Software mergers and acquisitions have been on overdrive this week, with Adobe, Google, and Intuit collectively spending roughly $2.5 billion to add to their respective product lines. Against this backdrop, OStatic's Sam Dean asks, is the time ripe for open-source mergers and acquisitions? The answer is a resounding, "maybe."
Virtually all M&A is motivated by a search for strategic value. That value comes from acquiring expertise in emerging markets, like cloud computing or virtualization, or by delivering developer communities, as VMware got by buying SpringSource.
This is why Dean is right to point to CloudEra and Acquia as ripe acquisition targets. It's not that either company has managed to build significant revenue streams yet. They haven't. But both sit on the crest of exciting markets or vibrant developer communities.
To be valuable, so-called open-source companies must deliver new markets or developers or both. Using open source to lower sales and marketing costs is an excellent strategy for building a business, but not for establishing strategic value to would-be buyers.
Speaking of SaaS (software as a service) businesses and their impact on enterprise IT, Christopher Lochhead, former chief marketing officer with Mercury Software, suggests, "The real innovation is when technology and a new business model meet." The same is true for open source.
The best bet for open-source M&A is to look for companies that have amassed a developer community or sit atop an exciting new market and have a growing customer list to suggest that a vein of gold runs through its community and/or market.
There aren't many of these, but they do exist.
At Hogwarts, only the Slytherins seem to care whether you're a pure blood or a mudblood. In the open-source community, too, some open-source advocates have never seen a corporate open-source contribution that couldn't have gone farther or been done with nobler purposes.
Alas! It wasn't open enough, at least, not for Chris Messina, who promptly criticized the move as "open washing, applying the tastes-great, less-filling label, while doing everything they can to maintain their control and dominance in a given area--further cementing the historic distinction between 'free' and 'open.'"
Messina raises some good points in his post, but what he doesn't do is come to grips with Adobe's news: it did exactly what it said it did, which was to open source code under an OSI-approved license (MPL 1.1). Messina may believe Adobe did so with devious intent, but can we at least wait for the ink to dry on the press release before hounding Adobe for its move?
Similarly, the response to Microsoft's open-sourcing of a few Linux device drivers is puzzling. Red Hat said "congratulations" out of one side of its mouth while pestering Microsoft to outdo IBM, HP, and other companies that heavily use open source in a refusal to future patent claims against any open-source developers or users.
Roy Schestowitz, perhaps predictably, argued that Microsoft only did it because Linux can't be ignored. Indeed, the argument is now circulating that Microsoft was legally bound to release the device drivers as open source. It didn't really want to! It's a sneaky company that only contributes under duress!
Sigh. In open source, no good deed goes unpunished. There is no greater enemy to open source than itself.
A more charitable view on Adobe, Microsoft, and other companies that are experimenting with open source is that they are making progress, learning to use open source to suit various business and technical needs. Microsoft says that it's learning to use open source to lower sales and marketing costs in new markets, but also to make its software development process more efficient.
Perhaps it's lying, but why start from that premise?
I think it's fair to say that Microsoft, in particular, has made significant progress in its understanding of and appreciation for open source these past few years. Yes, as Novell's leading Linux developer Greg Kroah-Hartman articulates, "companies [like Microsoft] are big" with conflicting agendas, which can make them seem insincere in their open-source efforts.
But why would anyone expect Microsoft and its ilk to continue to court a community that ridicules and second-guesses its every attempt at perestroika? I know from conversations with several companies that they're actually scared to engage the open-source community because the responses have been so intemperate and ideological.
I'm convinced that this element of the open-source community, vocal and sometimes vicious, is a minority. I'm equally convinced that we'd better off if this enemy within would spend more time analyzing its own behavior rather than shouting down the supposed "mudbloods" of open source.
Follow me on Twitter @mjasay.
The Wall Street Journal recently opined that "the inconvenient truth is that the earth's temperatures have flat-lined since 2001, despite growing concentrations of CO2," causing a greater number of scientists to question the science behind global warming. Whatever your opinion in the matter, it's certainly true that the world would be better off if we wasted less energy, which is what makes open-source Ecobot so useful.
Ecobot tracks your carbon footprint
(Credit: Taxi)While programs like Amee help businesses measure their carbon footprints, Ecobot offers a personal "carbon trainer" for Mac users.
Designed by Taxi, a Canadian corporation, Ecobot is derived from Taxi's participation in the "Green for Green" competition. The program "calculates your carbon footprint by measuring the fuel, power, and paper you use," and, importantly, does a lot of this data aggregation automatically. ("Automatically" is good - heck, if we weren't so lazy, we probably wouldn't need all these vehicles to power us from Point A to Point B.)
Not only does Ecobot keep track of how many pages you print from your laptop, but it also tracks the wireless networks to which you connect and works with you to figure out how you got from one to the other, and calculates the carbon emissions required to make the journey.
Pretty slick.
Even if you're not a tree-hugging, carbon-footprint-obsessed member of the Greenimati, Ecobot is an easy-to-use, unobtrusive way to monitor how much carbon your lifestyle requires. Of course, it only works if you're a Mac user.
Even so, despite Dell's insistence that Apple's Macs aren't as green as Apple claims, Ecobot lets you be as green as you want to be...and brag about it to anyone patient enough to listen to you.
Follow me on Twitter @mjasay. But please consider the environment before printing out my 3,000-plus tweets.
In a late-night Twitter rant, CNET's Stephen Shankland uncovers a significant error in judgment by software vendors like Adobe Systems: vendors continue to default to Internet Explorer, even as consumers increasingly do not:
Why the hell do Adobe CS4 help and Lightroom geotag links launch Internet Explorer? It's not even my secondary browser, much less default.
In other words, Adobe is trying to second-guess the consumer, presumably to favor either some preconceived notion of what its customers want or some revenue or partnership arrangement with Microsoft.
In either case, vendors like Adobe need to be thinking forward, not looking backward, and the writing is on the wall that Mozilla Firefox is becoming a new standard for Web browsing.
Sure, IE still commands a 68 percent global market share, according to Net Applications, but that share has been on a steady decline for years. Firefox? It has surpassed 21 percent global market share, and it claims more than 30 percent of the market in Europe, growing in popularity nearly every month.
Adobe and other vendors needn't prejudice their applications to Firefox in the way Google has--at least not yet--but they certainly shouldn't be force-feeding IE down customers' throats. An increasing number of people don't want it and, guess what? The customer is always right.
In November, I joined a panel at Adobe Max focused on the promise and pitfalls of open source.
I wrote at the time that open source is not a binary decision for Adobe Systems (or, really, any company): it's hard work and not the right answer to every question.
The Register on Tuesday picks up on the "hard work" theme and runs with it, detailing lessons learned from open-sourcing Flex, Adobe's Flash development tool. In addition to "treading a fine line between tipping off competitors to its Flex plans through the open-source work while coaxing the community to buy into the Flex road map," Adobe is learning that community involvement doesn't come cheaply...or sometimes doesn't come at all.
There is a pervasive myth in the industry that "community" forms around pretty much any well-designed open-source project. The opposite is true. Most projects are devoid of community in any meaningful sense. This becomes even more pronounced in projects that are dominated by a single vendor.
It's not that good open-source projects are company-free. They aren't. They're the opposite: Linux, Apache, Eclipse, etc., are filled to the brim with companies. In fact, most open-source projects are simply amalgamations of corporate interests (vendors, enterprise IT, system integrators, etc.), including "community" projects like Linux, Joomla, and Apache.
The difference between these and Adobe's Flex, however, is that there are multiple counter-balancing corporate interests involved, not just one. If Adobe wants to make Flex a true open-source project (and it's very likely that it doesn't, and for very good reasons), it needs to put Flex into a foundation structure, similar to Eclipse, Mozilla, and others, just as many have clamored for Sun to do with Java and OpenOffice.org.
In sum, open source is exceptionally hard work, but the job is made doubly difficult when one company seeks to retain control of a project.
OStatic reported on Wednesday that public open-source companies may be vulnerable as they watch their market capitalizations get flushed down the toilet. Unfortunately, it's not just Red Hat, Novell, and Sun that are getting pulverized by Wall Street. The entire market is in free-fall.
Is there a bottom in sight?
Novell and Sun are worth more dead than alive, with more cash on hand than their market capitalizations. It's not quite so bad for Microsoft and some other technology vendors: Adobe, for example, has an $11 billion market capitalization with $4 billion in total equity.
But that doesn't tell the entire story. Keeping with Adobe, it has lost roughly 50 percent of its market value since January 2008, this despite reporting quarter-after-quarter of growth and excellent performance. Google? It has lost 56 percent of its value in 2008, despite dominating the web advertising market, a market projected to keep gaining at old media's expense, with Proctor & Gamble and others actively looking at moving more advertising spend to the Web.
This is insanity. It makes no sense, because it is a product of panic. There are many reasons for the massive sell-off on the financial markets, but they all derive from panic: I've got to sell Asset X to be able to cover my obligations to Creditor Y. If everyone decided to stop panic-selling today, things would stabilize.
Alas! That's not going to happen. So perhaps the only thing to do is laugh at our folly and the trillions invested in our house of cards. If you step back from the mess for a minute, it's plain that Wall Street's sense of valuation has been thrown askew. Best to wait until the mania subsides, then buy heavily.
I was fortunate to speak Wednesday on a panel at the Adobe Max conference. The topic? "Why Open Source, and What Makes the Cut?"
We spent a lot of time talking about open-source strategy, generally, but it was when we discussed how open source applies to Adobe that things became particularly interesting.
Adobe actually does a lot of work around open source, though it generally gets (and takes) little credit for that work. But so does every big company, with few exceptions. No, the real question is in what Adobe chooses not to open source, and why.
It turns out that just as there are a myriad of good reasons for open sourcing technology, there are equally good reasons for not open sourcing technology. Adobe has good reasons on both sides, but also clearly recognizes that open source is not a binary decision.
That is, it's not a question of whether Flash Player should be 100 percent open source. It's a question of which portions can and should be open sourced. Ditto for Adobe's other technologies. Open sourcing some technology could seriously benefit Adobe and the larger open-source community. Open sourcing other technology would not.
So Adobe and other companies, from Microsoft to Openbravo, selectively decide what to open source, and how. It's not a binary decision. Today open sourcing Creative Suite 4 as a whole is almost certainly not on the cards at Adobe, but contributing to complementary projects like WebKit is in play.
Is it enough to satisfy free software activist Richard Stallman? No. But it's a prudent approach to managing one's business and one's community. Pressure from both should lead to the right, non-binary decision most of the time.
Adobe is under mounting community pressure to open source Flash, but as The Register reports, it's easier to talk about open source than to actually deliver it. I'm guessing that the fact that Microsoft's Silverlight has yet to make any serious inroads against Flash as the biggest reason for Adobe's alleged lack of appetite for open sourcing Flash.
However, that's just one aspect. There's also the fact that open source is easier as a soundbite than it is as a business strategy. In the case of the Flash player, specifically, 65 percent of the code is not owned by Adobe, making open sourcing it a long and laborious project, just as it was with Sun's Java technology.
Adobe's CTO Kevin Lynch recently commented on this to eWeek:
...[W]e need to balance openness and consistency. So we're very open about what goes into Flash Player, the bugs in Flash Player, the code and scripting engine in Flash, the format with Flash, the protocols with Flash. There is incredible openness around Flash. There's a vibrant open-source community where there are dozens of open-source projects that are alive and active. You can go to osflash.org and you can see a lot of those there. So I think open source and Flash is very much a part of the agenda here and a part of the success of Flash today....
... Read more
Adobe announced today that Adobe AIR now runs on Linux. AIR is a cool cross-platform runtime that enables developers to create Rich Internet Applications that merge the desktop with the Web. Bringing it to Linux removes yet another roadblock to bringing disruptive applications to Linux.
This beta release of AIR for Linux isn't perfect--supported distributions only include Ubuntu 7.10, Fedora 8, OpenSuSE 10.3; and it lacks some other functionality--but it's a great, running start:
This Labs release of AIR has all features implemented for Linux, except support for DRM and badge installations. Major new features include support for system tray icons, keyboard shortcuts, localization, internationalized input (IME support), filetype registration, SWF and PDF in HTML, multi-monitor support, fullscreen mode, encrypted local storage, support for V4L2 cameras and printing.
Those interested can download AIR for Linux here. I've been using AIR applications for Twitter (Twhirl), word processing (Buzzword), and other uses, and love how it makes RIAs even richer by tying them in with desktop processing.
Give it a spin.
If you needed any further testament to the colossal failure that is Microsoft Windows Vista, just read this Wall Street Journal article detailing PC manufacturers attempts to design around Vista's shortcomings, shortcomings that no amount of marketing are going to fix.
...[S]ome PC makers are trying to improve that [Vista] experience by adding their own proprietary software to their machines. In some cases, they're creating new user interfaces intended to make Vista faster and easier to use. In other cases they're replacing applications from other software companies with their own....
Today, Microsoft encourages PC makers to build software "on top of Windows Vista that enhances the customer experience," according to an email from Lauren Moynihan, a senior product manager at Microsoft.
This is the problem: they can't. At least, not as much as they'd like. PC manufacturers are trying to stand out, but given that they've ceded so much power and control over the computing experience to Microsoft, the best they can provide is "Windows dressing."
For Sony, HP, or other PC manufacturers hoping to create an Apple-esque experience, forget it. Your best chance of doing so is with Linux. When you pre-install Windows, you pre-install Microsoft's view of the world, with all the bad (and good) that comes with that view. Dell can replace Skype with its own VoIP software, but it can't replace the look, feel, and experience of an increasingly all-consuming Windows experience.
Perhaps Dell, Sony, etc. should band together with Adobe, Google, and others to create Linux-based computing experiences for consumers and/or enterprises. Each of these companies arguably has the brand awareness to take the Linux out of the Linux desktop, and re-brand it as their own. Windows will never give them this opportunity, no matter how hard they try.
