Author: Sam Jose
Free and open source software has become the newest craze in business and IT world. The second question ‘is it good for my business’ now takes a secondary position. Both business owners and managers agree to the use of free and open source software.
The real buzz about open source is not hyped by any corporation or company. It is a group of self motivated IT professionals from across America and Europe are behind this newfound attraction of open source software.
The main advantage of open source software is that the users have full control over the source code of any program delivered under open source license. Now people become more and more sensitized about the advantages of having access to the root of a program.
http://www.jbilling.com.
The main advantages that come with access to source code are Flexibility or adaptability, control, lowest possible costs, long term usage and upgrading without additional costs. The business house has to pay for coders and developers though.
Anyone is free to make any changes to software suites or programs released under Open Source License. Anyone can add, edit and make modifications to make the program work in any imaginable manner. The modifier is also allowed to resell the software.
Only restriction on such an open source license is that you have to provide access to the source code that you have modified or added. It is however not necessary to release source code of the modifications made to the original program if it is not distributed or sold. The developer company is free to use it for their own in house purposes. Whenever they sell it in the market, they have to license it under Open Source agreement.
Open source software projects, in most cases attract the fancy of skilled developers from around the world. They actively participate in collaborative development, fixing bugs and adding useful features. The end result will be a completely different software, may be many times useful than the original one.
jbilling Free Open Source Billing Software (http://www.jbilling.com/) remained the most active projects from among 137,389 open source software projects (as on Dec. 1, 2006) at SorceForge.net for quite a long time. SourceForge.net offers a collaborative environment for software developers develop open source software and is a source code repository which presently hosts many thousands of Open Source projects.
Open Source Billing Software project by jBilling has really picked up momentum and the present version 1.0.4 is available for free download at their website.
Friday, June 20, 2008
Open Source Initiatives Need More Concerted Efforts
Author: Sam Jose
Major corporate houses choose open source partly due to the economic gains and mainly due to the control the open source system gives to their hands.
The quest for control is a serious problem in open source arena. The problem sometimes seems trivial, but is really a loss of manpower by the professionals developing programs in open source environment. The problem is seeking too much of control leads developers develop their own solutions for specific issues.
Reinventing the wheel is quite a common problem in open source arena. Instead of using an already popular script, developers tend to write there own scripts for specific tasks. There may be hundreds of scripts with similar functions. There are however instances when a developer has to come up with something new when the existing system doesn't give the expected results. Developing a code from scratch will be faster than modifying existing program.
Proprietary software, in this sense is quite advantageous here. The developers working with proprietary software hardly ever goes to coming up with their own script as a solution for immediate problems at hand. Then again, proprietary software developers too invent their own wheels, but the goal is to avoid nasty situations like legal problems.
The nature of shared development of software development appeals to the human nature to have control over their destiny. This is true even when they can get customized 'solutions' by proprietary software vendors. The future is in open source, but it is premature to make predictions as to when Linux or an open source OS cross runs on 50% of the computers of the world.
Incidentally Microsoft Corporation's Shared Source Program is an effort by the corporate giant to somehow win the trust of open source community. Though Microsoft allows a peek into the source code, redistribution rights are neither granted nor expected. Only an illusion of free handling of source code, shared source program lacks the democratic nature of all open source initiatives.
Back to open source initiatives - open source initiatives find it quite difficult to get professionally talented developers to the fold, especially in the beginning stages. This is true for almost all open source initiative. The situation reverses when there are enough people in the fold and the project takes momentum at SourceForge.net.
There is one last thought for major corporations that have become so stepping on open source shoulders – spare some of your resources to enrich free software and open source software community.
Stumble It!
Major corporate houses choose open source partly due to the economic gains and mainly due to the control the open source system gives to their hands.
The quest for control is a serious problem in open source arena. The problem sometimes seems trivial, but is really a loss of manpower by the professionals developing programs in open source environment. The problem is seeking too much of control leads developers develop their own solutions for specific issues.
Reinventing the wheel is quite a common problem in open source arena. Instead of using an already popular script, developers tend to write there own scripts for specific tasks. There may be hundreds of scripts with similar functions. There are however instances when a developer has to come up with something new when the existing system doesn't give the expected results. Developing a code from scratch will be faster than modifying existing program.
Proprietary software, in this sense is quite advantageous here. The developers working with proprietary software hardly ever goes to coming up with their own script as a solution for immediate problems at hand. Then again, proprietary software developers too invent their own wheels, but the goal is to avoid nasty situations like legal problems.
The nature of shared development of software development appeals to the human nature to have control over their destiny. This is true even when they can get customized 'solutions' by proprietary software vendors. The future is in open source, but it is premature to make predictions as to when Linux or an open source OS cross runs on 50% of the computers of the world.
Incidentally Microsoft Corporation's Shared Source Program is an effort by the corporate giant to somehow win the trust of open source community. Though Microsoft allows a peek into the source code, redistribution rights are neither granted nor expected. Only an illusion of free handling of source code, shared source program lacks the democratic nature of all open source initiatives.
Back to open source initiatives - open source initiatives find it quite difficult to get professionally talented developers to the fold, especially in the beginning stages. This is true for almost all open source initiative. The situation reverses when there are enough people in the fold and the project takes momentum at SourceForge.net.
There is one last thought for major corporations that have become so stepping on open source shoulders – spare some of your resources to enrich free software and open source software community.
Stumble It!
Monday, June 16, 2008
The Difference Between Friend and Faux Open Source
Community: The Difference between Friend and Faux Open Source
There are lots of different perspectives on the topic of open source community. Some point to the unique development model, drawing together disparate contributors from around the world, most of whom never meet face-to-face. Others are intrigued by the governance model of open source development, which seems to function without any explicit hierarchy. Most commentators on open source fail to address what I consider the single most important aspect of community, the user community.
It’s easy to understand how product users get overlooked in all the histrionics about open source community. In part, it’s because it’s hard to know just who they are – this is due to the challenge of open source anonymity, which I addressed in the June 2005 newsletter.
Another reason that the user base gets overlooked is due to the current state of open source discussion. Many of the established pundits of open source are most interested in the developer community; indeed, they are, in some sense, the alpha males of the user community. The press has contributed to this as well; after all, it’s much easier to talk to the usual suspects than to unearth real users.
In my view, however, this ignores a central reality: for actual users of open source (the vast majority of the people who actually interact with open source products), the user community is the single most important factor dictating potential success for an open source product, as well as a critical predictor about the future of a given product.
Why is this?
Most users of software, whether commercial or open source, focus on software implementation, not creation. For them, information about configuration, integration, and tuning is all-important. Not only are they unlikely to contribute code to a project, they are unlikely to want to even compile the project source, far preferring to download executable binaries.
Consequently, the information they’re most interested in is practical help in getting the software running. For this, fellow users are a vital resource. Other users have probably already confronted (and solved!) the problem a new user is facing. One of the most fascinating things about open source is the phenomenon of users helping users. While it’s fairly easy to understand the motives for open source developers (scratching an itch, status, skill-building, etc.), it’s not as easy to understand the altruism of what is, in effect, free technical support. In my book I described one Perl mailing list contributor, Charles K. Clarkson, a real estate developer. His motive is that the pure logic of Perl programming problems offers relief from the irrational human interactions that make up most of his day – for him, tech support is stress reduction! In any case, no matter what the motives of the contributors are, the user community is where most users of an open source product will realize the majority of the value they get from the community.
However, some organizations choose to purchase technical support from a commercial organization. Primarily, this support comes from companies directly associated with a given open source product. For example, JBoss (the company) offers paid support and services for JBoss (the application server product). Many purchasers of paid open source support dismiss the product community’s importance, believing they have a higher-quality mechanism in place. This is a huge mistake on their part.
Here’s why:
First, the viability of commercial open source vendors depends upon the existence of a vibrant community. Commercial vendors survive selling to no more than one or two percent of the total user population of a product. Without a large community of users, there aren’t enough potential customers to support the vendor.
Second, a strong community is critical for long-term vendor existence. A number of open source companies have been funded recently, many of which are just developing their products. By definition, early-stage open source products have nascent communities. While these companies are currently operating on their venture funding, unless they develop large communities, their future is dim. If you’ve bet your infrastructure on a commercial open source provider like this, your risk exposure is quite high. In effect, you’re buying an option on the adoption of the product by a large community. This situation is likely to become more common, as more vendors decide to take advantage of the “magic” of open source distribution.
Many of these will be what I call “faux” open source companies that adopt open source distribution, but pursue policies more common to proprietary software companies. These policies, which include: (1) shielding developers from the community; (2) focusing most of the company’s energy on selling commercial versions of the open source product; and (3) holding features back from the open source product to make the commercial version more attractive, will all have the effect of hindering community growth. In other words, faux open source companies will never develop a strong community, and their products are poor choices for use, since the company probably will not survive long-term.
Third, and perhaps most important, a large community insulates you from vendor decisions. We’ve all seen software vendors change strategic direction and strand their users. Commercial entities operate according to their own motives, and just because a vendor is open source-oriented does not preclude this sort of shift from occurring. In fact, it’s likely we’ll see this happen more than once in the future. With a significant community, however, underpinned by a product with an open source license, the bond between product and vendor is broken. The community can take up an “orphan” product and ensure its viability.
For all these reasons, community is, perhaps, the key factor for organizations using open source. Most of them aren’t going to take advantage of source code availability, but all of them will rely on the community – even if they deal with a commercial entity. Community is the open source insurance policy.
So, if you’re considering an open source product, be sure to assess its community – present and future. Community is what separates friend from faux.
LinuxWorld Wrapup
LinuxWorld San Francisco has come and gone. I had the opportunity to participate in the product awards committee. This is a real treat, since it offers a peek at new technologies that are coming to the fore.
It was surprising to me that there was so much hardware at the show. File servers, SANs, clusters – all there. I guess it illustrates the fact that, with the operating system a commodity factor, innovation can move to other places – like interesting hardware experiments. It’s clear to me that we’re going to see more and more hardware goodies in the future; it’s a great time to be a user.
Also interesting to me was the crowd. LinuxWorld San Francisco has had the reputation of being more vendor-oriented than the Boston version, due to its proximity to Silicon Valley. While there were lots of vendors and venture capitalists floating around the show floor, what struck me was the number of what appeared to be typical IT types in attendance. It shows that mainstream IT has discovered that open source is something they should be paying attention to – and where better to find out about it than LinuxWorld?
Shameful, however, was the banishing of the .org pavilion to a second floor area away from the main exhibition hall, much like you put a socially inept relative near the kitchen at your wedding reception. It’s really exciting that there is so much vendor interest in open source, but … the thing that underpins open source is the community. Source code availability enforces open source, but community enables it. I hope the LinuxWorld management makes a wiser decision next time.
Takeaways
Community is a term much bandied about in open source, usually with little clarity but typically with much certainty (as in "the community believes" or "the community wants ..."). It often is defined quite restrictively as being made up only of open source developers. As both of the items in this month's newsletter illustrate, community is a broad and critical component of open source; from the user perspective, the community (in both the restrictive developer-only and broader user-inclusive definitions) is key to implementing the power shift from vendor to user that open source represents.
However, community is also key for vendors -- in some sense, the user community is where open source vendors hunt for revenues. In an upcoming newsletter, we'll address how vendors can help or hinder community creation for their products.
There are lots of different perspectives on the topic of open source community. Some point to the unique development model, drawing together disparate contributors from around the world, most of whom never meet face-to-face. Others are intrigued by the governance model of open source development, which seems to function without any explicit hierarchy. Most commentators on open source fail to address what I consider the single most important aspect of community, the user community.
It’s easy to understand how product users get overlooked in all the histrionics about open source community. In part, it’s because it’s hard to know just who they are – this is due to the challenge of open source anonymity, which I addressed in the June 2005 newsletter.
Another reason that the user base gets overlooked is due to the current state of open source discussion. Many of the established pundits of open source are most interested in the developer community; indeed, they are, in some sense, the alpha males of the user community. The press has contributed to this as well; after all, it’s much easier to talk to the usual suspects than to unearth real users.
In my view, however, this ignores a central reality: for actual users of open source (the vast majority of the people who actually interact with open source products), the user community is the single most important factor dictating potential success for an open source product, as well as a critical predictor about the future of a given product.
Why is this?
Most users of software, whether commercial or open source, focus on software implementation, not creation. For them, information about configuration, integration, and tuning is all-important. Not only are they unlikely to contribute code to a project, they are unlikely to want to even compile the project source, far preferring to download executable binaries.
Consequently, the information they’re most interested in is practical help in getting the software running. For this, fellow users are a vital resource. Other users have probably already confronted (and solved!) the problem a new user is facing. One of the most fascinating things about open source is the phenomenon of users helping users. While it’s fairly easy to understand the motives for open source developers (scratching an itch, status, skill-building, etc.), it’s not as easy to understand the altruism of what is, in effect, free technical support. In my book I described one Perl mailing list contributor, Charles K. Clarkson, a real estate developer. His motive is that the pure logic of Perl programming problems offers relief from the irrational human interactions that make up most of his day – for him, tech support is stress reduction! In any case, no matter what the motives of the contributors are, the user community is where most users of an open source product will realize the majority of the value they get from the community.
However, some organizations choose to purchase technical support from a commercial organization. Primarily, this support comes from companies directly associated with a given open source product. For example, JBoss (the company) offers paid support and services for JBoss (the application server product). Many purchasers of paid open source support dismiss the product community’s importance, believing they have a higher-quality mechanism in place. This is a huge mistake on their part.
Here’s why:
First, the viability of commercial open source vendors depends upon the existence of a vibrant community. Commercial vendors survive selling to no more than one or two percent of the total user population of a product. Without a large community of users, there aren’t enough potential customers to support the vendor.
Second, a strong community is critical for long-term vendor existence. A number of open source companies have been funded recently, many of which are just developing their products. By definition, early-stage open source products have nascent communities. While these companies are currently operating on their venture funding, unless they develop large communities, their future is dim. If you’ve bet your infrastructure on a commercial open source provider like this, your risk exposure is quite high. In effect, you’re buying an option on the adoption of the product by a large community. This situation is likely to become more common, as more vendors decide to take advantage of the “magic” of open source distribution.
Many of these will be what I call “faux” open source companies that adopt open source distribution, but pursue policies more common to proprietary software companies. These policies, which include: (1) shielding developers from the community; (2) focusing most of the company’s energy on selling commercial versions of the open source product; and (3) holding features back from the open source product to make the commercial version more attractive, will all have the effect of hindering community growth. In other words, faux open source companies will never develop a strong community, and their products are poor choices for use, since the company probably will not survive long-term.
Third, and perhaps most important, a large community insulates you from vendor decisions. We’ve all seen software vendors change strategic direction and strand their users. Commercial entities operate according to their own motives, and just because a vendor is open source-oriented does not preclude this sort of shift from occurring. In fact, it’s likely we’ll see this happen more than once in the future. With a significant community, however, underpinned by a product with an open source license, the bond between product and vendor is broken. The community can take up an “orphan” product and ensure its viability.
For all these reasons, community is, perhaps, the key factor for organizations using open source. Most of them aren’t going to take advantage of source code availability, but all of them will rely on the community – even if they deal with a commercial entity. Community is the open source insurance policy.
So, if you’re considering an open source product, be sure to assess its community – present and future. Community is what separates friend from faux.
LinuxWorld Wrapup
LinuxWorld San Francisco has come and gone. I had the opportunity to participate in the product awards committee. This is a real treat, since it offers a peek at new technologies that are coming to the fore.
It was surprising to me that there was so much hardware at the show. File servers, SANs, clusters – all there. I guess it illustrates the fact that, with the operating system a commodity factor, innovation can move to other places – like interesting hardware experiments. It’s clear to me that we’re going to see more and more hardware goodies in the future; it’s a great time to be a user.
Also interesting to me was the crowd. LinuxWorld San Francisco has had the reputation of being more vendor-oriented than the Boston version, due to its proximity to Silicon Valley. While there were lots of vendors and venture capitalists floating around the show floor, what struck me was the number of what appeared to be typical IT types in attendance. It shows that mainstream IT has discovered that open source is something they should be paying attention to – and where better to find out about it than LinuxWorld?
Shameful, however, was the banishing of the .org pavilion to a second floor area away from the main exhibition hall, much like you put a socially inept relative near the kitchen at your wedding reception. It’s really exciting that there is so much vendor interest in open source, but … the thing that underpins open source is the community. Source code availability enforces open source, but community enables it. I hope the LinuxWorld management makes a wiser decision next time.
Takeaways
Community is a term much bandied about in open source, usually with little clarity but typically with much certainty (as in "the community believes" or "the community wants ..."). It often is defined quite restrictively as being made up only of open source developers. As both of the items in this month's newsletter illustrate, community is a broad and critical component of open source; from the user perspective, the community (in both the restrictive developer-only and broader user-inclusive definitions) is key to implementing the power shift from vendor to user that open source represents.
However, community is also key for vendors -- in some sense, the user community is where open source vendors hunt for revenues. In an upcoming newsletter, we'll address how vendors can help or hinder community creation for their products.
Thursday, June 12, 2008
Microsoft Releases WiX Toolset to Open Source
By. Ryan Naraine
A Microsoft developer's move to promote 'change from within' has led to the unprecedented release of an XML toolset to the open-source developer community.
A Microsoft developer's vow to promote "change from within" has led to the software giant's unprecedented release of an XML (define) toolset to the open-source developer community.
Rob Mensching, a Redmond employee who works on the Windows Installer XML (WiX) toolset in his free time, has convinced Microsoft to release the toolset and all of its source code to developers on SourceForge in an attempt to ferret out bugs and improve the toolset's documentation.
WiX is the first project from Microsoft to be released under the Common Public License, an externally created open source license.
The toolset is used to build Windows installation packages (MSI and MSM files) from XML source code and is currently used internally at Microsoft by developers working on Office SQL Server, BizTalk, Virtual PC, MSN and Windows Messenger and the msn.com network.
By putting the source code on the world's largest open-source software development repository, Mensching said the plan is to open up the bug-finding process to a larger community. "When someone encounters a bug [internally], the community tracks the issue down and fixes it. Now, via SourceForge.net, you have an opportunity to be a part of the community as well."
He said the WiX toolset is close to Beta2 quality but made it clear the documentation "leaves much to be desired."
"Part of my motivation for pushing the toolset external to Microsoft is to encourage me (and maybe find others) to update the documentation."
The toolset includes a compiler, a linker, a lib tool and a decompiler. The compiler (called candle) is used to compile XML source code into object files that contain symbols and references to symbols. The linker (known as light) is fed one or more object files and links the references in the object files to the appropriate symbols in other object files. The linker, Mensching explained, is also responsible for collecting all of the binaries, packaging them appropriately, and generating the final MSI or MSM file.
The lib tool (lit) is an optional tool that can be used to combine multiple object files into libraries that can be consumed by 'light' while the decompiler (called dark), can take existing MSI and MSM files and generate XML source code that represents the package.
Mensching said he had to convince Microsoft executives of the value of releasing the toolset to open-source developers. He described WiX as a developer-oriented project and wrote on his Weblog that providing source code access increases the pool of available developers.
"[M]any parts of the Open Source development process appeal to me. Back in 1999 and 2000, I did not feel that many people inside Microsoft understood what the Open Source community was really about and I wanted to improve that understanding by providing an example," he explained.
He said the process of releasing the tools and the source code started last October but stalled because of the way Shared Source dealt with contributions from the open-source community. In February, Mensching said he met Microsoft business development manager Stephen Walli, who has been working to improve Microsoft's relationship with open-source developers.
"Fortunately, Stephen was much farther along than I and had the step-by-step plan how to release an Open Source project from Microsoft using an approved OSS license." The process continued and reached the point where "everything passed through legal with flying colors," he explained.
"[Now], you get to see the results of many people's efforts to improve Microsoft from the inside out. I'm not exactly sure what is going to happen next but I'm sure there are quite a few people who are interested to see where this leads. Personally, all I hope is that if you find the WiX toolset useful then you'll join the community and help us improve the toolset," Mensching wrote.
A Microsoft developer's move to promote 'change from within' has led to the unprecedented release of an XML toolset to the open-source developer community.
A Microsoft developer's vow to promote "change from within" has led to the software giant's unprecedented release of an XML (define) toolset to the open-source developer community.
Rob Mensching, a Redmond employee who works on the Windows Installer XML (WiX) toolset in his free time, has convinced Microsoft to release the toolset and all of its source code to developers on SourceForge in an attempt to ferret out bugs and improve the toolset's documentation.
WiX is the first project from Microsoft to be released under the Common Public License, an externally created open source license.
The toolset is used to build Windows installation packages (MSI and MSM files) from XML source code and is currently used internally at Microsoft by developers working on Office SQL Server, BizTalk, Virtual PC, MSN and Windows Messenger and the msn.com network.
By putting the source code on the world's largest open-source software development repository, Mensching said the plan is to open up the bug-finding process to a larger community. "When someone encounters a bug [internally], the community tracks the issue down and fixes it. Now, via SourceForge.net, you have an opportunity to be a part of the community as well."
He said the WiX toolset is close to Beta2 quality but made it clear the documentation "leaves much to be desired."
"Part of my motivation for pushing the toolset external to Microsoft is to encourage me (and maybe find others) to update the documentation."
The toolset includes a compiler, a linker, a lib tool and a decompiler. The compiler (called candle) is used to compile XML source code into object files that contain symbols and references to symbols. The linker (known as light) is fed one or more object files and links the references in the object files to the appropriate symbols in other object files. The linker, Mensching explained, is also responsible for collecting all of the binaries, packaging them appropriately, and generating the final MSI or MSM file.
The lib tool (lit) is an optional tool that can be used to combine multiple object files into libraries that can be consumed by 'light' while the decompiler (called dark), can take existing MSI and MSM files and generate XML source code that represents the package.
Mensching said he had to convince Microsoft executives of the value of releasing the toolset to open-source developers. He described WiX as a developer-oriented project and wrote on his Weblog that providing source code access increases the pool of available developers.
"[M]any parts of the Open Source development process appeal to me. Back in 1999 and 2000, I did not feel that many people inside Microsoft understood what the Open Source community was really about and I wanted to improve that understanding by providing an example," he explained.
He said the process of releasing the tools and the source code started last October but stalled because of the way Shared Source dealt with contributions from the open-source community. In February, Mensching said he met Microsoft business development manager Stephen Walli, who has been working to improve Microsoft's relationship with open-source developers.
"Fortunately, Stephen was much farther along than I and had the step-by-step plan how to release an Open Source project from Microsoft using an approved OSS license." The process continued and reached the point where "everything passed through legal with flying colors," he explained.
"[Now], you get to see the results of many people's efforts to improve Microsoft from the inside out. I'm not exactly sure what is going to happen next but I'm sure there are quite a few people who are interested to see where this leads. Personally, all I hope is that if you find the WiX toolset useful then you'll join the community and help us improve the toolset," Mensching wrote.
Open Source: Now It's an Ecosystem
This software movement is branching into not just mainstream business applications but also the associated services. And VCs are eager to help
Eighteen months ago John Roberts, Clint Oram, and Jacob Taylor decided to quit their jobs at Epiphany, a maker of customer-relationship software. The trio wanted to target the same market, but write a new application developed using open-source code. It took them only three months to create the program and just another month to close their first round of funding. Little more than a year later, their company, SugarCRM, has given away more than 325,000 copies of its software, and raised a second round of capital, for a total of $7.75 million.
Giving away software isn't your typical path for a venture-capital-backed startup. But Roberts & Co., are smack in the middle of the next frontier of the open-source movement: business applications. "No one had funded an open-source application company at that point -- it was all infrastructure," says CEO Roberts. "We broke a glass ceiling."
Consider it shattered. The open-source movement is making another big thrust forward. Entrepreneurs, investors, and many analysts say they're confident that all of a company's business software -- representing hundreds of millions in sales -- will soon be available as open source. "I don't think there are any limits," says Ray Lane, a Kleiner Perkins Caufield & Byers partner and software industry veteran.
ONE STEP AT A TIME. Many of Lane's colleagues agree. Venture capitalists have pumped nearly $400 million into 50 open-source companies in the last 18 months -- and more are on the way. That may not seem like a lot of money, but bear in mind these companies are incredibly capital-efficient. They don't need to hire armies of salespeople or engineers because the open-source community does a good deal of the heavy lifting.
Investors have funded new ventures offering everything from broad business applications like business intelligence programs that monitor company operations to very specialized applications, like running a hospital's computer systems.
Every open-source program companies download, investors say, marks one step closer to changing forever the applications business long dominated by the likes of SAP (SAP ), Oracle (ORCL ), and Microsoft (MSFT ). Software that companies once paid millions for is now available for free via the Internet. Harried tech managers can simply download an operating system or application and play with it -- no need to free sizable chunks of the budget or get the board to sign off, as is the case with big, multimillion-dollar purchases. And since this is open source, they can customize the programs on the fly to better fit their needs.
WHOLE ENCHILADA. A new open-source ecosystem is emerging. While a big push is on to develop more applications, the movement is much broader: Tech-services companies are popping up to jump-start adoption of all of this open-source software.
Consider SpikeSource, headed by software veteran Kim Polese, who founded Marimba and is one of the original developers of Sun Microsystems' (SUNW ) Java software. SpikeSource was incubated at Kleiner Perkins under Lane's watch. "We were looking at these open-source component companies like MySQL and JBoss, and every one of these things is just a little piece of a big puzzle," says Lane. "We said, 'Why don't we play the whole puzzle?'"
SpikeSource, and competitor SourceLabs, both act as a go-between for big corporations and open-source projects, finding, testing, and evaluating ideas by the hundreds. Then they consult with companies on how to implement them, and provide support if something goes wrong. For legal safeguards, there are even startups like BlackDuck, a Waltham (Mass.)-based company that digs into whatever open-source code a company has downloaded to make sure the licenses are all in order to avoid liability issues.
TRAILBLAZERS. "It was really a Wild West when we started with open source," says Charlie Brenner, senior vice-president of Fidelity's Center for Applied Technology, which manages its open-source projects. The financial services giant is an investor in SpikeSource -- and also a customer. "SpikeSource is a perfect example of a company doing for the external world what we've done internally. It's well worth the price for us."
The Linux operating system, which burst on the scene in 1991, led the first big wave of open-source software. The program, developed and maintained by thousands of volunteers, already represents a $4.2 billion slice of the $49 billion server market, and is set to grow at least 15% a year for the next five years.
In the Web-browser market, open-source champion Firefox has captured an 8% share of the business. That's not much when you compare it to the 87% share held by Microsoft's Internet Explorer. But Firefox has been steadily growing -- knocking IE's share of the market to under 90% for the first time in years. Not many software companies have been able to chip away at the giant of Redmond.
BOTTOM-LINE IMPACT. Then came infrastructure companies such as MySQL, a challenger to Oracle's database business, and JBoss, which markets open-source application-server software to compete against proprietary programs sold by BEA Systems (BEAS ) and IBM (IBM ) (see BW Online, 7/8/05, "The Myth of Open-Source"). So far, these companies are mostly small and private, but they're doubling and tripling in revenue every year.
More impressive, many already are profitable, thanks to the low cost of operating an open-source business. Analysts expect MySQL to make $40 million in revenue this year. "We're probably one of their biggest customers," says Greg Gianforte, chief executive of RightNow Technologies (RNOW ), which hosts software that manages call centers for companies.
Gianforte says his company has slashed expenses by running entirely on open-source software. "[Open source] has a tremendous impact on the profitability of the business," he says. His tech costs, which include personnel, communications, and equipment, now run approximately 6% of revenues -- down from around 20% if he used all proprietary software or as high as 40% for top-of-the-line proprietary software, he adds.
BUZZ WORD. A gold-rush mentality is developing in open source. Many venture capitalists are so eager to find the next hot vehicle, they're going so far as to scour Web sites that coordinate ongoing open-source projects, looking for anything that promises to blossom into a business.
Entrepreneurs are every bit as eager. The words "open source" are finding their way into pitches and PowerPoint presentations around the world. After Nick Sturiale, partner at Sevin Rosen Funds, invested in open-source startup XenSource, which makes software to manage efficient use of computing power, more than 30 entrepreneurs came to pitch him open-source ideas.
Sturiale didn't fund any of them, and more than half weren't worth a second meeting, he says. "There's a flash crowd developing, and it's unfortunate," he says, skeptical that many of the deals being funded will make it. "There are too many VCs and not enough growth markets."
FREELOADING. Of course, it's too early to tell if these companies will sprout into thriving ventures and produce venture-style returns. Most business models rely on giving the software away over the Web, then either charging for a souped-up version of the program or for training, maintenance, and support.
But revenue continues to be a problem. While open-source companies trumpet hundreds of thousands of downloads, on average just about 2% of those customers are actually paying any money. After all, just because every piece of software companies rely on to run their businesses can be replicated with open-source alternatives, that doesn't mean there's a market for it, caution analysts.
The upside is that many more companies will try open-source software because it's free. The viral nature of the Web and the open-source community means companies don't need a costly sales organization. Instead of hiring expensive, experienced salespeople and investing a lot of money and time in closing deals with skeptical CIOs, open-source companies just put their code online. Developers within companies often download the software for a test drive. Word of mouth spreads the news. Before long, young companies such as SugarCRM and JasperSoft are getting tens of thousands downloads a day, without spending a dime on sales calls.
NICHE DWELLERS. Because of this low cost of entry, some companies are skirting the venture-capital route altogether. Two of the oldest and most successful application companies, Digium and Compiere, have never taken a dime of funding, nor have they needed it. They may never develop into $1 billion businesses, but they've carved a nice niche in the open-source landscape. Jorg Janke, founder of Compiere, says he has turned down numerous offers of venture-capital funding.
Compiere makes open-source enterprise resource-planning software. It's a tough category, because the program runs everything from a company's accounting to manufacturing to human resources. The software usually takes a lot of customization and can cost companies millions of dollars to install and maintain.
Even so, companies have downloaded nearly 900,000 copies of Compiere's software since the outfit was launched in 1999. Janke doesn't delude himself that big companies will pick Compiere over SAP or Oracle, but he has found interesting niches in the midsize business world -- prisons, for example. Most have several small businesses running within them, such as license-plate manufacture, and need some low-cost software to manage those operations. "We didn't even target them," he says. "They found us."
THREE REQUIREMENTS. But Compiere makes money on only a small percentage of its customer base. It relies on a network of some 60 independent resellers to do a lot of the customization its software requires. Some implementations reach the $50,000 range, but Compiere takes just a small cut of that. But with very low overhead, the company has been profitable since 2003 and is doubling revenue every year, Janke says. "Our business model isn't to conquer the world or to be super-profitable," he says. "We just want to have a sustainable business."
Companies with venture backing will have to do better than that. And because only a small percentage of downloaders are paying customers, they'll have to do far more volume than the average startup. That worries some investors.
Danny Rimer of Index Ventures has been one of the more aggressive investors in open source. Having funded MySQL and voice over Internet protocol company Skype, Rimer isn't turned off by a business model that relies on free downloads to gain steam. But making such businesses successful requires three things, he says.
First, it has to be a commodity product, like database software in the case of MySQL. It also has to be a type of software that's so common companies know what it is and why they need it before they consider replacing their existing software with a no-frills alternative. And it needs a huge market of users so frustrated by the expense or hassle of existing software that they're motivated to try open source. Rimer thinks there's opportunity for some of the service companies and infrastructure companies. But when it comes to open-source applications, he's not so sure the commodity market is large enough.
BIG GUNS. Rimer may have a point -- at least in the near term. Even the biggest proponents of open source aren't moving their entire businesses to it any time soon. "We're great enthusiasts of open source, but we're still very much committed to the systems we get from large vendors," Fidelity's Brenner says. "We rely on large-scale commercial vendors' applications, and we're not likely to move away from them."
Over time, if the software works as advertised, you can bet companies like Fidelity will move more and more of their business to open source. But it will be a gradual process -- and that could spell trouble for VCs betting too heavily on it now. "A small business that's highly profitable making $15 million year in and year out isn't going to move the dial for us," Rimer says. "We're looking to invest in major software vendors."
The new generation of open-source companies will soon get the chance to prove just how mainstream their software can become.
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