Newsmaker: Opening the door from lab to market

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My view of history may be somewhat slanted by the company I work for and how we think of the world. But we had a very simple-to-manage-and-operate world in the old mainframe era. But a line of businesspeople rebelled against that model and at having the CIO build all their applications.

Because they could grab a PC and build a line of business applications trivially in a matter of days or weeks rather than having the CIO shop...that created the whole client server era. The distributed computing world has got great advantages, but the cost of managing distributed systems is bringing distributed computing close to the breaking point. The people-management costs are going through the roof, and what we're seeing is now some level of reconsolidation. With Web 2.0 technology, there are new forms and new ways to build applications trivially, and the interesting thing about Web 2.0 is whether that model of mashing up new applications is going to be another disruptor--like client server--or whether we'll be able as an industry to manage it better than we did.

It seems that the really interesting innovations, at least as far as the consumer market goes, has been coming more from independents and small developers rather than the big guys. Is that because new interesting technologies that don't really have an immediate business application don't garner serious attention until some smart bulb figures out how to make money off of it?
Horn: No, I don't think that at all. Today you can build an application or a service by matching up other existing services that are perfectly good lines of business applications. And then all the kids, the hundreds of thousands of programmers who are growing up, they're going into the industry and they're going to know how simple it is to build the applications on a LAMP stack. So, the traditional IT suppliers like IBM and others have got to help corporations to be able to incorporate and utilize all that innovation and those novel ways to build software. If we don't, then it's client server all over again and there'll be two different worlds. There'll be the sort of corporate J2EE world and then there'll be the LAMP world, and applications won't work back between the two of them.

The cost of managing distributed systems is bringing distributed computing close to the breaking point.

I wanted to get your thinking about IP and licensing; IBM makes these big gestures to the open-source community. But how do you decide what's too vital to give away and what it can afford to contribute?
Horn: Part of my job was to make sure that we look out into the future and we don't miss future client server revolutions or don't miss, you know, a PC revolution that's going to disrupt the minicomputer business. So that we embrace disruptive technologies in the Clay Christensen sense, from the Harvard Business School.

Technologies that upset old businesses and change the world.
Horn: And one of the things that can change the world is the proliferation of Web services and Internet standards...They flatten the world in a Tom Friedman sense, and they allow work and business processes to go on around the world and be reintegrated fundamentally better in something that tends to be called services-oriented architecture.

What all that means is that companies are evolving into much more distributed and collaborative ways of doing business and innovation...and all of that is disruptive for the traditional old-fashioned way. Think about intellectual property. The traditional old-fashioned way you think about it is you invent something, and you keep control of the intellectual property. Now what we're saying is you can fundamentally speed up innovation by collaborating in a more open, interactive way.

And that's expressed how?
Horn: We're giving away patents in areas where we believe we can help speed up innovation by allowing for more collaboration and, hence, rapid development. A good example is Linux. IBM embraced Linux a number of years ago. Any operating system really requires about a half billion dollars a year to develop and maintain. The community is spending about a billion dollars a year on Linux, and IBM spends around $100 million to customize Linux for our own customer needs and makes sure all our software works on it and that our systems will utilize it.

One of the things that can change the world is the proliferation of Web services and Internet standards.

So for $100 million instead of $500 million, we get a fully customized operating system, and we can take that $400 million and spend it higher up the value chain. We get a lot of money from IP, but if we can replicate that open style of innovation, we get much more value than we get by controlling intellectual property we have on an operating system, and that's why we've given that operating system IP to the Linux community.

There has been a lot of hand-wringing about the quality of math and science education in this country. What's your view?
Horn: We've got major problems. But you know, it's still the case that our graduate programs and our graduate schools are where everyone in the world wants to come. So, we've got a large gap and we have a major problem...but as far as advanced education, I think the U.S. has got the best in the world.

You know, it's not an accident that eBay, Amazon, Google, YouTube and MySpace grew up in the U.S. Now, there may be other countries that will have companies that, you know, follow that, but we have the most innovative economy, and our economy is driven by innovation, I think more than any other.
 

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