Open source has long flourished on Wall Street as financial services firms have sought competitive differentiation by tweaking open-source software for enhanced performance and functionality. Wall Street was the first sector to buy heavily into Linux, and it has also welcomed a host of other open-source infrastructure projects.
Indeed, Wall Street adoption has reached the point, in the words of senior Accenture executive Lloyd Altman, that open source has become a mandate for cash-strapped financial services firms tasked with doing more with less.
I've seen this in my own business: open-source applications are suddenly the less risky choice, given the need to get more for less.
But the more dramatic shift for Wall Street right now is that it is considering open-source alternatives for fundamental, industry-specific applications, applications like Marketcetera's open-source trading platform, which I've called "a lifeline to the hedge fund industry" because it enables the industry to become more efficient and more productive. REvolution Computing, Esper, and others are also benefiting from this shift.
Cost may be a primary driver for the shift to open source, but as the managing director of Technology Risk Management at Bank of New York Mellon told me, open-source software has become the innovation platform of choice for financial services companies.
Marketcetera's Graham Miller explains this concept as it relates to his company's trading platform:
We've built out a platform product that provides out-of-the-box components for market data, signal analysis engines, market connectivity and user interface capabilities to exchanges, ECNs, brokers and lots of different destinations.
The key differentiator with a proprietary platform is you're limited to the kind of usage and the kind of customization that the vendor has forethought. If the vendor lets you change the fonts and colors on the EMS, then that's the limits of the flexibility on the systems, whereas an open source offering is really unlimited on what you might integrate with it and what features you might be able to add.
In other words, open-source tools like Marketcetera's put the customer in the driver's seat, and charge a lot less for the privilege. This is a recipe for success in any economy, and particularly in this recessionary economy.
Wall Street was an early adopter of technologies like Linux, JBoss, and more infrastructure software, and has been a key constituency for open-source applications. As it signals a move to replacing core, industry-specific business applications with open-source alternatives, is it also foretelling a macro move by other industries to vertically focused, open-source solutions?
I suspect the answer is "Yes."
Follow me on Twitter @mjasay.
Goldman Sachs recently surveyed enterprises and found 20 percent plan to support the iPhone, and Apple's Macs are among the biggest share gainers among computer manufacturers in the enterprise.
On Thursday, however, I saw the clearest sign yet that Apple wants a bite out of the enterprise: a full-page ad in The Wall Street Journal. While some vendors like Cisco are looking for growth in emerging markets like the Middle East, Apple's biggest emerging market may well be the Fortune 500:
Apple gets serious about enterprise marketing
(Credit: Apple/Wall Street Journal)I apologize for the quality of the image, and that I wasn't able to get the entire page into the scanner. It was a full-page ad, after all.
Despite a recent write-down on the value of its StorageTek acquisition, Sun is banking on updates to its open-storage initiative to drive revenue growth for the company, according to The Wall Street Journal. Is it putting too much faith in storage, and open-source storage at that, to repair its fortunes?
For me, it's not a question of whether Sun's open-storage business is viable, but whether it's big enough to save Sun in time. In other words, as the Journal points out, open storage is growing at a torrid pace, but will it be enough?
Sun's open storage line includes a hybrid server-storage machine called Thumper, introduced two years ago. Sales of such products are a small bright spot for a company beset lately by declining revenue. In the first fiscal quarter ended in September, for example, Sun reported $25 million in open-storage sales -- nearly triple the amount in the year-earlier period -- while Sun's total revenue declined 7% to $2.99 billion. "Certainly open storage is one of the bright spots in the storage industry," says John Fowler, executive vice president for systems at Sun.
It's during times like this that Sun would do better as a private company. It really needs some time away from Wall Street's unblinking eye so that it can turn the ship around.
With initiatives like open storage and open-source MySQL, Sun has demonstrated that it knows how to grow again. The major remaining question, however, is whether it will be fast enough to appease Wall Street. As an open-source proponent and Sun fan, I hope the answer is 'Yes.'
The Register correctly points out that at current valuations and bank balances, Sun Microsystems and Novell would make a lot of sense as private companies. I don't have enough data on Sun to make a good argument there, but I've long held that Novell would benefit tremendously from a few years off the Wall Street radar.
Novell is doing much better in its Linux business, but I continue to believe that as a company it's forced to stick with dying product lines that it would happily shelve or sell but for the pressure to deliver quarterly numbers. Going private would relieve Novell of undue outside pressure, giving it room to strengthen its core business value proposition.
There are lots of benefits to being a public company, but also significant downsides. Novell would be better off as a private company in the short term, in my opinion. Now would be a good time to make it happen.
The Wall Street Journal has announced its 2008 Technology Innovation Awards. Among the heavyweights on the list - Salesforce, Applied Materials, GlaxoSmithKline, etc. - is open-source storage vendor, Cleversafe, a company that I've long followed and admired.
It's great to see Cleversafe getting its due credit, especially from a list of judges that includes the CTO of Agilent, EVP of Software at SAP, and more distinguished names.
Here's what caught the judges' eyes:
[Cleversafe's] Dispersed Storage software breaks files up into slices and then sends the slices over the Internet to multiple storage locations on a network. By themselves, the slices are unreadable to hackers or anyone else not authorized to read them, but the original file can be easily reassembled, even if not all the slices are available due to equipment failure or natural disaster. The software also promises to be less expensive than traditional storage methods, which rely on creating full, multiple copies to protect against loss.
Jane Royston, professor of entrepreneurship and innovation at the Swiss Federal Institute of Technology in Lausanne and an Innovation Awards judge, says the software "could be an important part of Internet data storage systems."
What a great testament to Cleversafe's continued progress and product excellence.
Things have been quiet from MySQL over the past month or so, but today's Wall Street Journal has an awesome interview with Sun's Marten Mickos, perhaps the most quotable technology executive on the planet.
I really like how he talks through community (how to provide incentives, what to expect in terms of contributions), as well as competition. On the latter front, Marten talks through the value of leading through innovation:
MYSQL chief Marten Mickos isn't afraid his rivals in the database-software industry will ever overtake him. "Let them try," he says. "Our secret is in the way we operate our culture, and I'm convinced others cannot imitate that."...
Even if someone studied us in tiny detail, I don't think they could really match us. We've shown them our code, and nobody has been able to measure up against what we have....Even if I showed you my DNA, you wouldn't know how to become me.
Ah, Marten. I missed you! Head to the article for much more. What a great person to have in the open-source ecosystem.
I laughed when I read Network World's headline: "Wall Street Becoming Linux Stronghold." Is it 1999 or 2008, I wondered? Linux has long found a warm reception on Wall Street, where enterprises view IT as a source for competitive advantage. Network World cites one analyst's estimate that "Linux adoption among the 14 biggest investment firms this year will reach more than 72 percent of the installed operating server base vs. 60 percent in 2006."
That's big.
But the article goes beyond the "Wall Street uses a lot of Linux" argument and hones in on the next round of debate: Now that Wall Street has adopted Linux for technology benefits, are there licensing downsides?
To date, the answer has been 'No.' But this may well be because people haven't thought enough about the requirements open source may impose on Wall Street adoption:
... Read moreThe influential Walt Mossberg has entered into the browser fray and declared a winner: Mozilla's Firefox:
My verdict is that Firefox 3.0 is the best Web browser out there right now, and that it tops the current versions of both IE and Safari in features, speed and security. It is easy to install and easy to use, even for a mainstream, non-technical user.
If you are a regular reader of the Journal, you know that Mossberg can be pretty tough on products. He's an Apple fan but tends to give Microsoft its due, as well. His choice of Firefox is impressive because he also tends to focus on the average consumer, i.e., someone that isn't likely to go out and download software, but rather will take whatever is given to them.
So the big question is how will John and the Mozilla crew get Firefox into more consumers' hands so that they can benefit from the best browser available?
Yes, the open-source database market is still relatively small (roughly $200 million in 2007, according to Gartner). But when The Wall Street Journal starts paying attention (subscription required), it's clear that the opportunity is huge. The Journal doesn't get paid to be sentimental.
Regardless, as Arjen Lentz opines,
...(D)isruptive technology tends to not take over the incumbent's market, but find or develop a completely new market, and indeed take over in that space. The question then is, does the incumbent's market remain intact, or does it change/evolve naturally and perhaps shrink or even completely disappear over time. Generally, the market-dominant incumbent continues to survive in a niche (where they are obviously dominant, but no longer in the market overall). In short, the market changes and with it its rules and demands.
Leading this market transformation is Sun Microsystems. Open-source databases (PostgreSQL and, especially, MySQL) may get a significant boost from Sun's involvement:
... Read more
(Credit:
Matt Asay)
According to a managing director at the Bank of New York Mellon, open source is not about commodification. That's the pedestrian role served by proprietary software. Instead, open-source software is about innovation and competitive differentiation.
I was fortunate to speak at the Linux on Wall Street conference in New York today, and came away having learned much from my co-presenters, Stuart Cohen (CEO, Collaborative Software Initiative), Stan Rose (Managing Director, Technology Risk Management, Bank of New York Mellon), and Eben Moglen (Director and Co-Founder, Software Freedom Law Center). For the record, I'm fairly certain that Eben Moglen is the smartest person to have ever walked this earth. I could have listened to him all day....
Stan Rose of the Bank of New York Mellon, also impressed me. He gave some insight into how his company views open source, and I got the sense that he's not alone in this. In a nutshell, financial services companies like Bank of New York Mellon increasingly view open source as the foundation of choice for their innovation. For non-differentiating software (like a general ledger system), they use proprietary software, but would likely prefer to use an open-source alternative where these exist.
Get that? Proprietary software is essentially for IT that doesn't provide a competitive advantage. Open source is what you use in applications that really matter for setting you apart from the competition.
IT, in sum, does matter, but some IT (read: open source) matters more than others. We've come a long way in such a short time in how we look at open source.
