While everyone else on this planet was at E3, I hunkered down to Day 2 of the Open Source Conference at the University of Toronto. Today’s themes were business models and technology. This day ran over 12 hours long – from 8:30am to 9pm!
“Business Models Don’t Matter”
Bob Young, co-founder of Red Hat and Lulu.com and current owner of the Hamilton Ti-Cats, was even more pragmatic when discussing Red Hat’s business model; that is, they had none. Having just been laid off from being a computer salesman, Young’s goal was to feed himself. Their strategy was to listen to their customers’ needs.
Lamenting the free market: “Customers are evil. They always want more for less money. The second less evil people are your employees. The only people who understand you are your competitors.”
In the early years, most industry insiders predicted Red Hat was doomed to fail. In 1994, Scott McNealy joked that it was “hard to calculate a P&L without a P”. Despite this, Red Hat continued to flourish, because only at Red Hat could customers “get software that could do what they wanted it to do”. Red Hat ended up winning InfoWorld’s OS of the Year award five years in a row, from 1996 to 2000.
How they succeeded
- giving away software was a great marketing tool (loss leader)
- tapping into the largest engineering pool in the world (reducing development costs)
- fun and innovative ways to promote the brand (Red Hat bus tour)
- majority of developers do not want proprietary software. They make money writing small internal apps for employers
Ultimately, they realized their customers wanted freedom to fix their own software. They weren’t selling a product; they were selling control of a product. He used the analogy of the automobile industry: would you buy a car with a locked hood that only the car company could open?
Matt Asay Linux Business Office, Novell
Agrees that the software market is “an anomaly.” All other markets are filled with interchangeable commodities, except software. He warned that if one vendor has control, there is no longer any incentive to innovate. Open source is appealing because “choice enables maximum choice” (ala Karl Popper). But too many choices is not good either.
“Both source” model: Novell believes that the optimal balance between open and proprietary architecture is to use an open platform, middleware and database all with open file formats, and then place proprietary systems on top. This way, value is driven up the stack.
OSS progress also stimulates open debate, as development uses the scientific method.
#1 reason to write open source software: it’s intellectually stimulating. “You can only jazz yourself up for so long in the morning to kill Microsoft.”
- lack of support
- version splintering
- in a vertical industry, it’s harder to find a developer pool
He cautioned that open source is a means, not an end – with the means being “choice” and the “end” being “customer satisfaction”.
“Selling chairs to lumberjacks”
Dr. David Ascher, Chief Technologist of ActiveState (Sophos) said people looked to them because:
- tired of being pushed around
- looking for support
- we’re part of the community
Their advantage: high “gloss” UI. Looks “more like iTunes than xterm”.
Good software needs more than just developers:
- Product and project management
- Graphics artists and technical writers
- Dedicated support and QA
Business advantage: heterogeneous talent pool
View from the Top
Next up was Jason Matusow, Microsoft Shared Source initiative, who disagreed with pretty much everybody else. Many factors contribute to the “magic sauce” in software.
What users actually want:
- risk mitigation
- production use vs. development model
- value for money
Conceded that OSS is positive influence for most major software companies.
- SAP openDB
- BSD code in Mac OSX and Windows NT
- Microsoft has released WiX and WTL to Sourceforge
- 90% of MS Research projects go to the public domain
Increased competition is good for the customer, but the customer still demands value.
The Shared Source program’s intent is to grant read-only privileges of portions of code to a select group of Windows developers. The argument is that less than 1% actually wants to edit code.
His argument was that open source was just as capitalistic as proprietary source; he claims that the majority of open source contributions are being driven by large corporations with their own agendas, and that their service level agreements can have many restrictions. “There is no correct way to write software.” he concluded.
An attendee asked Matusow why Office 2003 will only export in a Microsoft-patented proprietary XML format instead of adhering to the open XML standard used by OpenOffice, etc. Matusow basically danced around the question, only saying that there were too many standards floating around in the software industry, and that the MS XML format was royalty-free (for now).
Evan Liebovitch, President, Linux Professional Institute
Disagrees with Matusow. Users actually want:
- NOT “risk mitigation”! They want problems solved
- collaborative development, global participation, “an export business”
- co-opetition (improving on UNIX’s attempt at openness)
Value of OSS
- Not just about the money, TCO
- No software audits
- No anti-user licensing terms (some licenses forbid reviews)
- Same support options as proprietary software PLUS community user groups
- Upgrading on your terms
- Knowledge builds knowledge
- Yes, mySQL controls developers, but the code’s still all GPL
He pointed out that open source can be viewed as a protector of IP rights. If your ability to use a tool goes away, so does your access to your own work, your own intellectual property. This right would be protected in a true open system.
- more than just cross-licensing agreements
- users have a stake in file formats, programming interfaces
- pretend openness (a jab at MS?) doesn’t solve this problem
Vendors get the second sale through quality and service, NOT barriers to change. “Would you get your license from Ford?” There is a chance of genuine competition if and only if standards are options.
He concludes: “Open source is a consumer movement