VMware's mistaken understanding of open source
Wow. I guess for those who have yet to be forced to compete with open source, it's permissible to come out with grossly inaccurate comments about open source. Even Microsoft would never say something like this, which Diane Greene (VMware's CEO) said to The Register:
There is still a lot of innovation going into our hypervisor. As long as there is a lot of innovation going in, (open source) is not the right model.
What we want to do is fund ourselves to be able to build new stuff. If you're purely open source, there is no way you can do new stuff.
Um...no. That is completely false. It's not even a little, teensie weensie bit true. In fact, it's when one is in the midst of innovation that open source makes the most sense. Ms. Greene seems to be suggesting that open source makes sense when you're ready to put code out to pasture because it has passed its prime. Quite the opposite is true, if you're hoping to derive value from community, which is the whole point of open sourcing code.
Community-influenced innovation.
What Ms. Greene ought to have said is something like this:
We're still making money hand over fist and can't be bothered to think that innovation in virtualization could come from anyone other than us. We know it all! Why would we offload tertiary development (bug fixes, localization, etc.) to free up our core developers for more hypervisor innovation? Why would we look for local markets to tweak our code for local problems? We are the be all, end all of virtualization.
That would have been a more accurate mirror into the VMware soul, I suspect. It would have been no more true of open source, but at least it would have been true of VMware's conception of open source.
Open source innovates. Communities can innovate with open source and corporations can innovate with open source. There's nothing inherent in open source that either demands innovation or impedes it. However, open source does open up developers to outside ideas, which in turn opens up the possibility of greater innovation.
Ms. Greene doesn't understand this. Maybe over time with added competition from open source (like Xen) she will come to appreciate open source in the same way that Sun, Microsoft, and other companies have.
Matt Asay brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. Matt is vice president of business development at Alfresco, a company that develops open-source software for content management. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. You can follow Matt on Twitter @mjasay. 
To me, Diane's statement is true. Why would Open Source (not known at all for huge revenue production) fit their model when they are "making money hand over fist"? Would you, as someone in her position just after an IPO, announce you are going to start giving your source code away? If you said yes, then you really don't understand business, do you?
Further, the most used software on the planet is not Open Source, does quite well, satisifies investors and has plenty of innovation that Open Source normally has to play catch up with (or mimicks). The one exception I can think of off hand is FireFox (which even that is buggier than its closed source competitor IE7).
So really, what is the point if it is Open Source or not? Why if someone is "making hand over fist" and then using part of that for R&D (like the billions Microsoft spends) such a crime and how does Open Source defeat this? Why is it that when someone has a *superior* product like VMware that instantly people like you go on the attack that it is not Open Source? Quite frankly, VMware kicks the living daylights out of ANY Open Source virtualization product which is why Open Source (as I stated earlier) has to play catch up. And while they are trying, VMware is still far ahead in the pack with a very well rounded solution with features and capabilities that Open Source will dream of for a year or two more to come.
You might want to take your attack to a different playing field that people will actually take seriously...
IBM, in their wisdom, developed a proprietary networking system called SNA, which was strictly hierarchical in nature, and completely out of whack with the then up-and-coming ideas about open systems interconnection (TCP/IP and the OSI model).
Why would open systems interconnection fit their model when they were making money hand over first? Their networking solutions were not open source, did quite well, and had plenty of innovation that companies like Sun Microsystems had to play catch-up with.
So, where is IBM now? They are still a significant company, but they are pretty much limited to the services market, and are no longer a significant provider of computer systems. They bet on proprietary solutions that, in the long term, were rejected by the market place (and in particular the US Department of Defense, then the largest purchaser of computers in the world, which mandated the availability of TCP/IP as a condition of purchase on new systems).
Your view of the marketplace is way too short, and Matt's point is that adopting an open source development model (as MySQL has done) doesn't actually slow down the place of development at all. It frees your to put your development resources where they really count, and augments your support services by allowing the community to develop ancillary products and services that complement yours and enlarge the total market.
As to whether Firefox is buggier that IE7, that's a pretty close call. It's certainly more serious about standards compliance, however, and that's just as important in today's world. The fact that the cracker world has targeted Firefox is a testament to its success.
Microsoft are adopting open source (for example in the IronPython system that brings dynamic language support to Visual Studio), and in the long term that is the only way they will avoid becoming another IBM. This is early days, but all markets are changing radically, and innovation is proceeding much more quickly than it did even ten years ago. If you don't take open source seriously you had better hope you have a good retirement plan in place.