The Open Road

A recent survey suggests that CIOs are loosening the purse strings on IT spending. IT vendors may want to hold off their celebrations, though, because much of the spending appears to be headed for deflationary forces like cloud computing, virtualization, and their kissing cousin, open source.

An economic rebound never looked so dire.

That's unless you're an IT buyer, of course, suggests a new report from Goldman Sachs. In this week's report, titled "A Paradigm Shift for IT: The Cloud," Goldman Sachs said it expects that pent-up IT dollars will flow in the short term to building out next-generation data centers (e.g., cloud computing). But in the long term, less money is expected to find its way into fewer wallets:

After the initial build-out, Cloud Computing could drive some headwinds for the IT industry, as a result of two factors. First, we see virtualization as a deflationary technology. Second, we see IT spending consolidating in the hands of fewer buyers--the Cloud providers, hosting vendors, and large enterprises. These factors will likely dampen IT spending growth due to greater utilization and buyer pricing power.

Even short-term build-outs may prove disappointing, however, as Goldman Sachs expects large enterprises to grow existing virtualization and automation technology adoption in the rollout of private clouds, shifting slowly to an embrace of public clouds over time. The chart below gives some idea as to when cloud computing will hit its stride:

Who wins in this scenario?

According to the report, Red Hat stands to benefit from the cloud-computing craze. ("Red Hat is well positioned for the emerging Cloud Computing ecosystem, largely due to its open source background and current ubiquitous deployments in data centers, including enterprises, as well as in Cloud providers such as Amazon," the report states.)

But the real beneficiaries will be...the same old crew. "[K]ey suppliers for internal Clouds are likely to be those that have the most complete portfolio of hardware, software, and services," including IBM, Hewlett-Packard, Cisco Systems, EMC, and Oracle.

New boss...same as the old boss.

The other beneficiaries are the start-ups that provide critical components of cloud computing, with an emphasis on management tools. Here we may see open-source companies benefit, including Reductive Labs (Puppet project), Cloudera, and the two rising private cloud companies, VMOps and Eucalyptus, among others.

While open source doesn't factor heavily into this particular Goldman Sachs analysis, the firm has before called out open source's role in wringing more value out of fewer IT dollars. Open source is a primary driver of the global reset in IT spending expectations.

With less money flowing into the pockets of fewer vendors, we can expect to see both increased consolidation and fierce competition for the IT spending that remains. Those vendors that can help CIOs do more with less stand to benefit from this shift to low-cost, high-value computing.

And those that can't? Well, let's just say they may pine for the good old days of the global recession.

Some open-source software may not be open enough. While "open source" refers to software's underlying license and its adherence to the Open Source Definition, there are numerous examples of open-source projects that offer an open license but a relatively closed development process.

It's been called "fauxpen source" and worse, but we may have to get used to it. It seems to be the new normal in open-source development. Only open source foundations like Eclipse, Apache Software Foundation, and Mozilla appear to be able to escape it completely.

Java is one example people cite of "fauxpen-ness." SAP CTO Vishal Sikka on Monday called for a more open process for Java development, arguing that Sun too tightly controls Java's development. It's a complaint that has plagued the Java community for years.

Not that Java is alone. While Google gets plaudits for its open-source investments, some are quick to allege that Google maintains a closed Android community. The same sort of complaints have arisen over Google's management of Chrome and Chrome OS.

Even Red Hat, the quintessential open-source company, is primarily known for what it distributes, not what it develops. Red Hat, of course, works alongside IBM and other corporate and unaffiliated developers to write the Linux kernel, and scrupulously releases its software under open-source licenses.

But when it comes to development of its Red Hat Enterprise Linux distribution or development of its JBoss middleware or other technologies (e.g., KVM), good luck finding many significant external contributors.

MySQL? It's largely the same. The company (now Sun Microsystems) does virtually all of its own development, which is true of every commercial open-source company of which I'm aware. This is one reason Richard Stallman can unblushingly worry about MySQL's openness despite the fact that it uses his preferred GPL license.

Open source, but not necessarily open process.

There are very good reasons that Google, Red Hat, MySQL, and others keep a tight grip on their open-source development efforts. They are responsible--fiscally and legally--to their customers, and have to be able to guarantee quality and security. Understandably, they exercise some control to ensure the products they ship protect the integrity of their brands.

But such corporate open source indicates a real divide between "open source" as a license and "open source" as a wholly transparent way of developing and distributing software. The former is now common and relatively easy. The latter, quite simply, is not.

The companies that seem to do it best are those that don't rely on direct monetization of open-source software. In other words, if you aren't selling open source, it's easier to be open. Doc Searls captures this brilliantly by arguing "you make money because of [open source], not with it."

Examples abound. IBM is a good example. So is Google, though I agree with its critics that it can do better. Facebook, Oracle, and others also provide examples.

In the future, I think we'll see this "fauxpen-ness" fade as companies clearly separate their open-source efforts from their revenue models. Open source can provide a platform for monetization, but it isn't the best way to actually generate cash. Not for most companies, anyway.

It's a fundamental tenet of classical economics that vendors want complementary goods to be cheap and plentiful.

It's therefore not surprising that SAP Chief Technology Officer Vishal Sikka is calling for a more open Java Community Process (JCP).

What is surprising is that it is SAP, the bastion of proprietary software, that delivers this message.

Irony, thy name is SAP.

SAP, after all, is hardly the most open-source or open-process friendly company on the planet. Despite early involvement in Eclipse, some interaction with MySQL (MaxDB), and a new commitment to the Apache Software Foundation, SAP remains a firmly proprietary company.

Even Microsoft, which arguably has the most to lose from open source, has consistently and continually experimented with greater open-source involvement.

SAP? Not so much. In large part, SAP hasn't been forced to embrace open source because it hasn't been threatened by it. ERP (enterprise resource planning) is such a complex beast that it has remained largely impervious to open source (with the exception of open-source start-ups like Compiere and Openbravo, to which I'm an adviser).

A few years ago I was asked to speak at SAP's Palo Alto campus. I spent an hour talking about open source's commodity influence on the industry. During the question-and-answer period, one attendee said: "This is all fine, but open source has not touched our business. ERP is different."

Apparently, that thinking prevails, as Sikka's argument about a more open JCP process fails to apply the logic to SAP's own software. He wrote Monday in a blog, laced with italics and bolds:

The Java industry is currently going through important changes, and there are many discussions around the openness of Java and the Java Community Process (JCP). To date, the JCP is heavily dominated by Sun Microsystems which was not always to the benefit of all parties interested in Java. Java is the lifeblood of the IT industry, and IT is a fundamental underpinning of the way business is conducted in the 21st century....

To ensure the continued role of Java in driving economic growth, we believe it is essential to transition the stewardship of the language and platform into an authentically open body that is not dominated by an individual corporation. Java should be free of any encumbrances to permit fair competition between compatible implementations for the benefit of customers. By preserving the integrity of Java, the IT industry can ensure a vibrant developer community and continued innovation for enterprise software customers. This ensures the continued global economic success brought about through open innovation.

It's a good argument, but it sounds funny coming from an SAP executive. After all, Sikka starts his argument by asserting that SAP's software is indispensable to the world's IT systems: "SAP systems are at the core of large parts of global IT, and are powering more than 65 percent of the transactions that make up the world's Gross Domestic Product (GDP)."

Surely any system upon which 65 percent of the world's GDP depends should be open, right?

Apparently not. SAP NetWeaver and, well, everything the company ships remain firmly proprietary last time I checked. Complements to SAP's proprietary products should be open, however--or so the argument goes.

Sikka does suggest that "SAP software also needs to be open and adaptable in order to allow customers and partners to be nimble and benefit from the speed of innovation within the SAP ecosystem," but apparently he means that everything but SAP's software should be open and adaptable.

Complements are best when they're free and plentiful, after all.

Again, Sikka's message is not wrong. It's the messenger who has the problem.

Disclosure: I will be presenting at SAP in Walldorf, Germany, on Thursday on SAP's track record with open source and open standards. Please share your thoughts on how SAP is doing.

Google CEO Eric Schmidt argues that competition is just a "click away." By opening up Google's access to personal data as well as the software that collects it, Google is adding substance to that claim.

It won't work to write better software than Google, because Google is not a software company. The only way to beat Google is through superior execution; through better operations.

The way to lose to Google? That's easy: try to sell software that Google is shoveling out the door as free (open source) software.

This thought hit me last week as Google announced the open-sourcing of its Closure tools. These are JavaScript compression tools that Google uses to build its own Web services like Gmail. Basically, Google was saying, "Here's how we build our software services. You can, too."

This follows on the heels of Google open-sourcing other software like Android ("Here's a free mobile operating system to help more people connect to our services"), Gears ("Here's how to run Google-like services offline"), and more, each opening up windows into the software that runs Google's services.

In many ways, Google is giving away the recipe to those that would like to build a Google clone.

The problem? Google is so much more than software.

In fact, one of the primary reasons that Google can write and open-source so much software is that it isn't a software company. Not even remotely. I could have every line of Google's software, both open source and proprietary, and I couldn't hope to compete with Google.

Google is what Google does with the software, and not the software itself.

Ditto for Red Hat. The company used to retain significant chunks of proprietary code in its Red Hat Network offering, but it has released that software under and open-source license in the last year. Doing so hasn't had any effect--positive or negative--on Red Hat's sales, because Red Hat isn't in the business of selling software anymore.

Red Hat, like Google, is in the business of providing services to customers, services enabled by software but which are much more dependent on IT operations and overall efficiency of execution.

And while both companies rely on open-source software to fuel those operations, Google, more than Red Hat, realizes that the conversation has moved on from open-source licenses to higher-order value, a theme that is going mainstream. Cloudera CEO Mike Olson captures this theme well:

The license terms attached to products have become secondary to the value it offers. People now are much more rational about how they adopt technology across the board. Open source is a detail, not a defining characteristic. At Sleepy Cat, we were proud to be an open source company. At Cloudera, I think of us as an enterprise software company that happens to be built on open source software.

Such sentiment would resonate well within the walls of Google's Mountain View headquarters, I suspect.

Even within their respective open-source communities, neither Google nor Red Hat company is particularly saintly. Red Hat has never waited on the Linux Standards Base or industry efforts to coordinate Linux distributions (like United Linux), but instead forged ahead with its own efforts...until the LSB simply adopted Red Hat's distribution as the standard.

Google, for its part, takes flak for dominating its open-source project communities like Android. Google's contributions (or lack thereof) to outside projects, like Linux, don't always mesh well with others in the industry.

To open-source community critics of Red Hat and Google, some advice: get over it.

The companies that spend the most time chumming around, talking up interoperability and the need for everyone to work together are usually the ones losing the race, a race whose rules may be written in software but whose victory depends upon execution.

Google and Red Hat have moved beyond software. Software enables their operations, but software doesn't define such operations. Google, for its part, is open sourcing Microsoft, one line of code at a time, and Microsoft hasn't a clue as to how to respond, because it only knows the old world: competition through better IP.

That world is gone. Open source has killed it. The new world is built on execution and superior IT operations. Google gets this. Red Hat gets this. Microsoft? Not so much.

Despite Apple's tremendous success with the iPhone, we're still in the early innings of mobile adoption. As such, a strategy of "throwing-lots-of-things-against-the-wall-to-see-what-sticks" makes a lot of sense.

It's true of platforms like Google Android, but it's also true of applications.

Even on the iPhone, which reportedly drives $2.4 billion worth of applications in annual sales, very few application developers appear to be making much money. Zynga, creator of Farmville, is an exception, as BusinessWeek notes, doing more than $100 million in annual sales.

This isn't to suggest that developers should stop trying. Quite the opposite. Now is the time to try a range of applications to see what sells.

Google is following the same strategy with its Android platform. The company is happily promiscuous with its code, allowing and even encouraging fragmentation to see where the industry will take Android. Fragmentation enables handset manufacturers and others to find the best fit for Android in the market, rather than going the Apple route. ("If we build it, they will come.")

It's very possible, as Bill Weinberg notes, that such fragmentation and experimentation will result in Android getting greater play beyond mobile than it does in the smartphone market.

I suspect Google won't mind. As in other areas, it's using the broad-based, open-source approach to increase adoption of its services like Search, services which generate more than $22 billion each year.

It's an approach that works particularly well for a fast-follower: someone tracking the progress of an early market leader. An open-source strategy basically enables the industry to determine, by itself and for itself, what the market leader is missing and how to resolve the voids.

However, it's also a good way to generate developer interest and, hence, modifications and add-ons. Application developers might be well-served by open-sourcing their applications to encourage adoption and make their road maps a community affair.

There are over 4 billion mobile phones on the planet, with virtually no one outside of the wireless carriers and handset manufacturers making money from this extensive device reach. The market is ripe for software businesses, but first we need to experiment to discover what sells. Open source just might be able to help with that.

Google's biggest threat is no longer Microsoft. It is itself.

As the company harvests copious quantities of personal data, it becomes dramatically better at serving customer needs...

...and at freaking them out over privacy concerns.

In other words, Google gets stronger with every Google Doc created, every Google Voice call dialed, and every Gmail e-mail sent. It becomes stronger because data is the heart of the Web's biggest businesses, as Redmonk analyst Stephen O'Grady implies.

But in so doing Google also becomes more threatening to the very consumers it is trying to serve.

Google Dashboard is meant to change this by putting consumer data back in the hands of consumers. It's a move that follows on Google's earlier pledge to "open data" and its Data Liberation Front.

As CNET reports, Dashboard lets people review the personal data Google has stored for them, delete it, and alter future collection policies. It's a great way for Google to mollify concerned users, putting control back in their hands.

Still, it's almost certainly never going to be used by the vast majority of Google users. Ever.

Why? Because for all our hand-wringing over privacy--and for good reason--the reality is that most of us, most of the time, really don't care. Or, rather, if accessing useful services or getting work done more efficiently requires some privacy concessions, we gladly concede.

It's not that we don't value our privacy. It's just that in many contexts, we value other things as much or more. We weigh the risks versus the benefits, and often the benefits trump the privacy risks.

It's the same thing with file formats. For years we've been agonizing over Microsoft's lock-in of customers through proprietary file formats (.pst, .doc, etc.). Now Microsoft is opening up the specifications for file formats like .pst (Outlook file format), and yet it will almost certainly change little to nothing in what products most people use most of the time.

People don't use Microsoft Office because they're forced to. They do so because it's convenient. (Yes, an argument can be made that it's convenient because Microsoft has forced network effects through lock-in.)

This, incidentally, is exactly the reason that Wednesday night I declared a ban on Microsoft Office in our family in favor of Google Docs--and didn't opt for OpenOffice (which we also use). I got sick of having to recover documents and perform other IT tasks related to a locally installed office suite, open source or proprietary. And I find it easier to let Google handle the back-end IT operations.

I wasn't trying to evade lock-in. I was trying to increase personal happiness.

Am I concerned about Google snooping on the documents we write and store in Google Docs? Let's just say I worry more about my time fixing Office than whether Google gleans any information from my 12-year old's seventh-grade essay.

Dashboard leaves Google in the prime position of being able to honestly say that it doesn't control user data, while still delivering increasingly beneficial services based on that data. It will not change the way that the vast majority of consumers use Google, but it just might change the way they think about Google.

A very smart move by Google, one that all data-driven businesses should emulate.

Follow me on Twitter @mjasay.

The European Commission must be feeling a bit silly right about now. Despite insisting that Oracle has not responded to its requests for comment and concessions in its planned acquisition of Sun Microsystems (and the open-source database MySQL), Amazon.com recently offered the EC all the proof it needs that MySQL competition remains alive and well.

For those who missed it, Amazon announced last week a fork of the popular MySQL database, called RDS (Relational Database Service). RDS is essentially a hosted version of MySQL, one that developers can write to at the minuscule cost of pennies per hour.

Oracle hasn't even started with MySQL yet, and it already faces significant competition, not to mention the other MySQL forks (e.g., Drizzle).

As Redmonk analyst Stephen O'Grady writes:

From here, it seems fairly clear that while RDS will not be the best option for every MySQL user, it will find a more than adequate market of customers who are willing to trade money for time, as (former MySQL CEO) Marten Mickos might put it. Assuming that Amazon can realize its typical economies of scale by amortizing the management and administration costs of the service over a wide array of machines, the product should more than pay for itself simply by widening the addressable market.

How much wider will it make the addressable market? At a minimum, it will lower the barriers to entry for customers with relational needs (read: most customers) and a lack of cloud expertise. It will be fascinating to see, however, if Amazon has far grander ambitions in mind.

Interesting, and somewhat unfair to Oracle. Presumably Amazon's entrance into the MySQL market is A-OK because Amazon isn't currently a database company, but it is a significant and growing infrastructure provider. Why should it get to own a complete stack, but Oracle can't?

That, after all, is what Oracle is attempting to accomplish with the Sun/MySQL acquisition. Sun gives it hardware, while MySQL gives it a strong entry into the Web database market and an effective hedge against Microsoft in lower-end enterprise needs.

Oracle's bid for Sun/MySQL, in other words, isn't about squelching competition, but rather about enhancing it. Amazon's RDS proves that strong, viable competitors to MySQL can arise from within the MySQL community, which disproves the EC's argument that Oracle's control of MySQL will somehow crush competition.

And if the deal doesn't hurt competition, as Amazon RDS all-but-proves it doesn't, then the EC's opposition is hollow and should be shelved, as The 451 Group's Matt Aslett argues.

It's time for the EC to acknowledge it was wrong, and move on. Amazon surely has. But until the EC makes a final decision, Oracle (and MySQL) can't.

"Skype is going open source!" screamed the headlines over the weekend. If only.

While Skype has acknowledged an interest in making its Linux client open-source, this may not mean very much in practice.

I love Skype and use it daily for both instant messaging and voice calls. Its quality is superb and the Skype team continues to enrich Skype's functionality (now including the ability to screen-share and video chat).

Open source won't help with this. Not in the way Skype means.

As ZDNet captures, Skype isn't planning to open-source its underlying protocols, and certainly not its back-room server technology. Instead, it's just talking about open-sourcing the Skype graphical user interface (GUI). And only for its Linux client, apparently.

Snore.

First of all, why only Linux? Open source long ago stopped being the exclusive province of Linux, if it ever was. Without Mac OS X and Windows support, Skype is actually locking itself out of the vast majority of the market for software developers.

And then there's the question of what is being open-sourced: GUI code? Really? That's it? No protocols? Does Skype think developers simply want to add fuzzy dice to the UI?

It's not really Skype's fault, as ZDNet explains, because its source code is in legal no man's land right now. You can't open what you don't own.

But maybe it doesn't matter. Steven J. Vaughan-Nichols believes an open-source Skype is unnecessary, given that there are credible open-source alternatives that are already available. Perhaps. But they lack the adoption that Skype has, and in communication the network is everything.

But, again, this is probably the biggest reason to yawn at the news of a Linux-based Skype GUI being open-sourced. The magic of Skype is not in the client. It's in the cloud/server, and that's remaining closed because, as TechCrunch posits, Skype doesn't want its competitors to free-ride on its services.

In sum, despite the euphoric greeting of the news of Skype going open-source, there's actually very little to celebrate. This isn't good for developers, and it's not good for Skype. In open source, it's generally worse to contribute too little than too much, because the community's first (negative or positive) impression tends to last a very long time.

For those new to open source, whether on the business or development side, it's hard to appreciate just how far the movement has come in the past few years.

In 1998, when I had my first taste of open-source software through my company's investment in Cobalt Networks, virtually no one knew what open source was, including now-common projects like Linux. Things were a little better in 2000, when I joined a Linux start-up (Lineo), but I spent much of my time working with prospective customers to ease their concerns over open-source licenses like the GPL.

By 2004, when a group of friends and I founded the Open Source Business Conference, there was significant, growing awareness of open source, but its adoption was still stymied by Fear, Uncertainty, and Doubt, much of it fomented by Microsoft (Steve Ballmer in 2001: "Linux is a cancer") and the SCO Group (lawsuit over the provenance of Linux code in 2003).

Today, SCO Group, once a high-flier, is struggling for existence. Meanwhile, Microsoft has committed another $100,000 to Apache Software Foundation, has started its own open-source foundation, and has embedded significant bits of open-source code within its proprietary programs, among other things.

Linux, for its part, struggled to get noticed in data centers back in 2003. It has since become essential, mission-critical infrastructure across the Global 2000 ranking of public companies

We've come a long way.

This progress reflects itself in the job market, where Linux-related jobs have seen a 6 percent rise in 2009 alone, while Windows-related jobs have plunged by 8 percent, according to data from Dice.com.

But it's also evident in enterprises' willingness--even eagerness--to discuss open-source adoption plans. Virgin America CIO Ravi Simhambhatla tells The Register that his need to do more with less drove the company to adopt open source and suggests that the open-source philosophy is a positive, disruptive force:

Our company doesn't need just another IT team, the more and more we get entrenched in the...way of doing things the less and less room we will make for ourselves to be innovative.

In 2004, when I was trying to find an IT executive to speak at OSBC, it was a lost cause. No one wanted to paint a legal bull's-eye on themselves for SCO or Microsoft. Today, company executives line up to talk up how they're differentiating through open source.

Open source has "arrived," and the signs are everywhere, from the U.S. Defense Department's efforts to boost its open-source adoption further to patent-rich Qualcomm's foray into open source.

Open source is no longer a question of "why" but rather one of "how." It's the way the industry does business, and the way it does development.

No, not everyone in the industry, all of the time. But for those of us who have been involved in open source for even the past five years, it's amazing to see how much things have changed, which suggests they'll evolve even further.

For some within the open-source world, this is unwelcome news. They defined themselves as freedom fighters, battling the forces of proprietary darkness. And as far as good-and-evil metaphors work in technology, they were.

But as that world embraces open source, they're largely left bereft of bogeymen, like old soldiers still struggling against an unseen enemy.

Winning can be a bit disorienting.

All the same, it's time to move on. There are no more vampires to slay, but simply further open-source education to undertake. Enterprises need open source now, more than ever, and they're adopting it now, more than ever.

What a long, strange trip it's been.