- Bill Hilf on Microsoft's Open Source Initiatives
- Linux Non-compete Agreements?
- Responsibility
- Solutions
- Microsoft to Submit License to OSI
- Responses to "Why Microsoft should buy Red Hat"
- SugarCRM Goes GPL 3 / OSI Approves Attribution
- O'Reilly Radar at Oscon
- Open Source Barometer from Alfresco
- JasperSoft BI Suite 2.0
July 30, 2007 | Comments: (0)
Bill Hilf on Microsoft's Open Source Initiatives
At Oscon last week, Bill Hilf, Microsoft's General Manager of Platform Strategy, gave a keynote presentation on the Microsoft's Open Source initiatives. While the talk was only about 20 minutes, Hilf did a good job describing the context in which he operates at Microsoft and also some of the positive steps the company has taken in the last several years as they have put their toes in open source waters. Hilf, a former developer, has had a long history in the open source world having worked at IBM, CNet, eToys over the years. Clearly this was not his first visit to Oscon and hopefully also not his last.
Hilf characterized Microsoft as going through three phases of "architecting for participation" with an Experimental period of 2001-2002, a Learning period from 2003-2006 and now an Architecting period. I'm not sure that these designations are meaningful since there will be ongoing need for experimentation and learning, but the conclusion that Microsoft is now ready to work more closely with open source is significant. I believe this has come about at the behest of customers who want Microsoft's software to play well with open source. And presumably Microsoft has observed the rapid adoption of the LAMP stack among programmers and is trying to figure out how to make sure Windows is not locked out of the growth in running PHP and MySQL based applications.
Some of Microsoft's early efforts, including the Windows Installer Toolkit (which we use at MySQL), their support of JBoss, the optimization of PHP for Windows, cooperation on integrating MySQL with Visual Studio, and collaboration with XenSource and SugarCRM are starting to bear fruit for Microsoft in terms of more sales of Windows servers as a deployment platform. Oracle, IBM, HP and Sun figured this out a long time ago and have been reaping the rewards for several years. I believe customers will benefit greatly from having more such cooperation between open source and proprietary software. But I hope that the cooperation is more along the technical lines of what Hilf presented on his slides and less about, ah, patent licenses.
Hilf also made two interesting announcements. First of all, Microsoft launched an open source web site www.microsoft.com/opensource and secondly they are going to submit their licenses to the OSI for approval. While these are not major items, they are small steps in the right direction. That is, presuming that Microsoft makes its licenses less restrictive than they are currently.
You can view the video of the presentation, including Hilf's personal comments on patents, online at the bottom of the Oscon presentations page.
For some reason Microsoft's PR firm (Waggener Edstrom) is reluctant to share the actual slides. I'm not sure why that is since there were only five slides and two were titles and one was a screenshot. Presumably the remaining two slides which had actual content were not confidential since they were shown to an audience of over a thousand people. I would think they should be more proud of what they've accomplished in open source...
Posted by Zack Urlocker on July 30, 2007 06:44 PM
July 30, 2007 | Comments: (0)
There seems to be a lot of discussion about whether Project Indiana at openSolairs is a Linux clone or not.
The Project Indiana website states:
"Project Indiana is a new project to create an OpenSolaris binary distribution. This distribution will focus on providing a single CD install with the basic core operating system and desktop environment, with the opportunity of installing additional software off network repositories."
Ian Murdock, of Debian fame, now with Sun, says:
"It is not a Linux copy thing," .... "It's a best of both worlds thing."
Most folks responding to the story at Slashdot and apparently those in attendance at an OpenSolaris user group in NYC (which fellow IBMer Mike Dolan attended) think Project Indiana is either (1) a Linux copy thing that should Sun should give up on, (2) not something that Solaris customers want, so Sun should stop wasting time and resources on it, or (3) both 1 & 2.
Jack Loftus writes:
"Now, from what I can understand the problem here is that Sun has continued to competitively position itself with Linux users with features like DTrace and ZFS when perhaps they should take a page from the Linux playbook and start siphoning off some Windows market share."
Hint, it's because the guys that buy/run/administer Linux servers are typically not the same guys that buy/run/administer Windows servers. Linux hurts Solaris (& other Unix OSes) much more than it hurts Windows. Sun has realized this and is trying to win over the "low hanging fruit" who used to be, or could be, Solaris customers.
What's wrong with Sun trying to build a Linux clone with OpenSolaris? Why shouldn't Sun compete with Linux if that is what Sun's strategy calls for? We participate in a free market, let Sun compete as they wish. The strength of the Linux ecosystem, backed by a truly open and extensive community should take care of the rest.
Nothing personal here, it's just business.
PS: I should state: "The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions."
Posted by Savio Rodrigues on July 30, 2007 12:40 PM
July 28, 2007 | Comments: (0)
I was playing golf the other day with some other folks in the software business and the topic of email came up. I was talking about an article I read that claimed that the younger generation prefers instant messaging over email and quoted someone as saying that they only used email to talk to their parents. My daughter echoes many of these sentiments. Email, however, still drives much of what we do in business and will probably be around for a long time.
My particular complaint about email, though, is spam and the seeming inability to end it. I get more spam in my email than actual messages and it's quite frustrating. As we waited on the 11th hole to make our tee shots we went back and forth about email usage and spam. The following conversation ensued:
- My friend: "Would you download a piece of software to your machine that would guarantee to eliminate spam?"
- Me: "No. I wan't to be able to use web-interfaces from any machine to deal with email and I don't want to have a client program tied to any particular machine that cleans up my spam. Besides, this is the responsibility of my ISP and the other ISP's out there processing email. Why should I have to buy a program to install on my machine to solve this problem?"
- My firend: "What if the software was free?"
- Me: "Nothing's free, would it have advertising?"
- My friend: "Not at first."
- Me: "So, let me get this straight. In exchange for eliminating unwanted advertisements in my email I have to use an email program that gives me unwanted advertisements?"
This exchange, of course, led us off on a number of discussions that related to responsibility. I pay for my email service. When I use the ISP's web-based interface I get advertisements through-out the web-page. I get spam leaking into my inbox. No one's close to claiming a solution to this systemic problem yet I'm expected to individually solve it for myself.
This is no better than the virus-protection issues. A company creates an operating system susceptible to viral attack. I'm expected to purchase third-party products to protect me from the underlying design and coding issues that allow the attacks in the first place. Where is the responsibility of the creator of the operating system? What's fascinating about this particular problem is there's a huge debate about whether or not the O/S vendor should be allowed, because of anti-trust issues, to create their own solution to the problem. What's irksome about the debate is the O/S vendor wants to charge me for a product designed to fix the problems they created in the first place.
Where is the responsibility?
Posted by Dave Dargo on July 28, 2007 08:18 AM
July 28, 2007 | Comments: (0)
I'm sick and tired of products. Actually, I'm sick and tired of product features and the announcements related to them. I remember back in the late 80's and early 90's when database products were introducing new features like row-level locking and relational integrity. These were new features introduced into markets that were just starting to buy relational databases as a product.
Here we are, almost twenty years later, and we still talk about product features. I received an email from Microsoft that highlights the features of SQL*Server 2008 with cool new things like "transparent data encryption."
Good grief, where are the solutions? Why am I still expected to build the solutions myself? Why haven't we moved beyond self-integration of independent technology stacks?
In the open-source world we still mimic much of the marketing and product management methods of these old-school software business models. One of the greatest promises to me of open-source is the ability to integrate products and build completely new solutions. One can not take Oracle, or a sub-set of Oracle, and combine it with technology from Microsoft Windows to build something that didn't previously exist. Licensing and intellectual property protection prevents that type of innovation.
With open-source, however, one can take source code and products from different projects and combine it into unique, new solutions designed to solve actual problems faced by large IT organizations. It's one thing to save an IT department money at the acquisition point, it's quite another to solve the real-world problems they face every day.
I'll give you an example. IT organizations face a nightmare today when creating new development environments for their developers. They have to provision physical servers. They have to create stacks of software that have to be manually managed and serviced. They get stuck with proprietary interfaces and file formats that have to be maintained. This is a problem screaming for a solution. The larger IT organizations are independently creating internal solutions to the problem yet there is precious little being done by the industry to solve the problem. The technology is there today that would allow the dynamic instantiation of server environments for developers. Imagine a developer who needs a new sandbox using a web interface to identify the components they need in their development environment and having it automatically instantiated in a virtual server environment. An instantiation that only occupies CPU and memory real-estate when being used is much more efficient than today's world of dedicated servers. This type of solution would drive standards. I'd love to see the day when the developer doesn't care what database lies behind their interface, the developer would simply expect a standard API and standard set of behaviours. The developer could concentrate on development and not on the nuanced differences between different database implementations or the proprietary features of any particular database. I've seen systems like this implemented by individual companies. If there was a solution in the market, though, it would sell and would help us all reach another level of efficiency.
When are we going to move beyond the tired product and feature announcements and start to see, as a matter of course, new solutions being delivered via the combination of heretofore unrelated products?
Posted by Dave Dargo on July 28, 2007 07:53 AM
July 26, 2007 | Comments: (0)
Microsoft to Submit License to OSI
In Bill Hilf's keynote at Oscon today, he announced that Microsoft will submit it's shared source licenses to the OSI for approval. This includes the Microsoft Permissive License, Community License and Reference License. Although a bit late to the party, I think this is still a good step on Microsoft's part. It shows that they appreciate there's a community outside of Microsoft and they are adapting their business practices and licensing in order to be successful there. That to me is highly significant. More coverage here at eWeek by ace reporter Darryl Taft who was on hand and at Internet News by Sean Michael Kerner.
I'll write about the rest of Bill Hilf's presentation on Microsoft's open source efforts next week. But this was too good to pass up.
Posted by Zack Urlocker on July 26, 2007 09:53 PM
July 26, 2007 | Comments: (0)
Responses to "Why Microsoft should buy Red Hat"
Earlier this week I wrote a "what if" post suggesting that Microsoft buy Red Hat. The comments here and on my personal blog were lively to say the least.
Many comments were a variation of the "wow, you're clueless" theme. I approved every single one of these comments.
Some readers suggested that it would never happen because of the DoJ & EU. A valid point that I hadn't even considered when I ended the post with:
"PS: I truly doubt this deal will ever happen, but it’s interesting to think about the possibilities."
Private email discussions I had on the topic suggested that Microsoft's culture would severely limit any hope of a positive outcome. Valid point. But corporate cultures evolve.
I was somewhat surprised by how strongly readers debated the very notion of such a deal based solely on Microsoft's history towards open source. Don't get me wrong, Microsoft has done plenty of clueless things in various open source areas. But, to judge the possible outcomes of a Red Hat acquisition based only on history is, I humbly suggest, missing the point. (Again, keep in mind that this acquisition will likely never happen, but stay with me for a second longer). For Microsoft to even consider this acquisition, they would have to dramatically change their historical views on open source. For companies like Microsoft, change is a lot easier than holding steadfast to outdated strategies.
Change doesn't happen overnight. However, the impacts of a threat like open source are not felt overnight either. It's taken Red Hat nearly 15 years to get to where they are today, and the open source movement has over 40 years under its belt. The results have not been industry shattering on either front. I am not minimizing the success of Red Hat or the open source movement by any means; I'm only putting them into perspective.
Sometimes we build deep rooted views about technologies and companies that don't allow ourselves to consider situations in which the technologies or companies evolve. Is it really "clueless" to think that over the next 5 to 10 years Microsoft could increasingly adopt open source strategies into their broader corporate strategy?
While buying Red Hat may never happen, what if Microsoft launched a Linux distribution, maybe even based on RHEL? Ahh, but what about Microsoft patents and GPLv3. True, but what if Microsoft realized that the revenue potential from shipping "Microsoft Linux" is 2x or 10x the revenue potential from licensing their "Linux patents"? These are the types of decisions that companies like Microsoft make daily. The point isn't whether Microsoft, its culture, or employees hate Linux/OSS. The point is that Microsoft, its culture and its employees are interested in the future success of the company and making as much money as they can. To date, Linux/OSS has been seen as a risk towards this goal for Microsoft. In the future, Linux/OSS may well be a driver towards this goal.
Change happens.
PS: The *most* surprising thing about my post is that Dave Rosenberg had a similar post encouraging Microsoft to buy JBoss and/or Novell....back in 2005. Sigh…and I thought I was an original thinker.... :-)
PPS: I should state: "The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions."
Posted by Savio Rodrigues on July 26, 2007 02:21 PM
July 25, 2007 | Comments: (0)
SugarCRM Goes GPL 3 / OSI Approves Attribution
SugarCRM, one of the leading open source applications, has announced plans to switch their current Mozilla derived Sugar Public license in favor of the new GPL 3 license for their next community version in September.
While SugarCRM took some heat for their attribution clause (which to me is quite reasonable), their adoption of GPL 3 is significant and does not preclude attribution through copyright notices. There's an FAQ on SugarCRM's site that provides more details.
While IDG reported this as "User Pressure Leads SugarCRM to Adopt GPLv3" I think that had little to do with it. There's really nothing particularly onerous about the license Sugar had and they have always provided access to their source code even if the SPL did not have an OSI seal of approval.
I think its likely just easier to have a more popular and standard license since the GPL is well known. It's one less thing for people to think about during an evaluation cycle. MySQL went through the same issue many years back.
Update:
As reported by The Register, the OSI has now approved an attribution license. Ross Mayfield of SocialText proposed an attribution license known as CPAL (Community Public Attribution License) which is now fully recognized by the OSI along with the Apache License, BSD, GPL, MPL, PHP, and a couple of dozen others. After months of back and forth between open source vendors, the OSI and pundits in the blogosphere, it's great to see that common sense prevailed. Congrats to all those who persevered to make this happen. And now we can get back to more important issues...
Posted by Zack Urlocker on July 25, 2007 03:24 PM
July 24, 2007 | Comments: (0)
This is the second year that Oscon has included a one day conference-within-a-conference called O'Reilly Radar, intended as an executive level briefing session on new open source or related technologies. The agenda includes a wide range of topics reflecting the broad interests of Tim O'Reilly and his gang of folks who blog at O'Reilly Radar.
Although this year's event did not re-capture the excitement and intimacy of the first time around, it was still a great day. The audience was slightly larger, perhaps 150 or so, but the room was much larger and the speakers were on an elevated stage. Although this is standard procedure for large conferences, it has a remarkable impact on the dynamics and participation of the audience. It made it much less spontaneous and engaging. I observed many in the audience had their laptops open doing email (or worse, blogging!) during the session. This seems to be endemic to many conferences lately; so I can't fault the O'Reilly team for a decreasing attention span among conference goers.
Tim's opening remarks were excellent, as usual, with analysis as to what enables projects or products to take hold in the market place. Cory Doctorow's presentation was a highlight as he discussed the ways in which freedoms are being eroded by the use of technology and gave examples of how we can encourage young people to, ah, fight back. Cory has a book called "Cory Doctorow's Little Brother" coming out next year which sounds fascinating.
I also enjoyed an on stage discussion between Matt Asay from Alfresco and Mike Olson from Oracle (and the former CEO of Sleepycat, which Oracle acquired.) Mike made some good points about how closed source companies such as Microsoft and VMWare are good at building community and low-friction business models and open source is just one tactic.
While that's true, I think that open source remains an important element of creating a disruptive business model. It's not the only way to create a disruptive business model, but it's a pretty good one. Matt Asay made the point that unfettered access to source code provides benefits to all users by ensuring ongoing development and innovation. In other words, everyone benefits from the fact that the source code is open since many programmers will enhance a product. I don't know if that applies to all software, but we've certainly seen that model work well for Eclipse, Linux, Apache, MySQL, PHP, Perly and other products. Tim then followed up with a short chat with Marten Mickos from MySQL.
There were also excellent panel sessions on scalability, on Facebook, on Firefox extensions, on open source hardware and various short "showcase" presentations on ohloh.net, OpenAds, openCV among others. These were short VC-style pitches (10 minutes) and quite well done.
The only disappointment was a session I had been looking forward to called "Licensing in the Web 2.0 Era" as a chat with Eben Moglen and Tim O'Reilly. Eben is normally a brilliant speaker who is passionate, articulate and convincing. In his session he was none of the above and came across as a rather under-appreciated if not embittered lawyer who was tired of other people making money while he was out protecting our freedoms. Eben has done a brilliant job on GPL 3, but if he intended his remarks to be a wake up call to open source developers as to the importance of the freedoms protected by the GPL, then he failed completely. What could have been a rallying cry became a diatribe and a somewhat embarassing personal attack on Tim O'Reilly.
But that's just my interpretation; maybe I missed something going on here. You can also check out Chris Marino's view on his SnapLogic blog "Eben Moglen Wacks Tim O'Reilly," or this report from Robert Kaye "Eben Moglen Berates Open Source" and from Joe "Zonker" Brockmeier "Eben Moglen Challenges Tim O'Reilly to Join the Conversation."
Posted by Zack Urlocker on July 24, 2007 10:00 PM
July 24, 2007 | Comments: (0)
Open Source Barometer from Alfresco
Ian Howells, Doctor of Marketing over at Alfresco, has published results of a survey of their users to come up with a barometer of open source. While the sample is from Alfresco's own users (and perhaps a bit skewed), it's an interesting snapshot on how open source is being used in the mainstream. In particular, it's clear that open source co-exists with closed source in many organizations.
A few of the highlights:
-Users evaluated use of Alfresco on Windows as much as on Linux, though Windows (42%) is used more for evaluation and Linux (52%) for deployment.
-Tomcat (72%) and JBoss (20%) were the most widely used application servers, with greater adoption than closed source app servers from IBM, BEA and Sun.
-MySQL was the most widely used database, at over 60%, with Oracle (14%), SQL Server (12%) and Postgres (8%) also used.
-Firefox was the most widely used browser, with browser usage was higher than portal usage in general.
Most interesting, Alfresco will update the survey every six months, thereby going beyond just a snapshot to provide insight into adoption trends over time. You can get the full report at http://www.opensourcebarometer.org.
Posted by Zack Urlocker on July 24, 2007 08:36 AM
July 23, 2007 | Comments: (0)
Recently, JasperSoft began shipping version 2.0 of their Business Intelligence Suite. JasperSoft has risen to prominence on the popularity of JasperReports open source reporting for Java. Since the company's launch they have been rounding out the offering to make it a full-blown suite with ETL, iReport report server, OLAP capabilities etc. Version 2.0 also adds a lot of web 2.0 ease-of-use for doing cross-tabs and other dynamic ad-hoc reporting and analysis. There's a good analysis at RegDeveloper by Philip Howard at Bloor research that discusses the BI market and how it might be impacted by open source, covering both JasperSoft and Pentaho.
I hope to get an update and demo from the folks from JasperSoft at Oscon this week.
Posted by Zack Urlocker on July 23, 2007 12:35 PM
July 23, 2007 | Comments: (0)
Why Microsoft Should buy Red Hat
Some background:
- Matt asked "Why doesn't Oracle just buy Red Hat?"
- I explained why Oracle would not buy Red Hat
- Luis Villa replied to Matt's question: "Because Red Hat employees would leave en masse."
- Microsoft announced fiscal 4Q07 growth of 13% on Thursday (or 16% if you only count their true software revenue - which falls into the "Client", "Server & Tools" and "Microsoft Business Division" reporting categories). Microsoft crossed the $50 billion total year revenue mark with the close of fiscal 2007.
- I compared Red Hat's stock performance over the past year vs. some Traditional software vendors (see below)
If you're still with me....
Red Hat is growing and executing well. Financial analysts expect Red Hat to hit $517M this year (fiscal 2008, ending Feb. 2008), and $631M in fiscal 2009. At this pace, Red Hat should cross the $1 billion revenue mark in fiscal 2011. Red Hat may well be the gorilla in the Open Source marketplace. But after everything is said and done, that marketplace is tiny in comparison to the total software market. If you believe in the stock market's ability to predict a company's future value, one could argue that Red Hat investors are in a "sit tight" mode right now. At a P/E of 72 and PEG of 1.44 (vs. Google's PE of 45 and PEG of 0.99), Red Hat's stock has likely priced in as much growth and "great news" that we could think of. Few doubt Red Hat's position in the overall OSS market, but some may be waking up and asking whether being #1 in 1.8% of the software market is enough to drive the multiples that Red Hat shares enjoy today.
While both vendors have strong operating system franchises, Red Hat isn't really eating into Microsoft's revenues. IDC predicts that the Linux & Windows markets are growing 26% and 9%, with Unix revenues declining by 3% from 2006-2011. Red Hat's Jboss division adds a JEE portfolio that does compete with .NET as the infrastructure for enterprise applications. But here again, it's very unlikely that Microsoft faces off against JBoss in (m)any customer deals. It's more likely that Microsoft competes against IBM WebSphere, BEA WebLogic or Oracle AS, and JBoss only comes into the picture when the customer has already selected JEE. While there is some overlap, Red Hat is much more complimentary to Microsoft's offerings than we'd like to think.
Just imagine a Microsoft that could offer customers a choice of Windows/.NET, Linux/JEE or, and here's the magic, BOTH. The fact is most customers have heterogeneous environments, and those that don't today, will likely in the future.
In the face of OSS competition, one of the best moves we made in the IBM WebSphere division was purchasing Gluecode. As I've mentioned (over and over), having a free application server, based on the open source Apache Geronimo project has done nothing but spur the growth of our overall WebSphere Application Server family. In some cases, the customer chooses WAS CE, in other cases, they choose Traditional WAS products. We help customers be successful with their choice and, equally important, ensure that their previous investments in WebSphere infrastructure are protected. This is exactly the scenario that Microsoft could create for themselves. Microsoft would be able to offer Windows, Linux, .NET or JEE in various combinations to solve customer problems. As a competitor, this would be a scary combination.
What's more, Red Hat could help Microsoft gain OSS street cred almost instantly. To me, this would easily become Red Hat's most important contribution to the software industry. Forget being #1 in 1.8% of the software market. How about helping a $50B software company evolve its thinking around OSS in order to become a $75B software company while increasing customer choice and satisfying customer needs? Goosebumps.
I doubt this acquisition will ever take place for three reasons. First, because of vendors such as IBM, HP, Intel and Oracle who have investments in/with Red Hat. Second, because Microsoft wouldn't want to take the risk. I'd argue that there is much less risk than appears on the surface. Sure, there would be some internal friction during product positioning discussions if the deal went through. But internal friction is healthy and shouldn't get in the way of helping customers succeed with your offerings. Lastly, as Luis' comment highlights, Red Hat's culture would also pose a barrier to this deal. But I’d argue that the only thing that these comments do is put a damper on the deal price, which, at the end of the day, is bad for Red Hat investors. One could argue that JBoss employees felt the same way about Red Hat prior to the acquisition. And yes, some left Red Hat, but some stayed. It would be up to Red Hat management to convince employees about the historic importance of their efforts inside of Microsoft, which would be a pretty compelling reason to stay.
A Red Hat marketing slogan states: "truth happens", what about "change happens"? And why not help Microsoft change?
PS: I truly doubt this deal will ever happen, but it’s interesting to think about the possibilities.
Posted by Savio Rodrigues on July 23, 2007 09:17 AM
July 19, 2007 | Comments: (0)
Zack asked:
So perhaps a question that might be worth asking is if Windows and Office only costs $3 in China, how sustainable are it's prices in other markets?
I remember reading about multinational companies consternating about selling online in the early days of the Interweb. Most companies sell at different prices in different markets. But until the dawn of widespread e-commerce, purchasers in different geographies couldn't easily compare prices across geographies. Today, I can easily find the price of an iPod for American customers vs. here in Canada, but I've never checked. I know that the US price won't change my decision or acquisition strategy.
Is a $3 Windows & Office package for students going to have a marked impact on comparable prices in other parts of the world? Sure, to some degree. But I'd argue very little. The growing concern about open document standards may likely have a larger impact.
Now to the larger question of Microsoft's strategy in India (& China):
This is based on a sample size of 2 cousins in India. One completed a business & IT degree and the other completed a degree in computer engineering. As they tell it, having a MCSE designation is critical to getting many IT jobs in India.
My cousins have grown up with Microsoft Windows & Office in their homes and in the local internet cafes. Most kids learned to use Office & Windows in university. Because of their educational backgrounds, my cousins also learned Visual Studio, VB, SQL Server and fun stuff like administering W2K.
Playing Microsoft Strategist, I'm happy to sell Office & Windows to students for $3 if it means I have them hooked on an end-to-end Microsoft technology stack. Training the next generation of workers on Windows & Office makes it more likely that employers will purchase Windows & Office. Don't underestimate training & support costs that can be minimized.
No here's the kicker...the kids love Microsoft. We may want to believe that OSS would be best aligned with emerging countries especially because of the code freedom and lower costs. When I questioned my cousin why they weren't using Linux at his company (Large bank), he asked: "Is Linux as secure than Windows?"
Again, remember this post is based on a sample size of 2.
Posted by Savio Rodrigues on July 19, 2007 04:34 AM
July 18, 2007 | Comments: (0)
The Demise of Traditional Software - 2Q07
Some of you know that I've decided to track the demise ;-) of the traditional software market on a quarterly basis using IBM's WebSphere branded revenue as the basis. I use the WebSphere division for no other reason than it's the part of IBM that I report into. Here are the 1Q07, 4Q06 and 3Q06 posts if you fancy. IBM announced 2Q07 results today.
A few points of interest from 2Q07:
1] IBM Software grew at 13% (or 9% at constant currency: i.e. if currency exchange rates were fixed to equal their 2Q06 rates)
2] WebSphere branded middleware grew at a very healthy 28%
3] IBM's other Software families grew 12%, 11%, 33% and 21% for Lotus, Rational, Tivoli and Information Management respectively
I stress very healthy because 28% growth is pretty awesome when you're growing from such a large revenue base, which unfortunately, IBM does not make public. But, if you have access to Gartner or IDC data, you can easily get to a ballpark number of total WebSphere branded revenue.
| Quarter | Y/Y Qtr Growth | From: |
| 1Q04 | 24% | Source |
| 2Q04 | N/A | Source |
| 3Q04 | 14% | Source |
| 4Q04 | 18% | Source |
| 1Q05 | 11% | Source |
| 2Q05 | 18% | Source |
| 3Q05 | 14% | Source |
| 4Q05 | 4% | Source |
| 1Q06 | 26% | Source |
| 2Q06 | 17% | Source |
| 3Q06 | 30% | Source |
| 4Q06 | 22% | Source |
| 1Q07 | 14% | Source |
| 2Q07 | 28% | Source |
IBM WebSphere Application Server Results:
Some might reply: "come on Savio, you expect me to believe that in the face of open source competition, the application server business is growing at all? Maybe WebSphere Branded Middleware is growing, but the underlying application servers surely aren't, right?"
IBM provided WebSphere Application Server's yearly growth in 2006, so we can compare that figure to the growth of WebSphere branded middleware in the table above:
From pg. 34 of IBM's 2006 Annual Report :
"Revenue from the WebSphere family of products increased 23.3 percent (22 percent adjusted for currency) and was led by doubledigit growth in WebSphere Application Servers (25.3 percent) and WebSphere Business Integration (22.7 percent) software versus 2005"
Translation: The WebSphere Application Server family revenue growth outpaced the figures that you'll find in the table above.
Yes, even in the face of open source competition, the WebSphere Application Server business is growing at 2-3x the market. How? We're helping our customers address their business needs to achieve success. In some customer situations, we help customers achieve success through the use of WAS Community Edition (WAS CE). In other situation we help customers achieve success through the use of the traditional WebSphere Application Server family.
The results are pretty clear.
Posted by Savio Rodrigues on July 18, 2007 02:11 PM
July 18, 2007 | Comments: (0)
Just a heads up that Red Hat's Bill Burke (of JBoss fame previously) is blogging here. Bill does write about techie stuff at the JBoss Matrix, but this blog seems to go beyond the bits and bytes and get into things like:
Should you start an OSS project at Apache?
Should Interface21 join the standards process?
I've had mild disagreements with Bill in the past, but he's always made me think....and his post on "Apache Business Model failure" is no exception.
I had never thought about "who owns the brand for an Apache project". Now that Bill points it out, the answer is obvious.
It's clear that established software vendors prefer neutral communities such as Apache or Eclipse. These vendors seek to jointly develop some widget/product/project and then use it within a commercial offering under their respective brand. As a result, "who owns the brand for an Apache project" is not a very salient question.
I've argued in the past that users benefit from projects developed at Apache (or Eclipse) as multiple (competing) vendors and parties have a stake in the direction of the project.
Maybe we're going to see Apache become the home for OSS projects that are sponsored, in one fashion or another, by Traditional vendors. Additionally, Apache could remain the home for implementations of core technology by individual developers who have a vested interest, but aren't doing so as their primary source of income.
Note however, I don’t think Bill’s comments have any impact on the importance of the Apache Software License.
Thoughts?
Posted by Savio Rodrigues on July 18, 2007 03:45 AM
July 17, 2007 | Comments: (0)
A few weeks back, I posted a couple of blog entries on my recent trip to China. We have seen huge MySQL download numbers from Brazil, Russia, India, China (or "BRIC") with very significant growth in the last few years in China.
I tried reading a book by Robert Buderi called "Guanxi (The Art of Relationships) - Microsoft, China and Bill Gates's Plan to Win the Road Ahead" on the development of Microsoft's research lab in China. However, the title should have been a warning to me. As much as I wanted to dive into this book it was just a puff piece and rather non-critical. But that's just my opinion, perhaps others will get more out of it.
So I was pleasantly surprised by a great article in Fortune called "How Microsoft Conquered China -- Or is it the other way around?" by longtime tech writer and senior editor David Kirkpatrick. The article describes Microsoft's ups and downs in China and how they've had to evolve their approach in order to be successful. Kirkpatrick is as insightful as Buderi is tedious.
Microsoft has been involved in China for 15 years, initially trying to graft it's existing strategy onto the local market without much success. After ten years with little to show for it, Microsoft began to look at China differently and realized that they could not compete under the same rules used in other markets. Their high-priced business model simply wouldn't work in a country like China that had little regard for IP-enforcement policies. And for many years, you could pick up CDs of Microsoft products at local markets for a couple of bucks. Windows was popular in China, but no one was paying for it.
Somewhat coincidentally, in 1998, Microsoft began investing in building what was a small but significant research lab in Beijing. The lab was staffed with local top talent as well as returning Chinese "sea turtles". The net effect was a huge boost in Microsoft's image. Now it was not just selling software, it was investing in China's development.
There's an interesting angle that Kirkpatrick touches upon in the article, which is that not only was Microsoft competing against Linux in China, it was competing against pirated versions of its own software.
Today Gates openly concedes that tolerating piracy turned out to be Microsoft's best long-term strategy. That's why Windows is used on an estimated 90% of China's 120 million PCs. "It's easier for our software to compete with Linux when there's piracy than when there's not," Gates says. "Are you kidding? You can get the real thing, and you get the same price." Indeed, in China's back alleys, Linux often costs more than Windows because it requires more disks. And Microsoft's own prices have dropped so low it now sells a $3 package of Windows and Office to students.
So perhaps a question that might be worth asking is if Windows and Office only costs $3 in China, how sustainable are it's prices in other markets?
Posted by Zack Urlocker on July 17, 2007 08:27 PM
July 17, 2007 | Comments: (0)
In a recent comment, Savio differs with my opinion on what customers are purchasing. I believe that companies don’t buy open-source products. Rather, I believe, they buy the support services and infrastructure that goes with those products. Savio believes that customers “…want a product, and support is one aspect of a product offering, not the product offering itself.”
This may be a matter of semantics but I think the differences are important. I’ve argued that the proprietary licensing model for software was an important economic innovation when it was first implemented. I’ve also argued that the proprietary licensing model is now obsolete and the open-source model is a fete accompli that cannot be stopped.
When companies like Oracle and Microsoft first started they had woefully incomplete products in a market where database and operating system skill sets were very rare. Most people had not even heard of SQL let alone possess the capacity to understand SQL parsing, optimization or execution. Oracle had a business model where they would collect a relatively small fee from a relatively small number of companies in order to fund the basic R&D necessary to build their products. Many of Oracle’s customers were betting on Oracle’s success and assuming that they would be getting better, more complete products in the future. I would argue that the vast majority of RDBMS innovation came about when there were many RDBMS vendors and Oracle was growing from $400 million/year to $1 billion/year. For the most part, support of the products was an afterthought. License sales were growing so fast that those fees far outpaced the support fees.
In the mainframe world support was a part of the license; if you didn’t pay support you lost the license. With Oracle and Microsoft you could license the product in perpetuity without ever buying support. At some point though, support became a more important aspect of the business. Unfortunately for companies like Oracle and Microsoft they can’t survive if they cut off the license revenue. Today Oracle collects billions in license fees for their database software but I don’t think anyone would argue that billions in new features and capabilities are delivered to the market. The market for licensed software is out of balance.
My statement regarding the product definition was, “…the proprietary bits are no longer the product.” This is true. Today, Red Hat could not sell the bits that make up Linux absent a support contract. Well, not to a very sophisticated customer anyway. Red Hat, instead, sells a support offering – timely, automatic updates, services around implementation, an infrastructure to assure availability of technical alerts and fixes, etc. The bits are freely available to anyone with the patience to assemble them themselves. Many do, but Red Hat is successful because of all the other companies who want a professionally managed operating system infrastructure.
Most of Oracle’s offerings include the same benefits and many of Microsoft’s stated directions imply the same thing. I believe it’s very easy for Oracle to justify their support fees to their customers, it’s the license fees that are, in my opinion, inappropriate.
The value of the bits in an open-source product is well established by the market: $0.00/bit. The value of support infrastructure and services is becoming well established by the market. Red Hat, Novell and others are monetizing that market.
Whenever I hear about hybrid open/closed-source business models I shudder. These business models exist only because someone still believes the proprietary bits contain value. It is the trusted assembly, servicing, support and delivery that contains the value. If you think your proprietary bits have value then be honest with your customers and ask them, “How much are you willing to pay me to write this code?” In today’s world, with a more ubiquitous skill set in operating systems, database systems, management systems and applications, I think it very difficult to justify collecting R&D dollars to build a future product. There’s just too much competition willing to collect on the back-end rather than the front-end.
Posted by Dave Dargo on July 17, 2007 07:45 PM
July 17, 2007 | Comments: (0)
Will Oracle Buy Red Hat or BEA?
Matt asks (almost as an aside to a post on a related topic):
My question: why not just buy Red Hat? Before Red Hat buys MySQL, and gives those database numbers a run for their money?
Then, Larry Dingnan writes:
A Credit Suisse analyst thinks BEA Systems is likely to go on the auction block in the next three to six months.And the potential buyer is two likely suspects: Private equity firms or Oracle, which indicated it has no plans to slow down its acquisition pace.
I'll play Nostradamus and predict that Oracle will not buy Red Hat. Oracle may buy BEA. Here's why...
If it's possible to summarize the complexities of decisions in a large business such as Oracle based on reading a book about its founder & Chairman, then Oracle won't buy Red Hat for the same reason that Larry didn't buy Netscape. And no, it has nothing to with whether Larry's cat can write an operating system. It does have everything to do with the "value" that Red Hat brings to the table. Essentially, what does Red Hat have that Oracle doesn't?
Three key reasons for buying a tech company would be: technology, brand recognition and customers.
By announcing Oracle Unbreakable Linux, Oracle has already proven that Red Hat doesn't have a whole lot of technology that can't be easily replicated. Sure, Oracle UL hasn't been a rip roaring success to date, but I agree with Matthew Aslett, that this is a long-term investment.
Red Hat does have an awesome brand. But its brand is tied to open source. As long as customers relate the two, and the OSS market remains less than 1.8% of the total software market, the value of Red Hat's brand to Oracle is questionable.
Additionally, Red Hat doesn't bring a whole lot of customers that aren't already Oracle customers in some shape of fashion. Even if Oracle were to migrate every RHEL customer running Oracle DB to Oracle UL, the end game isn't getting customers to Oracle UL. Oracle's goal is getting customers to Oracle middleware & Oracle apps. Customers don't typically make application & middleware stack decisions based on their operating system. Consider the Microsoft customers who run WebSphere or SAP or Oracle Apps on Windows.
Oh, and if Oracle tried to buy Red Hat, I'm sure that other vendors interested in the future of open source and Linux would have some role to play in the discussions.
BEA is different. They have IP that Oracle can't get their hands on without an acquisition. BEA has good brand recognition in the middleware market, an area that Oracle wants to grow. BEA's customers are likely also Oracle's customers (as BEA always had an affinity with Oracle DB vs. DB2). But BEA's middleware customers could be migrated to Oracle's middleware stack, which is strategic to Oracle.
PS: My admiration for Oracle will subside after I finish the book I'm sure :-)
Posted by Savio Rodrigues on July 17, 2007 12:26 PM
July 17, 2007 | Comments: (0)
Open Source Companies make the AlwaysOn 100
I'm not sure if we all got much hipper or AlwaysOn has expanded their reach but I am happy to see that several open source companies have made it to this year's AO 100 List.
Azureus
MuleSource
Untangle
Funambol
I have to think that at least 50 more of the chosen companies are big open source consumers.
Link: AO 100
Posted by Dave Rosenberg on July 17, 2007 08:00 AM
July 16, 2007 | Comments: (0)
Sometimes I just have to look away. Once in a while, I see something that I feel must be embarrassing to the person experiencing it and not wanting to be a rubbernecker I look aside. This happens to me a lot on the golf course when someone is having a particularly bad day and they just can’t seem to find their swing. I am overcome with a sense of empathy as I watch someone flailing about helplessly trying to hit that little golf ball just a few yards further down the fairway.
I get the same feeling when I see some of the business models proposed in the software world. I’ve heard the arguments for and against just about every business model out there and I’m in a constant state of empathetic embarrassment as I watch young companies struggle with how they’re going to monetize their particular market.
What’s particularly frustrating is the seeming inability for companies to step away from the old models. It’s difficult for me to understand why companies trying to change the world with new technologies, new marketing models, new development models and new support models want to retain vestiges of the very businesses they want to replace.
A recent entry in Slashdot highlighted a blog entry from Jeff Gould on XenSource. I think that XenSource has been struggling to find their path towards successfully monetizing their market but what sent shivers down my spine was the discussion about their go-to-market strategy. XenSource wants to offer “a hybrid of open and closed source” to keep other players from taking their product.
I want to look away. I want to scream, “NO, DON’T DO IT!” I don’t understand. I can’t understand. One of the benefits of open-source, to me, is that the proprietary bits are no longer the product. The product is support for your customer’s business, their use of your product and how you, as a vendor, help the customer accomplish things the customer couldn’t otherwise accomplish. If you don’t fundamentally believe that you can provide that better than anyone else then you shouldn’t be in the business. If you truly believe that Red Hat or Novell can take your product and do a better job supporting customers than you can with the code that you’ve written and managed then you should probably let Red Hat and Novell do just that. After all, it would be a more efficient market.
I remember being in a product management meeting years ago and someone on the development team said that implementing a particular feature would “be hard.” I said, “Of course it is, otherwise, everyone else would have done it already. We’re in the business of doing hard stuff.” Whatever your business is it better be hard and you better be the best at doing it. Otherwise, why bother?
Posted by Dave Dargo on July 16, 2007 09:47 PM
July 16, 2007 | Comments: (0)
Open Source at Dow Jones Enterprise Innovations Summit
On Wednesday July 18th the Dow Jones Enterprise Innovations Summit has a host of open source companies presenting. I will be there slinging heresy, hearsay and horror stories from the trenches.
Presenting Companies (starting at 10:30am):
MuleSource
SourceLabs
Groundwork
SugarCRM
Zmanda
I saw that Untangle and Coupa are also on the list but I can't figure out how to see the whole agenda on the website.
Posted by Dave Rosenberg on July 16, 2007 09:43 PM
July 16, 2007 | Comments: (0)
Intel, which until recently had been promoting it's own "ClassMate" low-cost computing design (and criticizing Nicholas Negroponte's efforts) has now joined the One Laptop Per Child project along side AMD, Google, Red Hat and others.
OLPC is a great project that promises to bring badly needed basic computing capabilities to developing nations. The OLPC defines a stripped down low-power laptop that runs Linux and it's own graphical shell. In order to keep the cost down, it uses no hard drive, has no built-in CD or DVD reader. But it has built-in mesh networking, and a simple suite of software including a browser, email, VoIP, chat, word processor and several programming languages. If you're not familiar with the OLPC there are some good videos on YouTube that give you an inside look into the design of OLPC from the designers themselves.
Even if the cost ends up being more than the original $100 goal, this is a great endeavor and shows the power of open source and cooperative design. Hats off to Intel for doing the right thing and getting on board with this project. Lets hope that business rivalry comes to an end where charity is at stake.
Posted by Zack Urlocker on July 16, 2007 09:29 PM
July 15, 2007 | Comments: (0)
Microsoft 'Shrink-Wrapped SOA' Coming in September
It's amazing to watch Microsoft continually be so clueless. 'Shrink-Wrapped SOA' is oxymoronic minus the oxy.
Regardless of the vendor, SOA "stacks" defeat the whole purpose of having a loosely-coupled architecture. Show me a stack vendor that allows for truly clean swapping of components with other vendors and I will eat my words. Of course even if a vendor's stack allows for substitute parts they are going to push toward theirs anyway.
Posted by Dave Rosenberg on July 15, 2007 07:08 PM
July 15, 2007 | Comments: (0)
Competing with the wrong companies (Hint: go after proprietary not other OSS)
On Competition and the Open Source Ghetto
I remain frustrated by the complete lack of marketing and business sense that many open source companies continue to display. I thought that we were past the whole foolishness of competing in the ghetto amongst ourselves vs. the big proprietary guys with lots of dough but it seems that the argument has just started taking other forms.
I just can't see a point in competing against other OSS companies/products when none of them have cracked a major revenue barrier. Everyone should be targeting the incumbent proprietary vendors who have all the money.
Let’s make some assumptions
-The majority of OSS companies that launched in the last 3 years are doing less than $10m in bookings for 2007, but let's assume $10m for ease of math
-If we take multiple proprietary companies within a specific market segment the impact on that company's revenue is equal to 1% (this is theory and easy math)
$10m bookings=1% of Proprietary Companies
Total opportunity=$1billion
So let's say you go to investors and tell them that you want to target this $1 billion market and that there are 2 proprietary guys and 1 OSS player.
Proprietary 1: $500m
Proprietary 2: $490m
OSS: $10m
So, who do you target? The big guys who are responsible for 99% of the money or the other OSS who you probably know better and have more in common with?
The obvious right answer is you target the big market. Who does Zimbra target? Exchange, not Open-Exchange. Who does Alfresco target? Documentum and Microsoft Sharepoint, not Drupal. Who does JBoss target? BEA and Oracle, not Jonas (or Tomcat or whatever.)
The BS of download statistics (or almost any statistic at this point) have become so meaningless and diluted that there is almost no correlation between downloads and revenue. (See Javier's post here.) In fact, you'll note that projects like JBoss had consistent downloads for a long time but revenues grew as customers bought more and average sale size went higher as more value was demonstrated. The # of downloads, rank on SourceForge etc. is schoolyard crap which the proprietary guys absolutely love. And they should, since this kind of stupidity only takes the pressure off of them.
If you work for an open source company and your team is focused on trying to beat other open source products you are doomed to economic failure. That kind of focus means you can't see the big picture and you should just return the money to your investors so they can invest it in companies that have bigger goals. It also probably means that your company is fueled by ego and your investors should probably take the money away from you before you start building Lenin-esque monuments to your engineers for refactoring a project ten times.
I have to admit that I am on a rage/disappointment roller-coaster with this kind of stuff every day. I can see the enormous opportunity that we all have and yet I feel like those who should be working toward the same goal insist on pissing contests with companies that feel the same exact way. In the meantime you probably just lost a customer to Oracle.
Open Source will only prove formidable if we are all working to kill the giants, not each other.
Posted by Dave Rosenberg on July 15, 2007 02:13 PM
July 15, 2007 | Comments: (0)
Softwar - An Intimate Portrait of Larry Ellison and Oracle
I've been reading Softwar: An Intimate Portrait of Larry Ellison and Oracle recently.
The book is interesting because it's written by Matthew Symonds, an author from The Economist, but Ellison gets to add footnotes explaining his side at the bottom of the page.
It's a quick read, quite funny. Since the book was published in 2003, you can track Ellison's visions, as stated in the book, with what we've seen. For one, he pretty much telegraphed Oracle's acquisition strategy in the book.
I disagree with his views on IBM's marketing (i.e. "how do they get away with the lies") and some of his statements on Microsoft. But hey, as I said, the book is a howl.
My favourite story from the book: Larry describes why he didn't buy Netscape:
Netscape's Navigator browser ushered in the Internet age. They single-handedly changed the Valley. EBay, Yahoo!, and all the other Internet companies exist because of Netscape. But Netscape had a big problem. It's just not very hard to write a browser. Andreessen wrote Mosaic in his spare time when he was in college. So there was no technical barrier preventing Microsoft from writing a competing browser. To emphasize that point, I said my cat, the one that recently died, could write a browser. For some reason that made Jim Barksdale [Netscape's CEO] and Marc very angry at me. I don't know why. She was a very smart cat. The two cats I have left, incidentally, can't program worth a damn.
Posted by Savio Rodrigues on July 15, 2007 12:12 PM
July 14, 2007 | Comments: (0)
PHP4 EoL - How will Users React?
The PHP development team officially announced PHP 4 end of life (EoL):
The PHP development team hereby announces that support for PHP 4 will continue until the end of this year only. After 2007-12-31 there will be no more releases of PHP 4.4. We will continue to make critical security fixes available on a case-by-case basis until 2008-08-08.
PHP 4 has been around for 7 years and PHP 5 for 3 years now. The PHP development team needed to draw a line in the sand and move forward. PHP 5 offers additional capabilities, more security, and OO, to list a few reasons for a PHP developer to upgrade. The fact that PHP 5 support OO programming (i.e. scary stuff for some of us) and PHP 4 "has pretty much all I need" have been reasons for PHP users to stay with PHP 4.
I make a distinction between PHP users (i.e. folks who tinker with PHP but really aren't developers by any means...i.e. me) vs. PHP developers (i.e. someone working at Yahoo/Flickr who codes in PHP for a living). A migration from PHP 4 to PHP 5 isn't as dramatic for PHP developers, even if their current applications are heavily PHP 4 based. PHP developers have the skills to troubleshoot any migration issues and re-write components as necessary. PHP users likely started with code copied from somewhere else that they've modified to the best of their abilities and understanding. So, when something doesn't migrate from PHP 4 to PHP 5, "who 'ya gonna call"?
Could a groundswell of PHP 4 users happy enough with PHP 4 and uninterested in PHP 5 capabilities be the impetus for a community to (form and) continue supporting PHP 4 beyond 2008-08-08? Realistic or not, I think PHP 4 users would prefer this option over migrating.
Could this situation test an OSS obvious truth: "you have the source, so why worry?”
Having the source to PHP 4 doesn't help a PHP 4 user like me too much. Arguably, countless PHP 4 users just need to find one person out there that will keep the PHP 4 development stream alive. Will that happen?
PS: I completely understand that the situation for PHP 4 users is much better than if PHP 4 was Traditional software and its EoL was announced. But hey, you could always pay to get support for a product past its EoL.
Posted by Savio Rodrigues on July 14, 2007 02:56 PM
July 13, 2007 | Comments: (0)
Human Mechanics: Why buzzwords make startups unlikely to hire you
As I posted a while back we are hiring at an alarming rate. Sadly it's not the glorious task that I had so hoped it would be. There was a week where we interviewed 40 people and hired 2 of them, which I think is actually not a bad percentage but it was really painful.
One disappointing trend I am seeing is the rise of candidates who have made half-assed attempts at starting businesses that are based on nothing but buzzwords, which have now failed and they are looking for real jobs. Monetizing the "wisdom of crowds" is not a business model, and taking advantage of "long-tail" economics is not why startups are successful.
There is absolutely nothing wrong with starting your own company. In fact I encourage everyone to do it. But, you should be smart about it. And when I see these things on resumes from "founders" of companies that can't articulate what their business is, or why someone should care I immediately discount them as a candidate.
On the other side, I have recently met several very interesting startups that may not have totally figured things out but are working to focus themselves and their businesses. Startup mechanics require more than a misspelled name and AJAX you need to understand your market and create a great product that has viable long-term revenue. And if you want to work somewhere as you figure things out be honest about why your idea is where it is.
Just because you can create a decent application doesn't mean anyone will actually use it. Nor should you expect to build a business on only one revenue stream—especially not one as fickle as advertising. When I saw Zack's post on GOOG surpassing IBM's market cap I started to wonder what would happen if there was some global incident that took down Google (unlikely but not totally impossible.) In that case Google's revenue would go away and IBM would still be standing. And all the companies that rely on advertising for monetization would all be dead.
Go out and build a product that has value and your company will be far more successful than if you try to ride a weak trend.
Disclaimer: Open source may be a trend. I haven't decided yet. However it's clear that there is not a bubble like Web 2.0.
Posted by Dave Rosenberg on July 13, 2007 12:57 PM
July 13, 2007 | Comments: (0)
O'Reilly's OSCON, the original and perhaps best open source conference takes place in Portland Oregon July 23-27. I've been going to OSCON for a few years now, and it's a good place to see open source "in the wild." Yes, there are some VC's and a few marketing types but mostly this is a conference for open source developers and those interested in using open source and contributing.
There are tracks for topics ranging from web app development to databases, security and random emerging topics. In recent years, they've added a 1-day executive briefing session called O'Reilly Radar, which focuses on the business of open source, presumably to keep from watering down the technical focus elsewhere. It's a good approach. They've done a good job tuning the conference over the years to keep it interesting. Speakers include the likes of Chris DiBona from Google, Larry Wall creator of Perl, Guido Von Rossum creator of Python, Rasmus Lerdorf creator of PHP, Matt Asay from Alfresco, Brian Aker from MySQL, Mitchell Baker from Mozilla, and many others.
Don't expect luxury food, but otherwise, there's lots of good meaty discussion.
Posted by Zack Urlocker on July 13, 2007 08:50 AM
July 12, 2007 | Comments: (0)
SaaS vs. OSS? Users choose SaaS, next question.
Tim O'Reilly has an interesting post on why the GPLv3 took a pragmatic approach when it came to the "SaaS loophole" (i.e. SaaS apps aren't redistributed; no redistribution means SaaS vendors can use GPLv2 code with modifications and keep the modifications to themselves).
Tim states in the comments to his post:
Having the source to Google or Amazon or eBay or CraigsList also won't let you replicate the service, unless you have millions of dollars to spend on infrastructure, employees to manage the ongoing services, etc. etc.
I've found it amusing that OSS supporters calling for software vendors to open source all their software believe the future of the software market is SaaS+OSS. Let's pause here for a second.
According to the FSF, here are the 4 freedoms that free software should provide:
0]The freedom to run the program, for any purpose (freedom 0).
1] The freedom to study how the program works, and adapt it to your needs (freedom 1). Access to the source code is a precondition for this.
2] The freedom to redistribute copies so you can help your neighbor (freedom 2).
3] The freedom to improve the program, and release your improvements to the public, so that the whole community benefits (freedom 3). Access to the source code is a precondition for this.
Yes, free software and open source software is different (as RMS has often said). But OSS proponents rely heavily on the above 4 freedoms when describing why OSS is a better answer than Traditional software (...to what question?).
I'd argue that SaaS expressly prevents freedoms 1 through 3. Considering that SaaS delivers on only 1 of 4 freedoms that OSS proponents suggest are immutable, why the love between SaaS & OSS?
In a future with SaaS at the core of non-commercial user applications, I suggest that the key things that users will care about are the openness of:
1] their data (via something like Wesabe's data bill of rights, as Tim points out)
2] the application GUI
The source to Gmail will not greatly help me replicate Gmail. But an open GUI api will help me (or someone else) create things like better Gmail without (messy & brittle) hacks.
Thoughts?
PS: I doubt the success of SaaS in commercial user applications. I base this view mostly on the (un)willingness of IT managers & CIOs to cede control outside the walls. But I could be wrong here. Technology aside, we can't overlook human nature.
Posted by Savio Rodrigues on July 12, 2007 11:55 AM
July 11, 2007 | Comments: (0)
Last week, Google stock (nasdaq:GOOG) hit an all-time high of $541 with a market cap of $169 billion (yes, with a B). That put their value higher than IBM's and on par with Cisco. Not bad for a company with an open source infrastructure.
But alas, it was a short-lived record. This week, with Google's acquisition of email security provider Postini, the stock price shot up again to a new high of $543 and today closing at $544.
I think Google's got a good strategy of building up a modern software suite optimized for the web, and this provides another piece of the puzzle. But it's hard to know whether the share price is justified. Is it a bubble? Or is Google going to overtake Microsoft by taking the battle from the desktop to an online world with a classic disruption strategy?
Posted by Zack Urlocker on July 11, 2007 06:19 PM
July 10, 2007 | Comments: (0)
We've recently hired our first CIO at MySQL, and it's interesting to consider how the role of the CIO is different from what it used to be. MySQL has some particular challenges from an information management perspective because we have so many employees working from home around the world. Otherwise, I think the role of CIO at our company is not that different from most other young companies. But what's really changed is the nature of IT in the past six or seven years.
Back in 1999 and 2000, a lot of IT effort was spent in scaling up. CEOs were asking their IT organizations to get them on the web, rollout ecommerce solutions and get it done fast. Money was no object as long as companies could somehow be part of the Internet boom. Billions were spent on expensive hardware, application servers, content management systems, and complex Enterprise Application Integration (EAI) solutions to tie it all together to the new web infrastructure. Then as we hit the dot com bust and larger telecom bust in 2001, suddenly... everything... slowed... down.
Not only was there an excess capacity in bandwidth, but hardware was going for ten cents on the dollar. Budgets were slashed. Jobs cut. Businesses shut down.
But there were still critical projects to be completed. So a lot of savvy IT folks figured out that they could deploy cheap commodity x86 hardware and LAMP (Linux / Apache / MySQL / PHP) software that didn't require budget approval. No doubt a lot of open source infrastructure and tools got brought into organizations under the radar.
I also think there's a fundamental shift in most company's tolerance for expensive IT projects. As a rule of thumb it used to be that payback periods for IT projects had to be around 12-18 months, about the average tenure of a CIO position. (Remember, CIO stands for "career is over.") But I think too many people got burned on expensive projects. In my view, the days of multi-million dollar enterprise licenses have gone the way of the dodo.
These days, I expect that even if there's a positive payback, most companies will avoid "big bang" projects in favor of smaller, incremental solutions. I've seen my share of expensive Enterprise ERP and CRM applications that took twice as long as expected to implement and never got widespread adoption. I doubt there was a positive return on investment for many such projects.
Now that many IT staffers have several years of experience with open source infrastructure software, I think a path has been cleared for open source applications, whether it's for ERP (Compiere, OpenBravo), CRM (SugarCRM, CentricCRM), Content Mangement (Alfresco), eMail (Zimbra), etc.
I don't think most young IT organizations thinks about the old-school heavy duty client/server enterprise software model much any more. (Or if I'm drinking too much web kool-aid here, let me know.) So for many, the options come down to home grown, open source or "on demand" or hosted services. Given the high quality of open source applications these days and the low upfront costs of on-demand solutions, I think most IT organizations would be better off not writing their own custom solutions. In some cases maybe the needs are very specialized, but otherwise you're better off getting a working solution and adapting your business.
At MySQL we have a mix of open source, closed sourced, on demand systems and some very old legacy homegrown apps that we're in the process of replacing. We use JasperSoft for some of our reporting, as well as Pentaho for some data warehouse projects. We have Zimbra collaboration suite for email and calendering running a pilot project. We use Asterisk for VoIP. And of course, we're running MySQL 5.1 beta in production in about half a dozen internal applications including much of our web site. I'm sure there's some other open source apps we're using that I've missed.
With the wide range of open source applications out there, from Alfresco to Zmanda, there's no reason a CIO can't get what is needed to run the business with a mix of open source and on demand applications rather than expensive closed source solutions.
Posted by Zack Urlocker on July 10, 2007 12:03 PM
July 10, 2007 | Comments: (0)
Revisited - Returns on open source VC investments
I questioned the value of VC investments in OSS in a previous post. I estimated that the investments would have to be worth between $12.5B and $19.6B to be in line with the historical rate of return for VCs (i.e. 57%).
Well, I was wrong, (somewhat). Matthew provided the yearly details of OSS VC investments and calculated that the investments would have to be worth $9.5B at the end of 2006.
Here's the Google Spreadsheets file.
If you redo the analysis to calculate the value of investment to June 2007, the result is $11.9B, much closer to the $12.5B I'd estimated.
But that's not the most interesting part. Let's ignore VC investments in OSS from 2000, because that was bubble mania at its worst. And as Matt Asay points out,
Most of the early money invested in open source wasn't invested in open source companies at all or, rather, into companies that styled themselves as such.
Matt goes on to suggest that VCs with OSS investments are in for banner results when IPOs and acquisitions start to accelerate in 2008/9.
If we only consider the investments from 2001 to 2006, the sum total invested was $1.44B. This investment would have to be worth $4.7B to be in line with historical rates of VC returns. Anyone else think that $4.7B of "value in VC funded OSS firms" is easily defensible?
So, there you have it. Next time someone tells you that VCs should be weary of investing in OSS firms because they're uneasy about returns, show them this analysis.
I hope this wins over some readers who are missing Matt's general exuberance for all things open source. Remember, I'm on your side, if only with one glass of the OSS Kool-Aid in me (versus Mr. Asay's 21 glasses :-). Pulling out the old calculator once in a while helps to add credibility to our views. I hope to challenge some status quo views on OSS and maybe learn a thing or two along the way!
Posted by Savio Rodrigues on July 10, 2007 03:00 AM
July 09, 2007 | Comments: (0)
Funding FSF's fight vs. Microsoft
Via CBR, I read Bob Sutor's (VP of Open Standards for IBM) comments on Microsoft and GPLv3:
Frankly, whatever they say, it might end up being up to the lawyers and other aspects of the legal system to decide what it all means.
Yes, it looks like the lawyers are going to be busy ($$$$). I tried to determine how much the FSF has in its coffers. The FSF website says:
Review our financial information now at Charity Navigator.
I couldn't get any detailed financials for the FSF via Charity Navigator as the site kept giving me a 404 when I tried to get details on the FSF. I did manage to get this (after registering). It seems that the FSF collects about $788K, with total expenses of $698K and net assets of $892k. I assume these are 2006 figures. The FSF will need significantly more donations if the GPLv3 debate makes it to the courtroom. Get your cheques/paypal/etc ready!
On that note, I noticed a Help Make Poverty History graphic on the top right-hand corner of Bob's blog. If you think the GPLv3 fight is important enough for your donations, maybe you'll consider this fight also? I don't mean to preach as I'm certain readers devote their resources to charitable endeavors as they see fit. But, if you're looking for an interesting book, check out The End of Poverty by Jeffery D. Sachs.
Posted by Savio Rodrigues on July 9, 2007 10:33 AM
July 06, 2007 | Comments: (0)
Returns on open source VC investments
Matthew Aslett reports that VC funding to open source startups rose more than 33% in 2Q07 vs. 2Q06. A decline in funding in 1Q07 resulted in an overall decline of 6.4% to $198.85M in 1H07 vs. 1H06. Matthew estimates that a total of $2.05B has been invested in open source startups since 2000.
I found this report from the National Bureau of Economic Research (NBER). Founded in 1920, the NBER is a private, nonprofit, nonpartisan research organization that has hosted 16 of 31 American Nobel prize winners in Economics. (i.e. NBER appears 2legit2quit). The research paper indicates that VCs, on average, get a 57% return on their investments. This is based on an analysis of 17,000 financing rounds in 8,000 companies, representing $114 billion of VC dollars, between 1987 and 2000.
Using: F=P*((1+i)^n) where
F = Today's value of the VC dollars invested in OSS
P = Initial Investment; in this case $2.05B invested in OSS by VCs
i = Rate of return; in this case 57%
n = # of years invested; in this case 6 (we should use 7 b/c Matthew's data is from 2000 to 2007, but 2007 isn't over and more was likely invested in 2007 than in 2000)
^ = Power of
Bingo, bango, for VC investments in OSS to track with the historical 57%, the $2.05B invested would have to be worth $30.7B. Wow. Is there any way that OSS vendors are worth that much today?
You'll argue that the complete $2.05B wasn't invested for 6 years. Valid point. So, if you run the numbers with different input for # of years you get:
@ 6 years F = $30.7B
@ 5 years F = $19.6B
@ 4 years F = $12.5B
@ 3 years F = $ 7.9B
If Matthew could provide the yearly or quarterly splits on VC funding to OSS, we could get a better sense of whether $7.9B or $30.7B is the correct target. My gut says it's closer to the $12.5B to $19.6B.
Maybe the VCs are doing the same math and realizing that their OSS investments aren't driving returns in line with historical norms? If so, this would be a 3rd factor in why VC funding to series 'B' and above is increasing while series 'A' seems to be drying up for OSS vendors, as Gianugo Rabellino, CEO of Sourcesense has posted?
Or maybe I just suck at math?
Posted by Savio Rodrigues on July 6, 2007 09:01 AM
July 05, 2007 | Comments: (0)
Artificial Scarcity vs Value Triggers
The obvious question that any open source "business" needs to address is how to get people to pay for offerings. Being that the code is out there and customers can theoretically support themselves and/or never pay there needs to be a compelling reason for them to give you their money. Open source companies typically sell subscription support and services and layer value into the subscription through a variety of mechanisms.
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