Open Source, Open Sesame
Rituparna Chatterjee from San Francisco tells us how making your software products free can possibly help you earn more profits despite all the bugs and challenges.
Imagine what would happen if Coca Cola shared its secret formula, or a popular restaurant shared its secret sauce recipe. When source codes of software are shared beyond the secret society of their proprietors, a whole new world with unimaginable technical possibilities is opened. Contrary to popular belief that the proprietors of the secret sauce would lose their pie, they actually get a slice of a much, much larger pie, which makes better business sense.
After all, many of today’s tech rock stars like Google and Facebook follow the open source paradigm. These firms had implemented their ideas using open source technologies when they had started. And today, they allow free distribution of software developed by them for their internal use. Such open-sourcing enables newer startups to take advantage, yet again.
Like Kloudless — a search engine for all our personal stuff in the cloud — started by a bunch of University of California at Berkeley students. It was built using open source utilities from the Apache Software Foundation including a data retrieval search engine called Lucene, the Apache web server, mySQL database management system and several others. Armed with these open source weapons, Kloudless had a search server ready in just one day! And its demonstrable product was ready in merely three weeks. “We literally saved thousands of dollars! A proprietary server and database such as IIS and MSSQL would have resulted in us paying, and paying for lesser performance,” says Vinod Chandru, one of the co-founders. Many others, even after making billions out of their own technologies, choose to open-source their products, simply to stay competitive in today’s hi-tech landscape, which is evolving at a speed never seen before. Like Google, which could come up with its Chrome operating system in less than two years because it chose the opensource way.
“With the current economy and technological changes, traditional software itself is changing. Therefore proprietary software is not working. Open source might offer less money, but it gives alternatives and disruptive models,” says Anand Babu Periasamy, an open source advocate and an India board member of The Free Software Foundation.
Building a community around your product, especially for viral marketing, has become mandatory. If your product is free and open source, it is more likely to have a higher rate of adoption and can scale massively and rapidly, than if it were proprietary. Moreover, the open source community of developers will constantly enhance the product — because they use it — and pass on the improvements. “There were bug fixes in as little as a day!” says Caeser Sengupta, product management director for Google Chrome OS.
It’s the kind of R&D smaller companies especially cannot afford, and yet get to reap the benefits of. In other words, open source just makes great business sense. Take the apps economy for instance. The open nature of the applications platform is a blessing for them. They build the applications free of cost and constantly improve the platform in turn. Yes, the consumer benefits but the real winner is the platform owner. Google for instance provides the open source Android platform on which mobile apps are developed.
While the big guys like Microsoft — synonymous with proprietary — can choose, startups don’t really have a choice. They just have to go open source for maximum scale-up at the lowest cost possible. This fosters innovation. Apart from the apps economy, another great field that probably would not have taken off the way it has, is cloud computing. It is set to grow from $25.5 billion this year to a $159 billion industry by as close as 2020.
“If you look at the noise and the hysteria in the number of companies coming into cloud computing, you will see that almost everybody’s ‘cloud’ except for Microsoft’s cloud (Azure) has been built on open source,” says Mike Evans, vice-president of business development at RedHat. Powerful giants like Microsoft and Oracle may have the resources to do everything by themselves. But experts believe that the proprietary locked-in universe they represent will be crushed by the cloud wave. “These guys have small bits of open source, which they use opportunistically.
But cloud waves will be one of the biggest shifters into pushing open source pretty much everywhere. The likes of Oracle and Microsoft could then be the dinosaurs of the industry,” says Evans.
“It’s like the Civil Disobedience movement. You fight the system when it does not make sense any more,” says Babu. “The real winner is the consumer, who gets a high-quality product without being locked in,” says Evans, pointing to the advantage customers get by using disruptive technologies. For the producers of disruptive technologies, it is a low-cost business model that can still challenge the established players.
OPEN BUSINESS MODELS
The freedom to change and rework software can be fairly profitable too. Although open source is a buzzword today, RedHat — the company synonymous with open source — showed way back in the early 1990s that it could be a profitable and sustainable business model. RedHat’s is a subscription-based model wherein users subscribe to its consulting services for free products like ‘Red Hat Enterprise Linux’ and ‘JBoss application server’. Today, the public company has revenue of well over $900 million.
Like RedHat put value into a free product like Linux, IBM too did quite well improving and adding value to existing free products like the Apache web server. It added hooks, which enabled IBM to use its own custom web server platform. IBM also has a basic enterprise software based on Apache Geronimo, wherein again it offers a better product with better capacity.
RedHat’s service offering and IBM’s product offering represent the two major business models in open source. “But just like there is no perfect one-for-all software, there is no particular open source model that’s good for all. You need to focus on what your customer wants,” says Babu. That’s for software, but the philosophy of freedom which open source embodies, is spreading. “If you have a commodity, you may as well be open,” says Greg Stein, an advocate of open source software and director of the Apache Software Foundation. That includes hardware, which might be very proprietary today. But things like Apache’s Arduino platform for instance, are beginning to make inroads into open hardware experimentation. And as hardware gets increasingly commoditised — with infrastructure-as-a-service (IaaS) becoming ubiquitous — it is destined to go more open source. “Where we are with open hardware today is where we were with open source software a decade ago,” says Stein.
Though relegated primarily to enterprise spaces, open source as an idea might be coming to consumers too. Apple’s trademark iTunes was forced to move away to include playing music on non-Apple devices as well. Today, the TV market is in a flurry with a lot of player technology moving into cable boxes. People use their XBoxes to access Netflix movies. Others plug in their tablets to projectors or television sets. And Internet TV is on the rise. Personal preferences mean that consumers will make their own choices and not be locked into devices like earlier. “Now with everything getting so customized that we will see more open source software at a consumer level,” says Stein.
THE CHALLENGES OF BEING OPEN
In spite of the future being increasingly open source, there are lurking challenges. One of the biggest challenges is competing against proprietary companies with a different model. “This means that it’s more difficult keeping things open source because a lot of senior partners don’t understand it. So, they think that open source could be a business risk,” says Google’s Sengupta. “But that barrier is now reducing each month and year,” says Evans. Open source is hard to define and everyone has their own definition of it (see Box). Software’s legal dilemmas are probably messier than the bugs plaguing it. So there are always challenges with licences, software freedom and on reaching a consensus about what is open source and what is proprietary.
Another perception is that being open source means not only free source code but also free of cost, monetarily. This is partly because of the double meanings of the world “free” and partly because there are some very strong free products by organizations like Apache, which are fully free of cost.
Then, there’s the trouble of the community: which is the very engine of open source. There are hundreds of thousands of developers. You have to find the right meaningful segment of the developer community, fit for your need, and excite them into building your specific application. Being open means that your competition can see what you are up to. This may keep you constantly on your toes and ensure that you always keep your products’ quality top-notch. “But because everyone knows what you are up to, you can never have the Steve Jobs/Apple moment of ‘wow!’. So, purely from a PR perspective, open source can be tough,” says Sengupta. Finding the right line between the indie cult spirit of developer community and a sturdy, trustworthy enterprise-ready product is also another challenge for open source. Things like firewall, storage, and others could not be disrupted by open source for a long time due to reliability issues. But then times are changing and open source’s merits nevertheless outshine its flaws. And even open source red flags like storage are doing well. In October, Babu sold Gluster, his open source storage startup, to Red Hat for $136 million. For a software startup, being open will eventually not be a matter of choice. Rather than waste precious funds in marketing, being open popularises the startup’s product resulting in a wider adoption. Counter-intuitive as it sounds, opening up its technology can bring a business more money.
Open Source Decoded
WHEN IS A SOFTWARE ‘FREE’?
Only when it enjoys the following four freedoms: The freedom to run the software, for any purpose The freedom to access the software’s source code and change it to suit your computing needs
The freedom to redistribute copies, so that you can help your neighbour
The freedom to distribute copies of code, enhanced and modified by you or others, to the community
SOURCE: THE FREE SOFTWARE FOUNDATION WHAT IS THE BUSINESS POTENTIAL OF OPEN SOURCE
Within open source, Linux servers formed 17.5% of total revenue in the server industry in the first half of 2011. Linux is the major open source operating system running 64% of the Internet’s publicly-accessible servers like mail servers and web servers
Over 90% of the world’s supercomputing is done on Linux. But Linux is also the force behind many consumer products. For example, Apple products’ own proprietary operating systems are all derived from Linux, as is Google’s Android mobile platform IDC prediction of the size of the global open source market at a compounded annual growth of 26%