The Open Road

Google loves Apache.

Lost in the flutter over Google's hymn to openness is an intriguing factoid on open-source licensing:

Though many of the programs hosted on Google Code are licensed under the GNU General Public License (GPL), when Google wants to open-source its software, it turns to the Apache Software License version 2.0.

Why?

Google's Jonathan Rosenberg elucidates:

When we open source our code we use standard, open Apache 2.0 licensing, which means we don't control the code. Others can take our open source code, modify it, close it up and ship it as their own. Android is a classic example of this....

Control. Apache is a signal that a company is prepared to fully remove its hands from a software project's steering wheel. The GNU General Public License (GPL), a more widely used open-source license, tells a different story.

Glyn Moody correctly articulates that "the GNU GPL gives a disproportionate advantage to the company that owns the copyright." Bingo.

In fact, as I wrote back in 2006, the GPL is the closest thing to traditional copyright ever devised in open-source licensing:

Please keep in mind that the supposed paragon of software freedom [GPL] is also the license that most tightly imposes a distinct lack of freedom on downstream users. If you're a capitalist like me, you probably like this fact. But if you're a software developer...?

Google, at the top of its game (and with its profits firmly secured by a very proprietary revenue stream), doesn't need to constrain its development community with the GPL. Indeed, doing so would be counterproductive, given the persistent privacy concerns that hover over its every action.

Google needs to demonstrate a lack of control. Apache helps it do so.

This shouldn't be underestimated. Microsoft, having lived on the regulator's rack for so long, may be anxious to ensure Google gets to know U.S. and European regulators, too. Apache licensing could help.

Apache licensing is one of the cards played by MySQL co-founder Monty Widenius with European regulators recently: Apache puts original developers and downstream developers on equal footing, so why not keep Oracle from snuffing out MySQL's life by relicensing it under Apache instead of the GPL?

It was a jaundiced card for Widenius to play, but it would be a decent card for Google to play against claims that it's too dominant. (Competition is "just a click (or a fork) away....)

Rosenberg writes that because of Google's open-source licensing, "others can use our software as a base for their own products if we fail to innovate adequately." True. Google is clearly betting on its ability to innovate fast, which is incidentally also the very thing that makes the prospect of seeing its code forked so remote.

Even if competitors are technically and legally capable of taking Google's code and using it to create competing products, the truth is that it's very hard to fork fast-moving code, especially if you're not an active contributor to that code. Google understands this. It's the savviest open-source company around.

Ubuntu has led the Linux community's efforts to improve on form, not simply function, and thereby make the Linux experience as good or better than Mac OS X in terms of usability. Mark Shuttleworth, founder and CEO of Canonical, the company set up to shepherd development and commercialization of Ubuntu, is the heart of that effort.

As announced on Thursday, however, Shuttleworth is resigning as Canonical CEO to focus on improving the Ubuntu user experience:

From March next year, I'll focus my Canonical energy on product design, partnerships and customers. Those are the areas that I enjoy most and also the areas where I can best shape the impact we have on open source and the technology market.

Is this good or bad for Ubuntu? And what about Canonical?

Canonical is reportedly doing $30 million per year in sales, and is working on some significant projects that may establish it as the de facto Linux distribution for Netbooks, if it isn't already. (Ubuntu is arguably the community choice for personal computers.)

Even so, Linux still has a long way to go to match the user experience of Mac OS X, or even Windows. Shuttleworth has given me a sneak peak of his vision for where Ubuntu can go from a UI perspective.

I was blown away. This is a man who "gets it."

Even so, he and the Ubuntu community still have a ways to go to match Microsoft or Apple in user experience, and certainly in market share. To get there, Ubuntu needs Canonical, and Canonical needs Shuttleworth fixated on improving Ubuntu's user experience.

When I asked what his resignation as CEO means for Ubuntu, and his involvement with it, Shuttleworth responded:

I don't expect to be less visible, just have stronger management for the business units.

As reported by CNET and as reported on Canonical's corporate blog, Jane Silber, currently Canonical's COO, will replace Shuttleworth as CEO. A search for a new COO will commence in the first few months of 2010.

This, I believe, is an opportunity for Canonical to tighten its focus. While Shuttleworth suggests that Silber's appointment "doesn't mark a change of direction," perhaps it should. With over 300 employees and products that span mobile, Netbooks and other personal computers, cloud computing, enterprise servers, and more, Canonical has its fingers in a lot of pots.

It's possible that the operations-minded Silber may channel Ubuntu's ambition into a few products where Ubuntu can dominate.

When I asked her for comment, Silber indicated that the move is more evolutionary than revolutionary:

This move should not be read as a precursor to a paring back in markets or as a dramatic shift in strategy. We continue to be committed to making Ubuntu the best possible platform, and to ensuring that Canonical provides high quality engineering, online and professional services to Ubuntu partners and customers worldwide....

I will still bring an operations discipline to company, but I will assume more responsibility and authority for the overall performance of the company including, I expect, greater participation in executive level sales and business development.

That involvement--i.e., working with customers and hearing them demand focus and discipline--may well prod Silber to instigate the changes she initially has disavowed.

Red Hat is instructive. Though many of us would like to see it broaden its focus, the company remains rooted in the enterprise server and middleware markets. Canonical, in my view, should take a lesson from Red Hat and channel some of its energy into fewer markets, markets where it can thrive.

Regardless of what happens, stay tuned to see how Shuttleworth's design aesthetic, now set to overdrive, can impact the cozy duopolies in "desktop" (Apple and Microsoft), servers (Red Hat and Microsoft), and more. With more time to focus on what customers and partners want, Canonical and Ubuntu may be set to take a more commanding position in the market.

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.

Whether you're an enterprise or a consumer, ultimately your big concern in buying technology is "Will it do what I want it to do?" Sometimes components matter, but most people most of the time just want something that works.

Gartner's consistently engaging Brian Prentice suggests this is already happening with open-source software. Vendors care about it because open source gives them high-quality, low-cost components with which to build solutions for customers. Customers may notice the lower price tag, but they don't invest much thought into why the price is lower.

I'm going to assume that at some point over the last 20 years you bought a car. So, how important was the car maker's use of just-in-time manufacturing to your purchase decision? I'm going to go out on a limb here and say it was of no consideration at all.

Well, I think we're fast approaching the point where open source to software will be like JIT to automotive manufacturing. While it will critical to the producers of software, woven into the fabric of its operations, it will be of no importance at the point of consumption.

As hard as this might be to accept, open source is not a value proposition in its own right.

As hinted above, this is mostly true. Customers do care about the things that open source offers (lower cost, higher quality, etc.). But they probably don't recognize (or care) that these benefits stem from open source, per se.

Consider the Web. Open-source software provides the fundamental building blocks for nearly all Web services like Facebook, Amazon, etc., not to mention the infrastructure for public and private clouds.

End customers aren't asking for open source on the Web or in the cloud. They're asking for well-managed services that solve their problems. It's the vendors who care, because it allows them to grow highly scalable businesses at a modest cost.

Indeed, many of the customer benefits of open source (i.e., the ability to view, modify, and redistribute code) disappear or get muted on the Web and in the cloud. This hasn't stopped customers from buying into the Web/cloud.

Red Hat may disagree. It's apparently betting that customers care about components in the cloud. Why else would Red Hat Enterprise Linux pricing be much more expensive than Windows on Amazon EC2, despite being much cheaper for on-premises deployments, as IBM's Savio Rodrigues finds?

But I suspect Red Hat will need to change its pricing, as the OS is even more commoditized in the cloud than it has been for on-premises deployments. Both Red Hat and Microsoft will race to the bottom in pricing, with the emphasis being on the applications that run on them.

After all, this is the thing that drives customers' purchasing decisions. Red Hat knows this, which is why it (rightly) makes a big deal of the huge ecosystem of applications that run on RHEL.

In the cloud, even more attention is focused on service that customers use. Open source, in such a world, is essential infrastructure, but it's infrastructure that every vendor shares or will soon share, making the battle all about end-user facing applications, and not about developer-facing open-source components.

This is a very good thing. It means we can get back to focusing on solving customer problems, rather than fetishing and battling over open-source licenses. It's about time.

Editors' note: This is a guest column. See John Mark Walker's bio below.

Quick, what were you doing on December 9, 1999? If you actually remember, then there's a good chance that you're an old-school Linux type. If you don't have any idea, then read on, and you'll discover what you missed.

I'll never forget where I was--at ground zero of the apex of dot-com ridiculousness. While I and all of my co-workers were in the office that day, about the only thing we accomplished was writing 15 gazillion Perl-based variations on the theme of stock tickers that displayed the price of LNUX, updated at regular intervals. Well, that and drinking champagne. Words cannot adequately express what it's like to look around the office and know that everyone in the building is a newly minted millionaire--on paper, at least.

Ten years ago today, shares of LNUX, the Nasdaq symbol for VA Linux Systems, went on sale to the eagerly awaiting public. You may recall that VA Linux Systems was the company that combined Linux, open-source software, and Intel-based hardware. Just six months prior to VA's initial public offering, Red Hat Software had gone public with a very successful IPO.

We were in the middle of the open-source pixie dust revolution, when many flagging companies jumped on the open-source bandwagon in a desperate attempt to recapture past magic. It was this phenomenon that led to the general conflation of the late-1990s open-source boom with the dot-com bubble, and it would be a few years before most industry analysts, pundits, and beat reporters figured out that there was a difference.

But back to IPO day. I strolled into work sometime after 9:30 that morning and was immediately greeted by Pay, my manager, with some astounding news. We all guessed that the day would be significant, but none of us were prepared for the tsunami of blissful, surreal numbness rushing to greet us.

He showed me a sheet of paper faxed that morning from the investment bank's office (truly ground zero on that day), that was copied ad nauseum and shoved into disbelieving faces. I'll never forget what was on it: just a simple table with 2 columns. The column on the left was a list of investors, and the column on the right was the price they bid for our stock. The numbers were astronomical: $320, $250, $200, $300, $290.

Curiously, some investor didn't get the memo and bid a paltry $50. We laughed at that because it was really funny--at the time. A year later, and I would recall that lone investor for an entirely different reason: on December 8, 2000, LNUX closed the day at $8.49.

On IPO day, we could all do the math, and on that day, the math was in our favor. The official IPO price was $30, and most of us owned options on shares with a much lower strike price. We had all won the lottery, hit the jackpot, (insert gambling metaphor here). Or so we thought. What actually happened was, as Don Marti so artfully described it, we had all become players in a game none of us truly understood.

To this day, the VA Linux IPO remains the Nasdaq's most successful, in terms of its first-day gain, but what does that success really mean, in the context of events that have taken place since? At the time, the LNUX IPO was lumped in with the rest of dot-com mania and treated as the poster child for the insanity that gripped the market.

The New York Times summed up that view best with its report on the IPO, "A Tiny Company with Dim Prospects Goes Public with a Bang." (Note: the Times has since changed the headline, but we remember the original.)

You'll be unsurprised to know that we viewed things slightly differently. But as the stock price plummeted, we went from a sign of the audacity of the times to a symbol of wasted effort, a gloomy future, and everything that was wrong with the go-go '90s. We were somehow expected to repent for the misdeeds of others.

It is simply wrong to view VA Linux as a dot-com vehicle or to attach a greater symbolism to its downfall. It was really neither; it was simply the dramatic rise and fall of a company that overreached. It was a real company that made real things and believed very strongly that open source was going to be a major component of IT very soon.

That we executed poorly and paid dearly for it does not diminish the original ideas behind the company. While VA was not profitable after the IPO, it was certainly not because of revenue. In fact, revenue growth was strong, but our unrealistic growth plan--to become Dell in less than two years--did us in. Only the convenience of timing allows VA Linux Systems to be mentioned in the same breath as eToys, Pets.com or Webvan. The revenue of those was rather paltry, in comparison.

To put the VA Linux IPO in its proper context, let's rewind and remember what was going on at the time:

• Red Hat had a great IPO the summer of 1999.
• IBM had jumped into bed with Apache and had started its first big push with Linux.
• Oracle and most other major database players had released native versions for Linux.
• A year earlier, Dan Kusnetzky famously authored the famous IDC report showing explosive Linux growth of 212 percent.

And yet, in spite of these obvious signs of traction and increasing market share with real customer demand, Linux and the rest of the open-source "bandwagon" were treated like Summer of Love refuse that had never really come down from the acid hits.

Every article about Linux included (stupid, irrelevant) questions about whether it would replace Windows 98. There was a widespread belief among industry observers that open source was fueled by the dot-com bubble and would wither away when the bubble burst. Every article referenced a ragged band of hippie programmers who did it out of love or ideology and just wanted to beat the evil empire.

At that time, no one had really figured out what was driving open-source development. It's worth pointing out that we card-carrying members of "the" open-source community played our part in that perception. Who can forget the famous Windows Refund Day? And if you never smelled Richard Stallman or Eric Raymond at a conference, then you clearly missed out.

It was a heady time of uncertainty, doubt, and eternal optimism. A time of green-field bliss, of "Linux without limits," and there was no problem that a few lines of Perl (Practical Extraction and Report Language) couldn't solve. After all, "the geek shall inherit the earth." It must be true; I read it on a T-shirt.

It truly was a time of the almighty individual weaving his magic and changing the world--and if you were lucky, getting paid well for it. We were young and naive, and those of us endowed with Y chromosomes were high on testosterone. We truly believed that we were on the right side of history but were too stupid to realize our own limitations. This was a blessing and a curse.

That unyielding belief in the omnipotence of writing code gave our army the energy to slay dragons we wouldn't have otherwise, but it also gave us the chutzpah to tackle issues that we ultimately could not solve. Case in point: that time when someone who shall remain anonymous tried to rewrite our ERP system from scratch. In Perl. He didn't last very long.

As it turns out, we were right about the open-source thing, but we somehow forgot the other history lesson: the one about how being on the leading edge of something successful doesn't mean you'll enjoy all, most, or indeed, any success. Those who ultimately reaped the benefits of open-source proliferation did so because they were smarter and took a more conservative approach.

The 10th anniversary of Red Hat's IPO passed without much fanfare last summer, probably because its management is too busy running a successful company to really take the time to pause and reflect. VA Linux Systems, meanwhile, was devastated by the tech bust because those start-up companies were a significant percentage or our revenue.

VA Linux Ssytems changed its name in 2001 to VA Software, after jettisoning the hardware business entirely, and it focused on selling licenses for SourceForge Enterprise. And when that didn't work out, it became SourceForge, a collection of Web sites deriving revenue entirely from ad sales. And it has since changed its name again, to Geeknet.

For the veterans of the VA Linux IPO, we're left to ponder what might have been and savor the unreal moments, while deriving some small consolation from the fact that our instincts were right: open source was not a fad; it was just the beginning. It's not going away, and VA Linux was ahead of its time. Small consolation, indeed.

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.

For those entrepreneurs looking to make a living from open-source software, Index Ventures general partner Bernard Dallé has some advice: get thee to a cloud strategy.

Why? At a time when enterprises may be less willing to spend on software, they're increasingly interested in spending on the operation of that software through cloud computing, an interest that can be bought...and sold.

The cloud isn't simply a clever way to provide social-networking services, either. As Dallé suggested in a phone interview on Wednesday, cloud computing may well be the best way to monetize enterprise-facing open-source software.

He should know. Index Ventures has been one of the most successful investors in the changing world of software, hitting home runs with MySQL, Skype, and more. So when Dallé says that as much as 70 percent of the investment opportunities they see now are cloud-related, and that this bodes well for open source, it's worth paying attention.

Given that the cloud renders software less visible to end users, I asked Dallé if cloud computing spells the end for open-source businesses. Far from it, he said:

I think it's good news. I don't think open source is going away. It's here to stay. The world is increasingly moving to a hybrid world: a combination of on-premises and cloud computing. We're not going to see a 100 percent cloud world.

If I look at our portfolio, even our "open-source companies" like Pentaho, OpenX, and DimDim are turning to the cloud to monetize their open-source software assets.

Open source provides a convenient on-ramp and off-ramp for customers, helping them evaluate the software at low to no cost and also gives a free (as in cost and as in freedom) exit in case things go wrong. Between that entrance and exit is a ripe opportunity to make a lot of money by delivering value to customers.

Dallé further explained that open source helps vendors reach customers through low-cost distribution, but cloud computing, importantly, makes the open-source software palatable to a class of customer that finds open source too risky, yet has no problem using it when hosted.

If this sounds like a potent mix, it's because it is. It's also a highly efficient, low-cost way to start and build a company. Dallé elaborates:

The other big trend, not related to open source, is cloud-on-cloud: cloud services running on other clouds. It used to be that everyone ran their own data center, but now an increasing number of companies are happily running their services on Amazon EC2 or other public clouds. This dramatically lowers the cost of starting a service, and starting a company around it.

This might raise the concern that we'll see too many open source/cloud companies, not too few. Dallé isn't worried: "The quality of an investment always comes down to the quality of the people involved and their execution."

If Dallé's correct, the right place to look for open-source businesses to flourish is at the nexus of on-premises open-source software and cloud computing. It could prove to be a potent mix. And while the cloud might not be the right delivery platform for some software, it probably does have a high degree of salience for many.