Open Source: No one is working for free

People continue to wonder how to make money in the free and open source software world. It’s dressed up in discussions of how one makes money when you give away the software for free, or why developers are working for free. It can likewise lead to a management backlash of not contributing to FOSS projects because some think their developers are working on FOSS instead of their own work.

Here’s a different way to think about it. Everyone is familiar with the idea of a normal "bell curve" distribution representing R&D investment over time. As a technology is better understood and a product succeeds in the marketplace R&D investment increases, and over time as new technologies advance the R&D investment in the original technology and product wanes. The function can also represent the "knowledge" gained or the increase in the intellectual asset base. Taking the integral of the normal distribution gives us the total investment and is the “S”-curve that is familiar to many when discussing technology innovation over time.

Good companies develop and invest in new successive waves of sustaining technologies. Microsoft’s success in PC operating systems started with DOS, then Windows, and finally enormous investment in Windows NT. Strong companies are good at sustaining innovations and know how to jump from technology to technology along the sustained innovation path. This is easily seen when looking at a single company’s R&D investment. These observations come from Clayton Christensen’s work as described in “The Innovator’s Dilemma.”

The R&D investment curves for projects like Linux and Apache still look like bell curves despite lots of individual and corporate contributors. These contributions, however, might best be viewed as a stacked bar chart. Individual contributors invest to meet their specific needs. As a project gains wider use, more contributors get involved. Because there is enormous overlap in their common needs, the sum of the investments remains the same but everyone is sharing the costs.

Individual contributors get enormous return on their investment. (One gives a few bug fixes to the Apache httpd team, but gets an entire HTTP server in return.) Organizational contributors give for the same ROI. They get enormous return in the technology they use as a complement to their products and services or as a component in their overall solution to the customer when compared to the investment in their contributions.

One can see this with the continued growth in the Linux community as it is adopted by more and more embedded device and mobile handset manufacturers. One only need read the Linux Foundation report charting the growth statistics in the Linux kernel to understand the enormous shared value generation happening release-on-release, four times a year.

The economics of open source works. The value gained by each contributor is enormous when compared to the cost of contributing. Nobody is working for free.
Source: http://www.networkworld.com

Open source could be a success story, too: Red Hat CEO

MUMBAI: From airlines to open source software, Red Hat’s global CEO Jim Whitehurst has made a smooth transition. Mr Whitehurst, who was the chief operating officer(COO) of Delta Airlines in his earlier stint, and helped the bankrupt airline return to profits, is now at the helm of open source software vendor Red Hat, which competes with firms several times its size such as Microsoft and Oracle.

Mr Whitehurst’s focus has been to change Red Hat from what he calls a one-trip pony selling, supporting open source operating system Linux to an enterprise infrastructure software firm, competing on technologies like cloud. “If you look at how we are positioned now with our customers and how analysts view us, we’re an enterprise infrastructure company.

That’s been a great transition. One of our biggest contributions to open source is our growth in profitability. It demonstrates you can have a successful model around open source,” Mr Whitehurst told ET in an exclusive interview.

Coming from an airline, the 42-year-old Mr Whitehurst is an unlikely CEO for a technology company, and more so, a company that makes profits from selling free software.

When he left Delta, he was approached to do a lot of additional turnarounds, but Mr Whitehurst said rather than trying to fix something, he wanted to build something, where there was a buoyant canvas to be painted, and Red Hat fit that bill. Red Hat was also looking for someone from a non-tech background and Mr Whitehurst’s profile, with his interest in geeky stuff, matched it well.

Other than expanding Red Hat’s portfolio, Mr Whitehurst worked on diversifying its customer base to include more than just banks (NYSE Euronext is one of its customers) and telecom firms, that are typically early adopters of technology.

“When I joined, our top customer list was great — all major banks and telcos. But where’s everybody else? Where are the big mainstream users of IT? That’s one of the key things that we worked on,” said Mr Whitehurst. Red Hat today has railroads, utilities, airlines and petro chemical firms on its top 25 customer list.

“The most powerful force in technology is not Moore’s law, its inertia,” said Mr Whitehurst, who beefed up support from systems integration partners and independent software vendors to extend its presence among customers.

“People want to feel confident they can deliver what they promised. And we generally feel more confident doing something we’ve done before. So if you are a systems integrator and you want to deliver for your customer, you feel more confident using things you’ve delivered before. So there is an inertia out there that we’ve to just overcome,” he added.

Even as Microsoft and Google get more aggressive in the consumer space, Mr Whitehurst is clear that Red Hat will not dabble in the consumer business.

“We’re an enterprise software company and we will stay focused there at least for the medium term... Look at Apple, they’re a consumer company. Look at Oracle, they’re an enterprise company. Very few companies have been able to do both well, and not just in technology but in business in general.” Red Hat is participating in India’s ambitious Unique ID project through its partners.

Source: http://economictimes.indiatimes.com/

Facebook has problems, Diaspora isn't one of them

The bigger a company becomes on the Web, the more likely it is to be accused of privacy violations. Google has been fending off privacy concerns for years, but it's now Facebook's time in the limelight.

An increasing number of people are concerned about Facebook's privacy policies. And while some are reportedly looking to jump off the Facebook train, most continue to complain...on Facebook.

Enter the Diaspora project, an open-source social network that eliminates the midddleman, the "anti-Facebook."

Diaspora attempts to solve Facebook's privacy problems at the infrastructure layer, using a decentralized, peer-to-peer approach. Unfortunately, this approach has the potential to limit the service's appeal by introducing complexity, as ReadWriteWeb explains:

Because not everyone will be technically capable of (or interested in) setting up their computer to function as a "seed," there are plans to offer a paid turn-key service too, similar to Wordpress.com, the blogging platform. Wordpress itself is software you can install and configure on your own server, if you're inclined to do so, but if you're less technically-savvy, you can opt to quickly start a blog via Wordpress.com instead. Diaspora would function in a similar way.

In other words, if you care deeply about a decentralized social-networking service and have the technical chops to set it up, Diaspora provides a way to do that. For everyone else, there's a somewhat centralized Web site.

This is progress?

Let's be clear: one of the primary reasons for Facebook's success is that it disintermediates the complexity that makes it hard for 400 million (and counting) people to connect to each other. For Diaspora to compete, it needs to be more than merely open: it actually needs to be better at connecting hordes of people simply, casually, easily.

As Identi.ca, the open-source Twitter clone, has shown, there's a niche market for those who prize openness over other considerations. But it's niche. The mainstream doesn't have time to set up seeds or otherwise follow openness for openness' sake.

I don't foresee Diaspora ever breaking into that mainstream because it's starting from the wrong premise: it treats privacy and decentralization as its primary goals. This isn't how users see it, though. For most people, privacy is a secondary concern (though it is a concern). The primary concern is connecting with friends and family.

So long as network effects favor Facebook, Diaspora users will remain few and far between.

If anything, the best Diaspora can hope for is to help prod Facebook to improve its privacy policies and communication about them. This is an area that Facebook recognizes it needs to improve, as Elliot Schrage, vice president for public policy at Facebook, notes in a recent interview:

It's clear that despite our efforts, we are not doing a good enough job communicating the changes that we're making. Even worse, our extensive efforts to provide users greater control over what and how they share appear to be too confusing for some of our more than 400 million users. That's not acceptable or sustainable. But it's certainly fixable. You're pointing out things we need to fix...

I sincerely hope that Diaspora can help motivate Facebook to improve how it handles users' privacy. I just don't think that it provides compelling competition for mainstream Facebook users who need ease of use before they need to be worrying about "seeds" and such.

Source: http://news.cnet.com/