The Open Road

Google is perhaps the world's largest open-source company. That does not, however, make it the most open. Not even if Google says it's so.

The company is fond of believing itself different. And perhaps it is. For all of its stumbles over privacy concerns, it's still the company that insists it will "not be evil." I give its executives the benefit of the doubt that it really does want to be open, as revealed in a blog published Monday by Senior Vice President Jonathan Rosenberg.

But the irony of Google's position is that it's very open...until it needs to make a buck. Or a billion of them. At that point it's just as closed as its competitors. Perhaps more so.

Rosenberg doesn't shy away from the inconsistency, arguing that Google is closed when it's for its customers' own good:

While we are committed to opening the code for our developer tools, not all Google products are open source. Our goal is to keep the Internet open, which promotes choice and competition and keeps users and developers from getting locked in. In many cases, most notably our search and ads products, opening up the code would not contribute to these goals and would actually hurt users. The search and advertising markets are already highly competitive with very low switching costs, so users and advertisers already have plenty of choice and are not locked in. Not to mention the fact that opening up these systems would allow people to "game" our algorithms to manipulate search and ads quality rankings, reducing our quality for everyone.

Am I the only one that just had Napoleon of "Animal Farm" flash through their minds while reading that statement? Some animals are more equal than others, and some companies know better than others when to keep code closed.

It's not that Rosenberg is wrong. It's just that his embarrassment at admitting Google likes the revenue that results from closed systems ties his arguments up in knots, as Gartner's Brian Prentice highlights:

I don't think Rosenberg is making any attempt to mislead. I think he's thinking out loud and trying to reconcile the paradox he's created for himself--that open systems win even though Google's success is so clearly the result of being strategically closed.

Prentice adds further color:

The truth is that closed systems still win. Open systems, practically speaking, are basically good for making others lose.

The art of business in the 21st century is figuring out how to open up your suppliers' and competitors' business while keeping yours tightly sealed. And in that endeavor Google has proven highly successful.

From Red Hat to Facebook, from Google to Microsoft, from MySQL to Oracle, the same lesson applies: openness is exceptional for creating developer interest, lead generation, and many other things, but some element of proprietary still pays the bills. The big ones, anyway.

No exceptions.

Google is a fantastic company that groks the strategic benefits of openness better than most, and certainly better than its lumbering counterpart in Redmond.

But it's not exceptional in understanding open on-ramps and closed exits. Other important businesses like IBM have been leveraging such principles for years (even before Hewlett-Packard's Martin Fink explained the strategy in "The Business and Economics of Linux and Open Source").

Google isn't original with the business strategy. It's just better at it than most. It's open...until closed takes over to pay the bills.

Follow me on Twitter @mjasay.

Microsoft is in significant disarray, fettered by its destkop dominance as the world goes mobile. Would this have happened anyway, or is Microsoft CEO Steve Ballmer to blame?

Ballmer, after all, knows how to sing to developers, but he doesn't really speak their language. Former Microsoft CEO and co-founder Bill Gates did. Now, more than ever, Microsoft needs to get in front of developers but finds itself playing catch-up.

Gates announced his resignation back in 2006 and formally discarded his full-time Microsoft duties in 2008. But it has been a long time since Gates' hand was full time on the steering wheel.

That's a problem for the world's largest software company. It was Gates who saw the threat (and opportunity) the Internet posed for Microsoft--drafting his excellent "The Internet Tidal Wave" (PDF) memo in 1995--and alerting his troops to an array of threats that saved Microsoft from ruin...while helping it to ruin many others on its path to billions in profits.

Gates oversaw Microsoft's early, largely successful forays onto the Web. Ballmer has shepherded Microsoft to vanishing mobile market share (now just 7.9 percent of the market), a hesitant tiptoe into software as a service, and a general sense of retreat in emerging markets.

Hence, while former Microsoftie Don Dodge talks up his new employer, Google, with its food perks and 401(k), it's really the company's vision that has him jazzed:

Google has made three big bets on the future of computing; Chrome (browser), Google Apps (cloud), and Android (mobile). The trends are pretty clear. All the exciting new applications are running in the browser, with application code in the cloud, and the cell phone as the platform....2010 will be the year that enterprises of all sizes start their transition to Gmail and Google Apps, and take their first steps towards the vision of the future.

Dodge couldn't sell this sort of vision at Microsoft.

Microsoft has been playing catch-up for many years, but at least did so successfully under Gates. With Ballmer, there's a sense that Microsoft is always a half-decade too late on critical initiatives like search, open source, and mobile.

So is the problem Ballmer, or is Microsoft simply doomed, blinded by its own success with personal computers--a blindness that no CEO could overcome?

I hate to ascribe so much importance to any one person, but just as Steve Jobs is the soul of Apple and its revolutionary leader, so, too, was Gates the heart and mind of Microsoft. He understood developers, and they rewarded his belief in them by making Microsoft the world's largest software company.

Microsoft is the poorer for Gates' departure.

Even as I type this, Google keeps moving into the future while gouging Microsoft's past. TechCrunch is reporting that Google is acquiring DocVerse, which enables people to collaborate on Microsoft's Office documents. Microsoft is under siege.

This is just the beginning.

Developers are coding for Google projects, Twitter, and other new-style Web applications. Morgan Stanley is predicting the mobile market will be twice the size of the "desktop" market. Will Google someday dwarf Microsoft in size and influence?

Unless Ballmer can discover his recessive developer gene, the answer my well be yes.

Update at 2:10 AM Pacific on Tuesday: Newsweek predicts the ouster of Ballmer in 2010, but ZDNet's Mary Jo Foley cautions "not so fast."

Follow me on Twitter @mjasay.

Despite all the handwringing about Microsoft's market clout in the European browser war, the real threat to Firefox may be Google, not Microsoft. Even as Microsoft's browser market share deflates to 64.36 percent, Google has upped its game with its increasingly extensible Chrome browser.

For those of us who cling to Mozilla Firefox because of its library of excellent add-ons and extensions, suddenly we have another viable, open-source choice.

Internet Explorer remains a viable threat to Firefox due to Microsoft's heft in operating systems, which helps to create enough inertia that most Windows users who start with IE simply never discover that they have browser alternatives.

But while IE plays catch-up to Firefox in sheer extendability and third-party innovation, the real contender could well be Google Chrome, which marries open source with a strong developer/extension story and bests just about everyone in performance.

I love Firefox, but mostly because I love the third-party innovation that Firefox enables. Add-ons like ForecastFox (in-browser weather updates), AdBlock Plus (blocking ads), and so on make my browsing experience awesome.

Such add-ons, however, tax the resources of my MacBook Pro. Considerably.

As I type this, I have 15 tabs open and have 22 add-ons installed. As a result, Firefox is eating up roughly 30 percent of my CPU, even beating resource hog Java.

That's a lot of juice to power my browser, even when considering that most of my work is done within the browser (from common browsing to Zimbra e-mail to Google search to...you name it).

According to TechCrunch, development of add-ons for Google Chrome is much easier than it is for Firefox, and those add-ons apparently no longer constrain Chrome's performance in the same way that Firefox add-ons do for Firefox.

If true, then Mozilla needs to be doing a lot more than simply opening up a Firefox add-on marketplace in 2010, as The Register reports it will. Instead, Firefox should be heads down on improving browser performance.

A marketplace makes sense for enriching the Firefox developer community and, hopefully, diversifying Mozilla's revenue sources so that it's not so heavily dependent on Google.

But given that Google Chrome's improved extensibility is aiming squarely at Firefox, Mozilla has more than a monetary problem. It has a serious competitive threat looming, one that will only be won by significantly improving performance while maintaining its excellent track record with developers.

I'm confident that the Firefox team can do it. I'm equally confident that it must. Yes, Mozilla marshals a more diverse and robust open-source community around Firefox than Google does for Chrome. But users arguably won't care.

The Google train is coming, and it's not going to stop...not even for a longtime ally like Firefox.

Follow me on Twitter @mjasay.

Once a monopolist, always a monopolist? Not in Microsoft's case. While no one will accuse Microsoft of being a forlorn Tiny Tim, it's also no longer the Ebeneezer Scrooge that it once was. In fact, Microsoft seems haunted by the ghost of monopolies past, to the point that it has lost its ability to fight on equal terms for new markets.

Look at the markets the U.S. government sought to open by suing Microsoft for monopolistic practices. Microsoft's market share in media players, Windows, etc. remains largely unaffected by the government lawsuits.

Where Microsoft has lost market share (as in Web browsers and mobile), the competition hasn't relied on consent decrees and the like to win. Firefox wins because of its community development and distribution. Apple's iPhone and Google Android are trouncing Windows Mobile because they significantly change the rules of engagement for mobile while providing a better experience.

Government, in other words, probably solved little. But what it did was create a culture of caution within Microsoft that stultifies its ability and desire to compete. (We should note that just today, the European Commission formally ended its browser-focused antitrust pursuit of Microsoft, following concessions by Redmond.)

Microsoft's competitors, like Google, thrive in the wake of this fear, uncertainty, and doubt that plagues Microsoft. Ironically, competitors like Google do many of the same things that got Microsoft into hot water with the U.S. Justice Department.

Google et al. are free to compete. Microsoft is not.

Granted, this constricted freedom may be more psychological than real. As a journalist friend said to me on Tuesday, "Everybody thought Microsoft laughed off the antitrust thing. But I think it really did take the wind out of their competitive sails."

I do, too. In fact, a few years ago a friend and I set out to start a business delivering Microsoft Office-like functionality to mobile phones, which we ultimately abandoned. We didn't worry about Microsoft suing us for patent or copyright infringement. My friend had successfully sued Microsoft for anticompetitive practices in the Caldera litigation. We knew Microsoft's hands were tied by its antitrust settlement.

Microsoft is not the same company it once was. It's under siege, and seemingly incapable of responding. I think we're the poorer for it.

No, this isn't a paean to Microsoft monopolies. Rather, it's a plea for a Microsoft that competes vigorously to win.

Not one that repents in sackcloth and ashes for the "sin" of competing with open source. Not one that is continuously constrained by various antitrust authorities even as it erodes market share for the products in question.

I don't want a monopoly. I understand the important competitive principles that Mozilla and others are fighting for in the ongoing browser/etc. wars.

But I want a competitor again. Microsoft has lost its fight. This should concern us.

It should bother us because companies like Google need to be kept on their toes. It should nag at us because Microsoft writes great software that is comparatively easy to use, and we need its influence on the market.

I hardly use Microsoft software, preferring Apple and Google and open source. But I'd still like Microsoft's influence on the market, and not as a milquetoast competitor too afraid of antitrust shadows to thrash a competitor. Man up, Microsoft.

This post was updated at 2:30 p.m. PST in light of Microsoft's apology, which confirmed the anti-Drupal ads.

Microsoft has launched an advertising campaign against Drupal, an open-source Web publishing system, to promote its WebsiteSpark program. Some will see this as a devious plot on Microsoft's part to crush open source beneath its monopolistic feet.

But here's a more rational explanation: Microsoft competes with Drupal. This is what competitors do: compete.

Here's what Microsoft is accused of doing:

The other day I was checking Listology.com for the Drupal website list. But what attracted me more on the page was the small Google adsense block with the title "Forget Drupal and get:"...

Oops, here is an advertisement against drupal on a very page that lists all drupal websites. But the biggest surprise was that the advertisement was from none other than Microsoft. Clicking the advertisement takes you directly to the page of Microsoft's new product - Webspark, on Microsoft.com.

The horror! The horror!

Microsoft's WebsiteSpark program is designed to make it easy for Web developers to work with Microsoft technologies like .Net. It's hard to find anything nefarious in this, but some see Microsoft's alleged attempts to steer Drupal developers to WebsiteSpark as evidence that Microsoft is more worried about Drupal than it is Google, since it's using Google AdWords to place the ads.

As for Microsoft, no sooner had the community reared its incensed head than Microsoft's Mark Brown dashed out an apology:

I want to offer my sincerest apology for this. I have contacted Google and we are working on having this ad pulled as soon as possible. In addition we are working internally to ensure this doesn't happen again.

Really? For what? Having a business? For competing in the same way the Drupal community does?

This is silly. Microsoft is simply using the advertising channel open to it on the Listology Web site, trying to nudge developers its way. Acquia, the company set up by Drupal's founder to commercialize Drupal adoption, is doing the same thing.

Both are simply advertising where they hope to have a significant return on advertising dollars spent. It's called business. It's not personal.

It's the very same reason that Acquia advertises on Joomla.org, a competing open-source Web publishing system, as Joomla leader Elin Waring notes.

Take off the hair shirt, Microsoft. It doesn't become you.

After all, Microsoft is also promoting Drupal in Google searches:

A Jekyll and Hyde moment for Microsoft? Not really. The Web Platform team, of which Mark Brown is part, undoubtedly wants Drupal developers building on Windows.

But guess what? The WebsiteSpark team wants such developers building on Microsoft's Web technologies. It's a big company with different teams and different priorities.

In other words, it's nothing about which to be concerned. In fact, I'd worry more if Microsoft were doing the kumbaya thing with every open-source project, forgetting its fiduciary duty to compete vigorously...including against open-source competitors.

There is no free lunch with open source and there is no free pass for open source. We're grown-up boys and girls. We can compete. As for you, Microsoft, stop pandering to the hurt feelings of open-source developers who should know better.

Activists worry about the environmental cost of discarded mobile phones, personal computers, and other technology. Perhaps they should also worry about the swelling graveyard of start-ups and tech titans gone bad.

As Le Monde points out (in French), though businesses fail in all areas of the economy, technology ventures, and especially Web start-ups, prove particularly short-lived.

It's Joseph Schumpeter's creative destruction...in overdrive.

Le Monde suggests three reasons: the speed of innovation/evolution (AOL's walled-garden approach meets Yahoo's open-portal approach), the ability of incumbents to crush nascent competitors (Netscape meets Internet Explorer), and the shortcomings of business models (Skype: only $500 million out of more than 520 million subscribers).

These are good points, but perhaps there's another: technology companies are increasingly disposable because they're so darn cheap to create.

This affects start-ups and incumbents alike. For the latter, perhaps the negligible cost of starting a new company fosters the comparative disposability of such start-ups. As Bernard Dalle, a general partner with Index Ventures in London, notes, start-ups need only rent essential infrastructure like hardware and software, and that rent is dirt cheap.

Ideas that couldn't survive a $5 million to $10 million capital-raising process might well weather a friends-and-family round of $50,000...and expire shortly thereafter when the idea proves barren.

But it's also true of the incumbents: Gulliver-esque Microsofts can fight off most of the Lilliputians, but an increasing array of the pesky imps sprout into adulthood (e.g., Google, Salesforce, Facebook).

Unfortunately (or fortunately, depending on your market position), this process of creative destruction may well be accelerating, and open source is one of the primary fuels.

The Linux Foundation's Jim Zemlin insists that the pace and price of innovation today requires open source, a communal effort that isn't bogged down by the bureaucracy or cash constraints of any one company. He may be right.

That certainly seems to be one lesson to take from the success of Linux, Firefox, and other open-source projects, particularly those that are community-led, as opposed to company-led. It's hard to compete with a group of self-selected, highly focused developers who can focus on good code, not good financial quarters.

Now that virtually every technology company depends upon and contributes to open-source software, we may well be laying the foundation for even more industry innovation...and corporate bankruptcies.

Guess what? There's nothing we can do about it. Nor is there anything we should do about it, except focus on building long-term customer value rather than short-term start-up goofiness. That's the way to thrive in the fast-evolving world of technology, because it's the one thing that never changes:

Customers pay for value, and companies that consistently deliver real value acquire the most customers.

Tim O'Reilly points toward this in his call for developers to "work on stuff that matters." It's a reminder but also a warning.

Microsoft is still with us because it has delivered an amazing amount of customer value in its 30-plus years. The same is true of IBM, Oracle, SAP, and other industry incumbents.

But it's equally true of relatively new companies like Salesforce, Red Hat, and Google, which have eschewed gimmicky software and flimsy business strategies to give customers tangible, ongoing value. None of these companies sought an early exit through acquisition. None of them were content to build for the quick flip.

So, yes, technology may be a veritable boneyard of failed companies, and essential ingredients like open source may accelerate the demise of start-ups and incumbents alike. But those companies that use such ingredients to deliver above-average customer value are going to endure...and thrive.

Follow me on Twitter @mjasay.

Open source, like digital media, doesn't suck money out of hitherto profitable industries. Instead, the opening up of software and information simply changes where the money gets made.

This is obvious to the Googles of the world. It's probably equally obvious to the Microsofts of the world. The difference is that the latter can see the train coming but is powerless to stop it, and the former is driving the train.

The evidence for this is increasingly clear and is driven by a shift in how content is sold and consumed. The problem is neatly summarized by Google CEO Eric Schmidt in a Wall Street Journal op-ed piece directed at the newspaper industry:

[T]he Internet has broken down the entire news package with articles read individually, reached from a blog or search engine, and abandoned if there is no good reason to hang around once the story is finished. It's what we have come to call internally the atomic unit of consumption.

That newspaper was "the package," but is increasingly too slow and out-of-sync with how people prefer to discover news content. New packaging is rising, including Google News, that will shift who makes money on news content.

Reporters will still get paid. They'll just have a new employer on their payroll check. Maybe it will be Google.

News isn't dead. Paper is.

Think about what is happening in music. I could download New Order's "Regret" for free using LimeWire, but I bought it on iTunes because of the "packaging" which makes my experience easy, high-quality, and legal.

Still, the primary drivers are ease and quality.

Such packaging is worth a lot of money--and to an entirely new breed of vendor--as a quick look at Google's latest income statement suggests.

It's happening in software, too, particularly in open-source software. Red Hat is an example of a company that does a great job of turning software license into an ongoing service contract that enterprises buy. It does this by packaging the power of others' development in the form of a subscription, as Red Hat CEO Jim Whitehurst recently highlighted.

But Red Hat is just Open Source 1.5. Open Source 2.0 looks more like Google or IBM. For every dollar Red Hat makes selling subscriptions to use open-source software like Linux and JBoss, both Google and IBM make multiples of that dollar using open-source software to sell something else, something they've packaged in hardware or Web-based services.

The hardware is running open source. The services are based on open source. The money is made in the packaging of open source.

... Read more

The mobile-computing world is increasingly a two-horse race between Google and Apple, with Apple clearly in the lead but Google Android making up ground quickly. Microsoft and Symbian are also still in the game, but the ultimate winner will be the one that best appeals to consumers or developers.

Or both.

This struck home while reading Mark Sigal's analysis of the "inevitability" of Google Android. On his way to dismantling the idea that Google's victory is assured, Sigal stumbles into apparently divergent interest groups:

[U]nlike the PC, where "good enough" was the bar required to seize the market,...for most consumers, their mobile device of choice is a lifestyle decision, a personal, ever-present extension of themselves that is resident in a way that never existed before with the PC--a value proposition that Apple has completely run with on iPhone (and iPod before that).

Fundamentally, though, mobile is a platform play, a game that is largely won by securing the hearts and minds of developers, and for them, the expectation bar is now set pretty high, owing to the success of iPhone across so many domains....

If you're Google (or Microsoft or Symbian), then, who do you target? Developers or consumers?

It's a real question, as while both parties' interests ultimately converge (consumers want developers to make great applications so that those same consumers can pay the developers lots of money), the short-term interests of consumers (sexy product) and developers (ease and richness of development platform) don't necessarily go together.

Motorola RAZR? Sexy product, lame development platform. Windows Mobile? Arguably a solid development platform...with almost zero sex appeal for consumers.

This is why John Carroll is probably right to argue that Microsoft should reinvigorate its mobile strategy with an emphasis on .Net as a powerful way for developers to write powerful mobile applications, it's not going to be enough. Microsoft can port all the business applications it wants for Windows Mobile. It won't matter.

Consumers don't buy business applications. Not until after they've chosen a phone that meets their personal needs, first.

Yes, enterprises do try to dictate corporate standards with Blackberrys and dull Dell PCs heading the list. But in the fast-changing mobile market, you can't hope that consumers will be forced to use your software. You want them to want to do so.

This is why I believe Google has a good chance of taking a serious bite out of Apple, and Symbian and Microsoft do not. Symbian is too difficult an application development platform, as Gartner notes, and Microsoft...is boring.

Not that it needs to be. XBox certainly isn't, and actually helped Microsoft surpass Apple in a recent consumer survey focused on product innovation.

But not in mobile, or even in computers. Apple understands how to create wicked cool products that consumers want, which is why its Mac sales are projected to grow by 26 percent in 2010, right through the recession, and why its iPhone continues to thrive.

But Apple's Achilles heel could well be developers, which are reportedly tiring of Apple's apparently arbitrary application approval and updating process. If Google can continue to help handset manufacturers to achieve the "Wow factor," while simultaneously creating a more open, robust development platform, it just might be able to beat Apple at the game it started.

In other words, the winning mobile vendor will be the one that marries sex appeal for consumers with platform appeal for developers. Google is on course to deliver, but it probably needs to win big with consumers before it makes waves with developers.

In the past week, the open-source business community appears to have reached consensus: making money from open-source software is a bad model, but making money with open source is golden.

This can't be good for Microsoft.

Microsoft has long maintained that as the open-source industry has matured, it has become more and more like the commercial world it sought to leave behind. Fundamental freedoms of open source, like the right to modify source code, are signed away to secure a support contract with Red Hat or another vendor.

In many ways, Microsoft was right. Unfortunately for the Redmond giant, however, the new consensus should lead to less commercialization of open source, and more commercialization around open source. There's a big difference, and it's one that threatens to seriously undermine Microsoft and every other traditional software vendor.

That is, unless Microsoft responds in kind.

The new consensus

This consensus has been articulated by TechDirt, Redmonk's Stephen O'Grady, GigaOm, and here on The Open Road.

In fact, it's a drum I've been beating for over a year as Tim O'Reilly's wisdom on the topic finally caught up with my 33MHz brain.

There are fundamental, strategic benefits to open source: ease of distribution, friction-less adoption, costs, etc. There are also serious downsides when it comes to selling it: people chafe at paying for something if they can get it, or something similar to it, for free.

Such problems don't plague companies like Google, which distributes open-source software to drive more adoption of its proprietary advertising or SaaS services. Even Red Hat isn't really in the software business: not with its Linux distribution, anyway. It's in the business of providing certification and update services; of managing the complexity of an operating system.

It's a great business, but if you had to choose between Google's sales or Red Hat's, it's a no-brainer.

Microsoft's response

As this lightbulb goes on across the industry, companies like Microsoft, which insist on direct monetization of software, with little in the way of open-source complements to fuel adoption (or simply undermine competitors), are going to struggle. More and more companies will give away Microsoft's core business as open-source complements to their own.

So, here's a suggestion for Microsoft as just one good way to respond: open-source Internet Explorer.

Forget Office. Forget Windows. Forget all those other billion-dollar cash cows. Microsoft has no revenue directly tied to Internet Explorer, but IE is the gateway to the next phase of Microsoft's growth. Open-source it.

Cut Google's Chrome and Chrome OS off at the knees. Undermine Mozilla Firefox's raison d'etre. Give the European Commission a reason to love you.

More importantly, give developers something to embrace and extend. Microsoft has been steadily losing browser market share as Firefox eats into it. In some countries, like Germany, Firefox has even surpassed IE's market share.

Fight fire with fire. IE is still the world's most popular browser. Make it the world's most open browser, too.

Every Microsoft business could benefit from this move. Even if one assumes that Microsoft isn't ready to take the plunge and fully open up the development process around IE, here's some comfort: neither has Google around Chrome. Microsoft can still steer the IE ship, even if it were open source.

Microsoft needs a proactive open-source strategy, rather than the reactive policy it has had to date. Open source is a threat, yes, but it's a threat to everyone, especially as the industry collectively comes to grips with open source as a business enabler, rather than as a product to sell.

If Microsoft wants to win big in the new world of Web-based software, it needs a bold strategy. Open-sourcing IE is the starting point.

Follow me on Twitter @mjasay.