Saturday, October 30, 2004

The Open Source Dilemma

It is easy to dismiss Free Software as the dabblings of a bunch of geeks on the fringe. Open Source software is another matter. Open Source is about business, making a profit and in the end, economic domination.

There are many motives for an enterprise adopting the Open Source model. For a small startup company, Open Source can be about creating a cheap and effective distribution channel. If you look at the income statement of a typical software company, sales and marketing is the single largest expense, and most of that money goes to the inefficient one-on-one process of a salesmen persuading a customer to spend a lot of money on the software package. As a Venture Capitalist might say, it is a process that is difficult to scale.

On the other hand, Open Source is like try before you buy. The game is to persuade as many people to download the product and try it out as is possible. Only after they have tried it out, found that it works and go to put it into production, do they discover that there are plenty of good reasons why they should pay for the product, or at least for support. Selling is a subtle job of positioning, partnering with other successful Open Source products and plain old getting the word out. Even so, the Open Source product is cheaper than the conventional software package because you do not have to pay the odious salesman their hefty whack.

A more interesting game is played by large companies who use Open Source for economic warfare. Open source can be used to weaken a competitor by destroying their economic value. It is a game that the larger, stronger, more diversified and aggressive company wins. A well known example, although not exactly open source is the Microsoft and Netscape saga. Netscape's principal product was a browser that they were selling for a modest sum. Microsoft killed the market for browsers by giving away their Internet Explorer with the operating system.

Interestingly enough, as a part of their war on Netscape, Microsoft opened up the source of Internet Explorer, and licensed it relatively cheaply to companies that wanted to build their own browser based product. When Netscape looked at their code, they discovered that they could not respond. Game and set to Microsoft, however it is not clear whether the match is over yet. Netscape rewrote their code and it has been released as the Open Source Mozilla browser. With security problems swirling around Internet Explorer, Mozilla has a chance of making a comeback.

IBM is an example of a big company that is actively supporting a number of Open Source initiatives for various purposes. IBM has helped develop Linux. One reason is that Linux can extend the life of the mainframe. However, a side effect is the Linux has developed to the point where it is getting to be a contender for the desktop, and thus capable of sucking some of the air out of Microsoft's lungs.

Another IBM product, Websphere is connected with the Apache Open Source web server, and IBM continues to donate software to the Apache Foundation. IBM also took an also ran development environment and turned it into the leading IDE by making it Open Source. IBM sells hardware and services as well as software, so giving away a little software to help grease the skids for an integrated sale of hardware, software and services is an excellent tactic. In fact, giving away the software to sell the hardware was standard operating procedure at IBM for many years.

So now we come to the Open Source dilemma. The first thing is to realize is that there is no such thing as a free lunch. Any software that you select is going to cost you money, and the cost of the software license is only part of the total cost. You need to pay for the implementation of the software and the hardware that it runs on. You need to train staff to manage and use the software, and you need staff to keep it running.

Thus, you are making an investment by selecting software package even if the package itself is free, and you need to protect that investment. If you do not have a relationship with the entity that produces the software, you do not have any control, and the investment is at risk. There are many types of relationship that you could have, offering code or other services in return, but the easiest way to have a relationship is to pay for it.

The core of the dilemma is that by choosing an Open Source system you may be getting involved in a battle of the giants. In any battle there is going to be a winner and a loser and while the battle is going on, anyone near the field of battle risks being trampled. When selecting Open Source software you need to do due diligence, looking not only at the resources and stability of the producers of the package, but also their motives and the likelihood that they will prevail.

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