Open-source Software Cuts Into Data Mining Vendors' Profits
By: CFO June 26, 2014
While recent innovations in the software sector have significantly boosted capabilities for most software products, free open-source software solutions have made an even bigger splash. More than half of all data mining tasks are now conducted using open-source software, displacing the purchase of proprietary software.
Analysis from market research firm IBISWorld estimates the adoption of open-source has contributed to a 1 percent annualized decline in the price of data mining software in the three years to 2014, to about $8,000 per user per year. Although most buyers cannot rely solely on open-source software and will still have to purchase some proprietary data mining software, they can reduce total costs by buying fewer proprietary licenses.
For the uninitiated, data mining is the manipulation and examination of very large databases to find patterns. Data mining is used for databases that are too large to be handled by data management software like Microsoft Access.
The proprietary market is highly concentrated, with IBM and SAS Institute together controlling about half of the market’s revenue. The high level of concentration means there is less price competition in the market, reducing a buyer’s ability to negotiate for the best deal.