases.