Ray Lane will be right at home jousting with Colin Powell about Kleiner Perkins Caufield & Byers' portfolio companies. The venture capitalist controlled his open source panel at the AlwaysOn conference this morning with a general's grip.

The former Oracle president, who put in time at Ross Perot's EDS earlier in his 30-year career, vehemently made the case today that open source software is here to stay but denied that it was more stable or secure than proprietary software.

"I've never seen a grassroots change in the business like we've seen now. It's significant and it's happening from the bottom up," said Lane. As part of his investment in Spike Source Inc., an open source certification and services company, he said he interviewed many Fortune 100 CIOs and, "they don't have a lot of good to say." They're not happy with quality of software, the sales teams that visit them, the maintenance fees they have to pay and the fact that changes arrive with little warning.

"We're not going back to the old way, the old way meaning silos and lock in," said Kim Polese, Spike Source CEO, at the conference.

The implications are large. As Lane noted, it's not easy for proprietary software companies to change. "It's not about fine-tuning the sales force or asking their development team to go from a single product to a multithreaded product. You have to change the entire business."

In the software industry, the top 15 companies represent 84% of the revenue. The top three - Microsoft, Oracle and SAP - represent 75% of the profit. When he was at Oracle, he tried to manage this disruption. Now, that he's at Kleiner Perkins, which just hired Colin Powell as a special limited partner, he's trying to accelerate it.— Joshua Jaffe

alwayson2005

Go to the press release announcing SeeBeyond's sale to Sun Microsystems
Go to The Deal's VC coverage of Spike Source
Go to the AlwaysOn webcast
Read a deconstuctionist view of AlwaysOn's agenda

Video of Joshua Jaffe's interviews from the conference (Mouse over thumbnail images or double click to watch):