Alberto Saavedra 2.0

Microsoft, Apple and Amazon reported this week great first quarters which are in sync with last week’s earnings results reported by Google, IBM and eBay, confirming a healthy IT/Internet industry (besides Yahoo). So the question in the air is who rules this sector?, some are saying that Google does, but comparing current revenue figures it is not that clear yet, so let’s take a look at some IT history:

• The hardware era. IBM was the mainframe leader, but it was not until the IBM PC dominated the personal computer market share that its ruling was recognized.
• The operating system era. Microsoft beat IBM with Windows 95, and Netscape with Internet Explorer as the killer consumer application.
• The web era. AOL and Yahoo were the most visited properties in the US on 2000 and this February Microsoft sites were the most visited properties worldwide.

IBM sold their PC business division and nowadays focuses in enterprise software-based services and corporate middleware which are almost unknown for general consumers, Microsoft’s newer versions of Windows and Office are showing strong sales as Apple’s iPods and Macs but the preference among general consumers is for a company that provides free advertising-supported services: Google.

Also this week, Millward Brown crowned Google as the most powerful brand coming from the 7th position last year; this fact combined with comScore’s yet to be released figures for March that have Google sites as the most visited, the dominating figures in the international search landscape and US’s search engine market share, and the estimated 80% market share of online ads serving that DoubleClick’s buy brings, are some indications that we are living in a Google’s consumer web world; although some traditional media companies still do no understand the business model.

Google is a mixed-source company, they use open source in their infrastructure and propietary code for business secrets; with a different model than controversial’s Novell approach: free web apps/services, they support and encourage OSS development with programs like the Summer of Code. The well-established server stack AMP and the rising client stack OFT have confirmed OSS is ready for corporate environments so mixed source infrastructures are a reality and companies are paying more attention to this trend.

Open source web servers are still leading the market, PHP, Rails and MySQL are continuously powering Web 2.0 applications with scalable architectures, Ruby and Python are in the top 10 of most popular programming languages; these facts confirm Nat Torkington’s OSS trend: Web 2.0 is FL/OSS, presented earlier this month at China OSS Summit. But in the corporate world Microsoft platforms are still leading; although Enterprise 2.0 adoption is growing, current infrastructures are not going to change so fast, but since OSS is leading innovation in the social web, closed source companies have no other option than to start to embrace OSS - one of 2006’s trends - and mixed sources infrastructures are inevitable.

One of the things you probably didn’t know about Open Source is that it is older than proprietary software, it is a development model that promotes open access to the generation processes of products, resources or content embracing collaboration and freedom of choice. This disruptive model is a bit difficult to understand, mainly because the current perception of success in the software business keeps us looking for the Open Source Billonaires or the survival of the strongest. But the value of OSS is not only related to costs’ reduction, there are other strong reasons to use OSS like access to faster innovation as the study on the economic impact of OSS on innovation shows, every year code valued at 800 million euros is available for anyone to use; so, in theory, everyone is a potential millionaire, all we need is a business plan.

Red Hat has a working business model resistant to competitive attacks from Oracle and Novell-endorsed-by-Microsoft as this analysis of Open Source Business Models presented at EclipseCon 2007 shows. Brent Williams provides evidence for 2 interesting statements that invalidate some myths of OSS business models: software is not price competitive at market level and the software market does not behave like a commodity market. Other successful companies are MySQL and SugarCRM who built their business strategies around an architecture of participation.

The research community is also increasing their attention towards FL/OSS; 6 EU-funded projects are working actively and one of them - FLOSSMETRICS - has identified the available data sources on OSS projects. In their study of business models adopted by 80 FLOSS-based companies 6 categories were identified: twin licensing, split OSS/proprietary plugins, badgeware, pure FLOSS, platform providers and consulting companies; this gives us some guidance to the different attempts companies are trying to monetize open source.

Another interesting research explores the changes OSS created in the economic interaction among players in the software ecosystem. It identifies the economic motivation for system integrators (more potential customers), software vendors (services company) and developers (free agency) to embrace open source. Of the three groups the ones that are being disrupted are software vendors; while we are moving to a user-centric world, where some people think there is no customer value in proprietary software, closed source companies need to adjust to maintain their leadership and it looks like Microsoft is realizing that open source is in their future.

Transparency is driving OSS to become a natural part of the IT landscape, we may never look at the source code of the applications installed but if we want/need to do it at some point we can. The first thing anyone needs to know about open source is the differences with the free software movement, which considers proprietary software as the enemy and their evangelists live up to the principles; OSS leaves the door open for capitalists funding and co-existence with closed source infrastructures. Other interesting tips to consider are the rules to start working with developers’ communities provided by Tobias Schlitt and the rules for running a project provided by Greg Beaver.

There are interesting predictions on what the future of the web will be: Mozilla’s Web OS, the Web 4.0, Gartner’s Goog-Azon pretailer and life in Virtual Worlds. The next big innovation in the browser market is offline/desktop support for web applications and Adobe’s donation Tamarin VM seems like a key component for this expected feature; other options that embrace OSS include the Dojo Offline Toolkit for AJAX applications and Joyent’s Slingshot for Rails applications. Even Adobe has partially accepted Joyent’s invitation to open source Apollo by open-sourcing the Flex SDK and this move may force Microsoft to open source some of Silverlight at Mix07, if this happens is a validation of the growing impact OSS has and break-through applications like the Web VM g.ho.st will be easier to develop.

The next big applications on the Internet are virtual worlds; they bring a more realistic, interactive and social experience than any social network interaction through the web browser now. This virtual 3D web has the potential to establish a virtual economy bringing proven traditional business models to the virtual worlds. Second Life is the most prominent virtual world and some interesting newcomers to this market include Entropia Universe and Red Light Center, other alternatives are listed by Onder Skall; while this market keeps maturing Second Life is taking the OSS path by opening the code for its client software and planning the release of the server code too, in an effort to use the community’s knowledge towards the establishment of a fully distributed 3D network.

Open approaches have changed industries as Sean Ammirati shows in his Open Ethos examples related to the publishing and software industries, but there are still some things to figure out. The Free Software Fundation is pushing some changes in the GPLv3 license to be prepared for Microsoft/Novell-like deals sending a clear sign what the free software movement wants to protect. In a similar tone, activeCollab’s project founder moves to try a different business model have strong resistance from the community, specially if he expects to keep the brand, raising the question of the value of open source to open services. With Microsoft now showing more interest than ever in open source, probably not yet with the motivation to start a Microsoft Summer of Code, it is important to start finding the best practices applicable to mixed source environments, nothing is going to stop this shift now.

Labels: knowledge sharing, open source

# posted by Beto : 2:46 AM