Is SaaS a threat to open source software?

I saw a tweet saying that the Dell CIO Jim Stikeleather claimed at the Nasa IT Summit that open source as we know it is being replaced by software as a service (SaaS) solutions. He said that there would be no more "Apache-like" projects. I understand his sentiment but don't agree with his conclusion because modern SaaS solutions require quality open source projects to support them. They are the building blocks of SaaS and actually almost all modern software solutions.

We have a recurring conversation in the office that goes something like this:

"Have you seen the new tool xyz.com?"

"No, what's it do?"

"It makes your life easier by..."

"That's fantastic. How do they make money?"

"I'm not sure. It's all open source and they don't seem to offer any consulting."

The thing that software company business owners forget is that there are many developers who just like writing software. They like finding elegant solutions to difficult problems. In fact, I like doing that and I used to contribute to these projects in my spare time until all of my time became consumed with running a company and taking care of my kids. There are still smart people out there developing and making software available for free because they just like doing it. As far as I know nobody involved in the early days at Apache ever thought about making money from it. They did it because they wanted something better and thought that the best way to do that was by letting good people from around the world contribute and then sharing (testing) the technology with as many people as possible.

I don't think it's an either/or scenario. I think they will both grow and support each other. But don't just take my word for it, Andy Oram at O'Reilly agrees with me.