Strategy

Swing for the fences, ye open source startups

While I believe that a market of one is no market at all, I also firmly concur with Dave Rosenberg's suggestion that open source companies that spend all their time competing with each other are wasting the world's precious supply of oxygen.

If you work for an open source company and your team is focused on trying to beat other open source products you are doomed to economic failure. That kind of focus means you can't see the big picture and you should just return the money to your investors so they can invest it in companies that have bigger goals. It also probably means that your company is fueled by ego and your investors should probably take the money away from you before you start building Lenin-esque monuments to your engineers for refactoring a project ten times.

Bingo. As Dave notes, most open source companies are not doing enough in revenues to bother competing against them. That will change two or three (or ten) years from now, but it's the case today.

I've never once competed with an open source project or company in a single deal that I've done. Never. My competition is the 95% of the market that doesn't use content management because it's too complex and too expensive.… Read more

How piracy helps the music industry

The Wall Street Journal yesterday had an interesting piece [Sub. req'd] on the value of piracy to the music industry. No, not in Tim O'Reilly's classic 'Piracy is progressive taxation' sense, but rather in figuring out what people actually want to hear.

Earlier this year, Clear Channel Communications Inc.'s Premiere Radio Networks unit began marketing data on the most popular downloads from illegal file-sharing networks to help radio stations shape their playlists. The theory is that the songs attracting the most downloads online will also win the most listeners on the radio, helping stations sell more advertising. In turn, the service may even help the record labels, because radio airplay is still the biggest factor influencing record sales....… Read more

The secret of successful open-source companies, Part II

Last year (almost to the day), I wrote a post that detailed how JBoss went from $0 to a $350 million acquisition by Red Hat and scored a range of paying customers along the way. The research for that post was actually done in preparation for an OSCON presentation I was to deliver, which is the same impetus for this post.

One year later, my analysis of JBoss has proved to be remarkably accurate (at least for Alfresco). However, I was a little off on my timing (see the slide at right), and I didn't give enough credit to the power of open source to drive sales.

One year later, I'd add the following observations to my original analysis:

You don't need much in the way of field sales for the first three years, and maybe four, but you must balance this lack of quantity with exceptional quality. Basically, you want your field sales person (and it probably should just be one person per major geographic) to cover the big strategic accounts. It's not that inside sales can't do these but rather that you want them going for volume and the field sales person developing depth within a few strategic accounts.… Read more

Look out Silicon Valley, OPTi's back with a vengeance

Last week, Opti Technologies announced a patent infringement lawsuit against a bevy of chip companies: Advanced Micro Devices, Atmel, Broadcom, Renesas Technology, Silicon Storage Technology, SMSC, STMicroelectronics and Via Technologies. At issue are two patents for "Compact ISA-Bus" technology.

Opti had recently sued Apple and AMD over three patents for "Predictive Snooping" technology used in some computer chips. And, in August of last year, Opti settled with Nvidia for $11 million plus up to $9 million more if nVidia continues to use Opti's technology in its products. The nVidia action included all five of the above-mentioned patents.

Silicon Valley faithful will remember Opti as a once-respected chip company that fell on hard times. Is the company's recent patent litigation rampage the death-throws of a desperate company or a promising new business model? Let's go through it.

At present, Opti has but one full-time employee, CEO Bernard Marren. And, according to the company's 1995 proxy statement, Marren gets a cut of everything he brings in to shareholders on a sliding scale that starts at 5 percent and ramps down to 1 percent. Mike Mazzoni, the company's part-time CFO, appears to have the same deal.

Do the math; it's not bad work if you can get it.

I had lunch with Marren a few weeks ago. The 71-year-old industry veteran seemed excited about Opti's prospects and he may have reason to be. Marren isn't new to executive management. He's a former founder and president of electronic distributor Western Micro Technology and the Semiconductor Industry Association (SIA). He sits on a number of boards, including Microtune, Infocus and Unipixel. Marren knows his way around the negotiating table.

For better or worse, patent infringement litigation is business as usual in the chip industry. If not for broad cross-license agreements, chip companies might spend more time suing each other than developing products. Nevertheless, some companies have carved out significant niches by developing and licensing technology. ARM, Qualcomm, Rambus, Tessera, even IBM and Texas Instruments, make a solid business of it. But, for the most part, these companies develop technology with that business model in mind. Believe me, they prefer to negotiate than to litigate.… Read more

Enterprise software: customers upgrading at a snail's pace

Oracle owns the database world. And this may be precisely its biggest problem.

As the Wall Street Journal reports, customers aren't planning to snap up its newest version of its industry-leading database, 11g. The reason? Oracle is improving its database at a much slower pace, providing fewer reasons to upgrade:

[I]t typically takes at least several months for a company to fully shift to a new version of Oracle's database software -- the larger the company, the longer it takes -- and lately Oracle has made several small, incremental changes in new releases rather than a few large, important ones that would compel a company to switch quickly, customers say....… Read more

Just when you thought it was safe to go in the water...the BSA wants to chat

Lee Gomes today interviews Jenny Blank, the senior director of enforcement at the Business Software Alliance (the "other BSA"). Net net: you don't want to talk with Ms. Blank. On the other hand, this is also a lesson in why open source makes so much sense: stop fretting about IP infringement and instead focus on IP distribution. You want people to use your software.

It's expensive to chase down piracy. (Microsoft largely gave up this fool's errand in China, and has profited as a result.) But the BSA ensures it's also expensive to pirate:… Read more

Anatomy of an open-source decision: The Adobe Flex example

I just took the time to read through this interview with Phil Costa, director of Product Management for Flex at Adobe. (Many thanks to Dave McAllister for his link.) You may remember that Adobe announced in April its intention to open-source Flex.

Now, the company is talking about why. It's very interesting to see that the decision to open-source a product is somewhat universal in the considerations that go into it. It brings back memories of early 2003 when we (at Novell) were giddy about releasing the company's UDDI server as open source...

I particularly found Phil's thoughts on the LGPL (i.e., why Adobe opted not to go with LGPL and instead used MPL) fascinating.

At its core, Adobe's decision to open-source flex stemmed from a desire to make the project bigger than the company. That is, independent of the company. Something you could embrace without embracing the company, too. This is precisely the same reasoning that went into Alfresco's decision to GPL our enterprise content management system, so Phil's comments resonate with me.

In response to How Software Is Built's question as to why Adobe decided to open-source Flex, Phil replied:… Read more

Marten Mickos on the "un-value" of compromise

I love Marten Mickos, and it is quotations like this in a Computerworld interview that reinforce my respect for him. Asked whether MySQL would ever go partially proprietary in order to get a higher download-to-sale conversion rate, Marten replied:

We've had that debate many times. I think we might win a few new customers, but we would lose 2 million users. We're not ready for that kind of compromise. We also look at other companies who have built closed-source products on top of open-source ones. They don't seem successful.… Read more

Artificial scarcity and open source

Luis Villa has left a placeholder for a larger discussion on artificial scarcity. He has a problem with:

creating artificial scarcity, either through the use of patents, copyrights, or trademarks, or by allowing others to use trade secret and SaaS (software as a service) tactics to take data from the commons and then "proprietarize" it (make it proprietary).

I see his point, and agree, but any business depends on artificial scarcity of some kind. Or, rather, I should say instead that successful businesses are good at creating the appearance or reality of scarcity. Why? Because otherwise, the customer will take forever to buy something, even if they want it today. Right now.

This is actually one of the weaknesses of an open-source business model.… Read more