The Open Road

With open-source software businesses, you have two options. Actually, three, but the third belongs to Red Hat, and it applies to roughly no one else.

The first option is to sell support for open-source software. This option is generally advocated by those who have never grown a business beyond $10 million. It's a terrible model unless your only aspiration in life is to run a services company.

Hence, the support model might be good for Accenture or systems integrator, if they want to take on the burden of support, but it's a poor model for Red Hat, MindTouch, Microsoft, or other software company.

The second option is to contribute heavily to open source but not build your revenue model around monetizing that software directly. This is what the New York Times points to in its Sunday expose of allegedly fizzling open-source business models.

Open source can drive adoption like little else. It's not, however, necessarily a great driver of revenue. For that, you need to be selling something beyond the source code, and that "something" is often going to be proprietary, be it hardware, software, or a service.

Google is the master of this model. It gets roundly criticized for its half-open, half-closed open-source efforts, but the reality is that Google's products--Chrome OS, Android, etc.--are open enough to facilitate adoption without giving away the keys to the car, which drives wherever Google wants it to go.

That's the way successful companies are run: they take ownership of what they ship. They are influenced by but not controlled by the mystical whims of The Community.

Even Red Hat, which piggybacks on a lot of Linux kernel development, increasingly includes more home-grown software in its distribution and takes great pains to certify its Red Hat Enterprise Linux will work in the most demanding environments before putting its brand on the label.

Some, including me, have wrongly concluded that Red Hat's business model would apply to other product markets beyond the operating system. It doesn't. It only applies where the moving parts in the product are complex, multitudinous, and frequently changing.

For everything else, there's Option 1 (if you want a business that doesn't scale well or possibly at all) or Option 2 (which is really no different from the old proprietary model except that it effectively uses open-source complements to lower engineering costs and possibly sales/marketing costs).

Even Option 2 won't work if you under-invest in marketing and development, as Symbian is learning to its hurt. It turns out that there is no free lunch, even in the land of free software. It always takes work. And money. Lots of both, actually.

Twitter and Facebook are duking it out to own the future of the social Web, though users won't have noticed. Indeed, for those who use both, this may come as a surprise, since the two, while both social media platforms, seem to serve very different purposes.

Tell that to Twitter and Facebook, which increasingly have painted big bull's-eyes on each other.

They probably should spend more time painting their home pages. While the two Silicon Valley companies have opted to skirmish in the hinterlands of APIs and data feeds, the war will almost certainly be won somewhere else: user interface and ease of use.

Facebook groks this more than Twitter, which is why your mom/dad, teenage neighbors, and friends all use Facebook, and probably don't use Twitter.

Both companies have open APIs that encourage third-party developers to build out their respective platforms. Facebook has the Open Stream API; Twitter, the ">Open API Service.

These are critical components of a platform strategy, but they're secondary to the lesson that Microsoft and Apple have taught us: if users don't care about the front end of software/services, developers won't care about the back end of the same.

Facebook largely works because people know how and why to use it. Twitter...not so much.

It's telling that Twitter's "big" feature of the last six months is...lists. I use and love Twitter, but after a month I still can't get myself excited about creating or following Twitter lists. I'm not even sure why I'd want to do so.

Is this the best Twitter can do?

This is perhaps why Twitter seems to work for a narrow class of user: Caucasian, middle-aged urbanites with no kids.

In other words, not teens, not your mom/dad, and probably not you.

Facebook's demographics look very different, probably because its current range of uses is very different.

To me, this is a user-interface problem, and not a defect in the DNA of the Twitter platform. It's simply not immediately obvious what one should do with Twitter. That's not the case with Facebook.

We learned this long ago in open source. What separates a good but doomed project from a truly great project is documentation (to help developers know how to use the system) and user interface (to help end users know how to deploy the software). That's why Linux was interesting but not ubiquitous until Red Hat, IBM, and others added the finish that made its power usable by the general business world.

Twitter has a lot of promise, but not yet much polish.

It's nice that New York gangs have found new ways to dis each other using Twitter. It will be better when Twitter makes it easy and obvious for me to talk with my parents using Twitter.

Desperate for a deal after sleeping right through Wal-Mart's early-morning Black Friday frenzy? You're in luck. The best deal this holiday season may be just a download away.

That's right: Handbrake, arguably the world's best video transcoder, just hit version 0.9.4.

And boy, is it beautiful.

Handbrake has long been my go-to choice for ripping DVDs to my hard drive (saves battery life when watching videos while traveling and ensures my kids won't ruin the DVDs), but this particular version exceeds my expectations. Why? Because it delivers over 1,000 new enhancements while delivering better picture quality at a smaller file size and faster.

Or as the Handbrake developers say:

There's an old proverb in the video encoding world: "Speed, size, quality: pick two." It means that you always have to make a trade-off between the time it takes to encode a video, the amount of compression used, and the picture quality. Well, this release of HandBrake refuses to compromise. It picks all three.

This isn't hype. In my own use of the software during the past week, performance is noticeably faster, and picture quality is awesome.

Importantly, while the Handbrake developers have been hard at work over the past year to update the venerable video transcoder, the team owes a lot to developers from the x264 project:

A large portion of these speed, size, and quality improvements come to us for free, from the x264 project. The past year, like every year, has seen some massive improvements for that video encoding engine. As always, it has been further hand-optimized for better performance. But it has also gained new features like macroblock tree rate control and weighted P-Frame prediction.

This is how open-source development works: Handbrake focuses on what it does best (User interface, features like live preview, etc.) while leveraging the best of other project's strengths.

It's a recipe for a supereasy and very powerful transcoding experience. And at a 100 percent discount now through forever (Handbrake is open source and costs nothing to download), now is a good time to download it and let 'er rip, whether you run Mac (Intel 32-bit and 64-bit, plus PowerPC), Linux, or Windows.

When an open-source project is working optimally, can proprietary-software companies hope to compete?

Greg Kroah-Hartman, a prominent Linux kernel developer and Novell fellow, suggests that the answer is no. Speaking to the How Software Is Built blog, Kroah-Hartman makes the case that the pace of Linux development leaves competition in the dust:

[The Linux kernel development team adds] 11,000 lines, remove[s] 5,500 lines, and modif[ies] 2,200 lines [of code] every single day.

People ask whether we can keep that up, and I have to tell you that every single year, I say there's no way we can go any faster than this. And then we do. We keep growing, and I don't see that slowing down at all anywhere.

I mean, the giant server guys love us, the embedded guys love us, and there are entire processor families that only run Linux, so they rely on us. The fact that we're out there everywhere in the world these days is actually pretty scary, from an engineering standpoint. And even at that rate of change, we maintain a stable kernel.

It's something that no one company can keep up with. It would actually be impossible at this point to create an operating system to compete against us. You can't sustain that rate of change on your own.

Microsoft might beg to differ, as would Apple, but the reality is that neither is updated as often or as extensively as Linux is, which supports a far broader hardware portfolio than any other operating system in existence.

Linux is pretty incredible. But it's not alone. Mozilla Firefox, Eclipse, and other projects produce best-in-class software at an almost frightening pace.

Can anyone compete with an open-source project at the top of its game?

The answer might well be no, as the top open-source projects are collaborative efforts between multiple companies that pool resources and expertise to drive development. And while it might seem reasonable that a single corporation could best open source's seeming "development by committee" approach, the reality is that well-managed open-source projects have none of the inertia that one might expect from a communal approach.

Quite the opposite.

Having said that, very few open-source projects actually meet the criteria that enable Linux's success. Most appeal to a too-narrow and too-small population of developers (i.e., single-company projects) to glean the benefits and scale of Linux-like development.

As such, the proprietary-software companies probably won't have to worry about competing with indomitable open-source competitors. Not most of the time, anyway.

For those that do, however, better stock up on the pumpkin pie. It may be the only thing to be grateful for this Thanksgiving season.

Greg Kroah-Hartman interview discovered via @glynmoody's ComputerWorld blog.

Life has never been better for enterprises and consumers. From free music to free software, the digital economy is an all-you-can-eat free-for-all.

That is, unless you're a vendor.

Traditional vendors are getting shellacked by the digital economy, spurring some, like Rupert Murdoch and his News Corp., to threaten to stick a finger in the dike and demand that users pay for content. (At Murdoch's Wall Street Journal, users already do pay to access some stories online.)

The problem with this approach is that not everyone is willing to follow suit. Why? Well, not everyone needs to. The BBC responded to Murdoch's plans by declaring it won't charge for content. It doesn't need to. U.K. taxpayers already fund it.

Different strokes for different folks. And different business models, too.

Google makes money by making it easy to discover others' content. So does Apple's iTunes. Google can afford to give away lots of free software (and even free hardware) to nudge people into its advertising model.

That's hugely disruptive.

In software, Microsoft doesn't like competing with free Linux. Microsoft spends a lot of money developing Windows. It must seem unfair to have to compete with the rest of the industry, which increasingly coalesces around Linux (or Android, or MySQL, or...).

But that's life in the open-source economy. Your core competence is always going to be someone else's throwaway complement, and ripe for open-source commoditization.

In fact, it may be getting worse, and not just for Microsoft. The Wall Street Journal reports that Domino's Pizza has rolled out a multimillion dollar, homegrown pizza-ordering/fulfillment system.

Could Domino's have bought an off-the-shelf system from Oracle, SAP, or another vendor and customized it? Probably. But then, this isn't how most IT gets built, anyway.

Most software is written by enterprises to use, not for sale, as Bruce Perens and others point out. So while we credit Microsoft, Oracle, and others as the backbone of the "software industry," the reality is that these companies are really a drop in the software bucket, with companies like Sony, Wal-Mart, and GE the true backbone of a much larger software ecosystem than the vendors comprise.

As open source matures, we're going to see these "software users" develop more software in-house, often building from open-source projects. Gartner calls out intriguing proof of this trend, but it's equally evident in anecdotes like this one, highlighting Virgin America's adoption of open source to reduce costs and improve innovation.

Virgin America is writing few checks to external vendors. That money is paying internal developers instead.

Digitization, then, may not be destroying the software market so much as reshaping it. In this new model, companies like Domino's will need more internal developers as they rely less on outside software vendors.

There will still be a need for companies like SAP, of course, as there are broad industry needs that a company or open-source foundation can satisfy. But for strategic IT projects, we're likely to see more open source plus internal development, and less packaged software purchases.

If something seems too good to be true, it probably is. That popular aphorism never seemed truer than today when reading The Wall Street Journal's analysis of Wikipedia's declining volunteer base. Despite countless articles extolling the virtues and seeming omnipotence of "community" over the past several years, the technology industry seems to be settling back into old habits:

Command and control.

It's not that the "wisdom of crowds" idea hasn't influenced the way technology is developed, or how news and information are gathered and distributed. It has.

It's just that the promised sea change has proved to be far less disruptive than we expected.

Take Wikipedia. As the Journal calls out, volunteerism has declined as the ease of contribution has waned. The easy topics are taken. Rules for upping the quality have proliferated. Wikipedia is becoming...corporate.

Nick Carr has been pointing this out for years, but it's only now becoming self-evident. Wikipedia has grown up and, in so doing, is looking more and more like the encyclopedic world it sought to displace.

Nor is it alone. Open-source business models increasingly look like proprietary software models, as the Software Freedom Law Center's Bradley Kuhn suggests.

Even uber successful open-source communities like Joomla have discovered that reliance on volunteers falls short of what a few good paid developers can do.

That's a positive discovery by Joomla. A more worrisome discovery is that Mozilla remains far too dependent on Google to fund development of Firefox. Mozilla has lots of community, right? Yes. As Mozilla CEO John Lilly has said, 40 percent of Firefox's code comes from developers not employed by the foundation.

But that still leaves 60 percent, and virtually all of the core development work, that relies on "company," not "community," which is how much of the world's best open-source software is developed: funded by IBM and other "community" members.

For those who think "community" is a euphemism for "everyone else doing my work for me," think again. It just doesn't work that way.

Of course, companies can go to the opposite extreme, too. Apple, for one, gets beat up for a heavy-handed approach to its App Store approval process. Apple, in other words, doesn't seem to care one iota what "the community" thinks.

But then, this is the same App Store with more than 100,000 applications and 2 billion downloads to date. No wonder Apple isn't apologizing: it's clearly benefiting most people most of the time, or the application developers would take their complaints to a different platform.

But they haven't, and this calls out the problem with deifying "community." It's accepted wisdom that one shouldn't "anger the community," as if it's some unknown god that demands the occasional virgin to be thrown into the volcano. But the truth is, "community" is not really much different from the "customers" and "partners" the industry has sought to satisfy for decades.

So, yes, by all means seek to work with your community of users and partners, but don't expect "the community" to do your work for you. Guess what? "The community" already has a day job, and can't afford to work full-time for you unless you pay it.

All of which leaves us largely where we started. The most successful software companies don't rely on some vague "community" to build their products. Microsoft, Oracle, IBM, Google (Android, anyone?), and even, increasingly, Red Hat (JBoss, KVM, etc.) build great software based on their own, internal plans and expertise and "the community" buys it (or resells/embeds/etc. it).

The big shift, however, has been in the transparency of the feedback loop, which has been a welcome change in the industry. So, to the extent that "community" simply implies a more open way of developing and distributing software, then, yes, it has been significant.

But it hasn't changed the world. It has only changed the way the dominant technology companies...dominate.

For those who have fret about Microsoft fighting against open source, I have news for you: Microsoft's impact on open source may be worse as a friend than as an enemy.

Over the past few years, Microsoft has steadily warmed to open source, to the point that it now hosts its own open-source code repository and has seen its Microsoft Public License used more often than venerable licenses like the Mozilla Public License or the Eclipse Public License, according to new data released by Black Duck Software.

The open-source world should be worried.

After all, as IBM's Savio Rodrigues points out, an open-source-friendly Microsoft no longer has qualms about embedding open-source software like MySQL into its products. In particular, Microsoft supports MySQL as part of its Azure cloud service...without paying Sun a dime for the privilege.

It's a completely legitimate way to offer open-source value to Microsoft customers, and is very similar to what Amazon is doing with MySQL.

However, as Rodrigues notes, it's not necessarily good for MySQL, or other open-source projects that could be used this same way:

The larger point is if Amazon, Microsoft, IBM, HP, Google, Cisco, EMC/VMware, or Oracle/Sun offer a simple and supported cloud service for running MySQL, Tomcat, JBoss, Mule, or Apache HTTP instances, what reason do customers have to acquire "enterprise subscriptions" from the vendors developing these open source projects? Until now, the value of an open source "enterprise subscription" has largely been access to support and access to administration and management tooling. In the case of MySQL, the former is provided by Amazon RDS and Azure SQL as part of the per-hour service. Again in the case of MySQL, the latter is rendered unnecessary or replicated through Amazon RDS and Azure SQL tools.

Consider it a super-friendly, and super-dangerous, bear hug.

For those who think that this affects commercial open source and not community-led open source, think again. Money and open source don't grow on trees.

The explosion of open-source development has directly correlated to the explosion of cash investments into open-source projects, starting with IBM's $1 billion commitment to Linux. MySQL, the database, would be a pale shade of what it is today without MySQL AB, the company that has funded the overwhelming majority of its development.

So, is this cause to castigate Microsoft? No. After all, it's really no different from what Amazon, Google, Apple, and others do with open source.

Rather, Microsoft's move should serve as a reminder to open-source companies that they need to upgrade their business models or risk being rendered irrelevant by the cloud and all that it enables vendors to do with open-source software.

After all, the protections that the GNU General Public License (GPL) and other open-source licenses offer in the traditional software world are essentially meaningless in the networked world, where software is used to create services, but isn't actually distributed.

This is as true for Red Hat as it is for open-source start-ups like Openbravo and Talend. Imagine if Amazon decides to start offering JBoss as a cloud service. Or Red Hat Enterprise Linux, for that matter (minus the trademarks).

It could happen. Actually, I'll go one step further: it will happen. It's just a matter of when.

This is why companies like IBM, Google, and increasingly Microsoft strategically invest in open source, but don't try to directly monetize open source. It's also why the "open-source companies" need to figure out a Plan B before Plan A gets taken from them.

Is Apple an enterprise software or hardware company? That's the question Gartner's Nick Jones asks, ultimately answering with "you have to have a pretty relaxed definition [of enterprise] before Apple fits it."

It strikes me, however, that "enterprise" isn't something you define. It's just what gets used within the enterprise.

With this definition in mind, Apple clearly fits the "enterprise" moniker, whether Apple wants it or not. As BusinessWeek reported back in 2008, the Mac is finding its way into enterprise computing, with or without the IT department's blessing. Ditto the iPhone.

Is it somehow less enterprise because the CIO didn't issue a policy giving permission?

Maybe "enterprise" means something more than "gets used a lot within the enterprise." In fact, Jones points out a few reasons he, personally, doesn't feel Apple is an enterprise vendor:

Apple does the bare minimum for enterprises, they aren't deeply committed to security, management, road maps, low TCO and so on. And they don't open up the architecture of iPhone enough for third parties to fill the holes.

But, again, is this really how we should define "enterprise?"

It reminds me of the criticisms leveled at open-source software early in its adoption. Originally Linux, for example, wasn't considered "enterprise grade" or "enterprise ready," presumably because it didn't meet Jones' hurdles above.

Now, however, Linux is considered an essential enterprise technology. What changed? Nothing...except adoption.

Here's a test for Jones: while Gartner pooh-poohs Apple's iPhone as an enterprise mobile device, perhaps for a variety of good definitional reasons, will it hold to such a rationale once the iPhone's market share within the enterprise dwarfs that of Windows Mobile, which has lost a third of its market share since 2008?

Seriously, at some point it won't be enough to listen to Microsoft's Ray Ozzie deprecate the iPhone's enterprise credentials because its 100,000-plus applications are "not very deep" and lack the "thousands of man years" that have gone into the applications that run on Windows. It won't make sense. Why? Because no matter how "enterprise grade" those Windows Mobile applications are, few within the enterprise are using them.

Enterprise is as enterprise does. Would you rather work for the company that builds software for the enterprise, or would you prefer to work for the company whose software gets used by the enterprise?

If you can have both, great. But it's silly to say Apple isn't an enterprise company simply because it sells to the enterprise without even trying.

The natural state of a market doesn't appear to be broad competition between Lilliputian-sized competitors. Rather, markets tend to crystallize around a few dominant players.

Ironically, this is as true of open source as it is of proprietary software.

In September I asked if open source can monopolize a market. ZDNet's Dana Blankenhorn and others gave great feedback, but the market since then has provided the best evidence:

Yes, we can have an open-source monopoly (at least, a natural monopoly). In fact, this may actually be the normal state of a healthy open-source market.

If we think of markets broadly, e.g., the "e-mail/messaging market," we're unlikely to have open source dominate such a market in the near term, though with Linux, Firefox, and other open-source projects gaining momentum, full market monopoly may not be too far off.

If we constrain a market to just open-source competitors, however, we're already there.

Within the open-source market, Red Hat dominates Linux. Firefox dominates browsers. VLC dominates media players. MySQL dominates databases. Android dominates mobile operating systems. SugarCRM dominates CRM. And so on.

Name the market, and you're almost certainly going to come up with just one dominant open-source project or vendor. There are exceptions, of course: Drupal and Joomla duke it out over supremacy in Web content management. We'll call them a duopoly. But these exceptions prove the rule:

Open source loves a monopoly.

This shouldn't be surprising. While the theory of unfettered competition sounds great, it's actually hard for mere mortals to process.

For example, when I walk into a grocery store, I don't want 30,000 cereals competing to be my morning meal. I want just a few. (Ever notice that the same cereals sold when you were a kid persist on those store shelves? We don't seem to want much competition over time, either.)

It is convenient for open source to think itself different, and to rally the troops against "Darth Vaders of IT." But that's all it is: convenient. A convenient fiction that makes us feel that this time it will be different, that this time it's all about kumbaya and the customer.

The customer doesn't want 50 vendors providing support for one open-source project. It wants to invest in Red Hat, Canonical, or Novell, and probably just one of those. It wants Android or Symbian, MySQL, or Postgres. And so on.

Manageable choice. Choice that starts to look an awful lot like monopoly. It's not that customers want to have a market dominated by a single vendor. It's just that they'd rather have a limited choice of a few good vendors, rather than an unwieldy choice between scads of competing vendors.

The difference is code transparency, process transparency, data transparency, standards transparency, and so on. This lets customers buy into a limited choice, but have a more open option for exiting that choice. It's a distinction that is more meaningful in theory than in practice, but it's still worth something.

Just not as much as we thought.