‘’Going Open’’ – Why & How? Part 1/2

- Mikko Puhakka

There is a going trend among companies not just supporting and appreciating open source, but also ‘’going open’’ by releasing their new development efforts as open source or converting their formerly proprietary offerings open source by releasing the source code under some open source license such as GPL.

I believe there are many misconceptions among organizations as to what can be gained by this and even more misconceptions as to how to manage the process.

Some Myths:

- Open Source is hostile to intellectual property.
- If I give away my software to the Open Source community, thousands of developers will suddenly start working for me for nothing.
- The Open Source movement isn’t sustainable, since people will stop developing free software once they see others making lots of money from their efforts.

(Free/Libre Open Source Software: a guide for SMEs 2007)

Some reasons why select companies are making the move:

SUN Microsystems wanted, according to CEO Jonathan Schwartz in a Matt Asay interview, move to open source development and distribution strategy because:

‘’Early on at Sun I ran our developer tools business. There’s no clearer place than that to see that if you don’t drive adoption you won’t get revenue.
But not from the developer. No self-respecting developer pays for software. The average start-up or corporate developer doesn’t want to buy any software. Nor do they have to, because there are great open-source projects that do the same things that proprietary products do.
We distribute three to four million copies of OpenOffice every week, and probably have 100 million users worldwide. The bulk of these users are students, retirees, etc. I didn’t have access to these through an enterprise direct sales force. The only way to reach them was through free distribution over the Net.

Most don’t care about the license–they care about the money they’re not spending. (Think about how bizarre Google’s model would be if they charge 10 cents for every search.) But those students and free users of today are the corporate buyers of tomorrow.’’

CONTINUENT aimed at an offensive and defensive move.

Offensive in terms expanding market reach, defensive in term of taking control of open source project which could have become a competitive thread if let develop freely on its own. Continuent used to have proprietary clustering for open source (m/cluster classic for MySQL). They acquired rights for Sequoia open source project (www.continuent.org), formerly know as C-JDBC on Object Web) speeding up the project development as well as making it more manageable from business perspective by dedicating some in-house resources and that enabled them to expand product offering beyond MySQL, initially including also PostgreSQL and then subsequently added also support for commercial databases (Oracle, SQL Server, Sybase, DB2).

As a part of this process they opened or kept open some 90% of the code base and then create commercial value-add layer based on knowledge on specific databases.

And some results:

SUN according to Schwartz: ‘’In a year where Sun arguably moved more aggressively to give away more free software than any other company, we grew our software business by 13 percent. It was the fastest-growing business at Sun (and doesn’t even include Solaris, which we don’t yet break out). We pumped out more software last year than we have in the history of the company. We gave it away. And yet our software business grew by 13 percent.

How?

If you’re a London developer that happens to work for a bank, maybe you have your laptop set up with Ubuntu. It’s perfect for you, and it’s free as in beer. But if you’re the CIO at that same company, you’re going to demand a support contract for Ubuntu (or Solaris) running on your mission-critical servers, because you don’t want the risk of systems going down without backup.

I don’t expect many college students, developers, or start-ups to spend a lot of money on intellectual property. I expect someone whose job is on the line if a system fails to spend considerably more than nothing. The key is figuring out the difference between one’s market and one’s community. They are not the same.'’

Continuent with open source solution, according to the CEO Eero Teerikorpi, the approach has enabled us to move into subscription pricing and allowed us to significantly increase the services sale revenue. The marketing cost has definitely come down, but the sales cost has also come down, although that is expected to go back normal level when we move from early adopters to normal sales cycles.

For further insights I encourage you to look into the materials we published in the OSSI-project (available for free as pdf-downloads)

Disclaimer: Sun has funded some of my research and Continuent is a client of mine

Part 2/2 of this post will include some key things to consider when going open such as:

- Core vs. context
- Viral vs. non-viral licenses
- Importance of managing rights
- Conversion rate vs. natural ratio of customers vs. community users

Julkaistu 14:40  /  Kommentoi