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Annals of Business Administrative Science 12 (2013) 123–137 Available at www.gbrc.jp http://dx.doi.org/10.7880/abas.12.123 Online ISSN 1347-4456 Print ISSN 1347-4464 ©2013 Global Business Research Center

UNIX License Makes the Last Major Piece of the Puzzle

Nobuo TAKAHASHIa) and Tomofumi TAKAMATSUb)

Abstract: From 1992 to 1994, BSD was developed at the University of California, Berkeley (UC Berkeley), found itself involved in a license-related lawsuit filed by AT&T. At around the same , the GNU project, which developed a UNIX-like free not infringing on the AT&T license, was nearing completion—the “jigsaw puzzle”—with the exception of the kernel. Linux, a free UNIX-style software kernel with open free from the AT&T license made its appearance as the desired kernel becoming the “last piece” of the puzzle. A UNIX- is an aggregate of single function programs called tools, which are easily substitutable. Under these conditions, the system, noted for being “UNIX running on a PC,” was completed in a short span of time. Essential to the success of Linux was its miraculous release timing. It goes without saying that this phenomenon is unlikely to be repeated even under ideal conditions of it being free of charge and .

Keywords: open source, operating system, software development, licensing

a) Graduate School of Economics, University of Tokyo, [email protected] b) School of Business, Aoyama Gakuin University, [email protected] A part of this paper was originally published as Takahashi and Takamatsu (2002) in Japanese. 123

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1. Introduction

Linux is a UNIX-like operating system (OS); it is an open source software with publically available source code that can be freely redistributed. The name “Linux” originally referred to the kernel that makes up the core of the OS, however, entire OSs based on the are commonly referred to as Linux. Linux holds only a small share in the desktop PC market where accumulation and continuity of application software is critical. However, in the server OS market Linux competes with the likes of UNIX, represented by Solaris from Sun Microsystems,1 and with Windows Server from Microsoft, the reigning champion of the desktop PC market. The success of Linux made the term “open source” popular worldwide. Since its first official announcement by Linus Benedict Torvalds in October of 1991, Linux has been evolving at an astounding pace, achieving superior functionality in its lightness, high degree of freedom, and reliability. A few years later, in 1995, it was being used as a practical and stable OS (Leibovitch, 1999). At that time, Microsoft founder Bill Gates’ famous “An Open Letter to Hobbyists” 2 would epitomize source codes to be protected as intellectual property with usage rights to be granted to consumers for a fee. In the midst of this, Linux was provided free of charge and its source code was made publically available. These practices were greeted with surprise and sympathy, and considered as the reason for its success along with intuitive discussions (e.g., DiBona, Ockman, & Stone, 1999). Furthermore, for-profit enterprises such as , Apple, Hewlett Packard, and IBM subsequently began publicizing their adoption of the open source strategy, making their source codes available to the public (Hamerly, Pazuin, & Walton,

1 Oracle Corporation acquired Sun Microsystems in January 2010. 2 Published in Altair Newsletter and others (Manes & Andrews, 1993). 124

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1999; Landry, 2000). However, the open source strategies of these for-profit enterprises were not as successful as that of Linux. The definitive reason for the success of Linux was in its miraculously perfect entry that filled the gaps left by preceding groups. This phenomenon could not be repeated even under ideal conditions of it being free of charge and open source.

2. The Birth of UNIX

UNIX was developed at AT&T’ Bell Laboratories in 1969 by Ken Thompson and Dennis Ritchie. At the time, Thompson was building a for the Programmed Data Processor-7 (PDP-7), Digital Equipment Corporation’s (DEC’s) older model minicomputer; he rewrote the entire system for it to operate like an OS (Salus, 1994, chap. 1). This small-scale, light, and user-friendly OS was called UNICS, which later became UNIX. The first edition of the UNIX Programmer’s Manual was published jointly by Thompson and Ritchie on November 3, 1971 to be used with the PDP-11/20 (Salus, 1994, chap. 13). The PDP-11 series hardware was quite limited in address and memory, which brought about a prominent characteristic of UNIX. The second edition, released on June 12, 1972, added pipes. Like pipes, some wonderful ideas were incorporated into UNIX that enabled the construction of large systems made up of numerous small programs (Libes & Ressler, 1989, chap. 1). Operating systems were originally designed to demonstrate the speed and functionality of specific types of hardware, and were thus written in assembler. In contrast, in the third and fourth editions, released in February 1973 and November 1973 respectively, UNIX codes were rewritten from assembler, which is dependent on certain types of CPUs into the , not dependent on 125

Takahashi and Takamatsu any specific hardware. Because of this, UNIX became an exceptionally portable OS (Salus, 1994, chaps. 8, 13). Ritchie’s statement, “It would be easier to port the operating system to a new machine than to port the application to a new operating system” exemplifies the egg in the Columbus story (Libes & Ressler, 1989, chap. 1). At the time, AT&T, Western (fully owned subsidiary of AT&T), and Bell Laboratories (jointly owned by AT&T and Western Electric, each holding 50% share), based on the antitrust legislation, were legally required to provide licenses to anyone for a nominal fee by a 1956 consent decree. Accordingly, AT&T distributed their software without advertising, support, or bug correction and required advance payment. When Thompson and Ritchie published papers at the ACM Symposium on Operating System Principles (SOSP) in October of 1973, and in the July 1974 issue of Communications of the ACM (CACM), the patent licensing division at Bell Laboratories was unable to handle the overflow of UNIX inquiries from institutions such as universities (Salus, 1994, chap. 8). In response, the fifth edition of the UNIX Programmer’s Manual released in June 1974 added, for the first time, a consensus document including a signature page. This enabled universities to officially obtain UNIX for academic purposes by signing a simple agreement. It was offered at a fee that was roughly the cost of copying the tapes and manuals (Libes & Ressler, 1989, chap. 1; Salus, 1994, chap. 9).

3. BSD Under AT&T License

The source code written in C programming language was distributed free of charge to universities and research institutions, thus spawning numerous derivative OSs. UC Berkeley’s version of UNIX, BSD, was representative of such derivatives. Thompson became a visiting professor during a one-year sabbatical beginning in 126

UNIX license makes Linux the last major piece of the puzzle the fall of 1975 at his alma mater UC Berkeley. With this input, UC Berkeley student (William N. Joy) became fascinated with UNIX, thus creating the Berkeley Software Distribution (BSD), which was distributed in 1978 for USD 50. Distribution of the Second Berkeley Software Distribution (2 BSD) began in mid-1978 (Salus, 1994, chap. 16). For use with DEC’s new VAX series, 3 BSD was released in the latter half of 1979 as a fully bootable system with a based kernel and portable utilities. This version was instantly and widely used, resulting in the release of 4 BSD the following year in October of 1980, which also proved to be popular (Libes & Ressler, 1989, chap. 1).3 However, the usage of BSD required AT&T licensing, and this would gradually become a major problem. In reality, the 4.x versions of BSD (versions 4.0 BSD to 4.4 BSD) had vast differences in content, but continued to be labeled as 4.x BSD. Despite the differences, no subsequent 5 BSD version was released after all. The reason being said that the release of version 5 BSD would require a new license in association with AT&T (Libes & Ressler, 1989, chap. 1).

4. BSD vs AT&T

The period of tranquility in which AT&T distributed their source code free of charge was short-lived. Version 6,4 released in May of

3 However, DEC continued using their in-house developed OS and refusing UNIX support. This is why their culture was referred to as Not Invented Here (NIH) during the 20 years since their commencement. Although NIH syndrome usually refers to “self-sufficiency,” it should be noted that in the often quoted Katz and Allen (1982), NIH syndrome refers to a decrease in performance due to the prolonged years of tenure of project members (Takahashi & Inamizu, 2012). 4 It seems that the sixth edition came to be referred to as “Version 6.” While there is no necessity for the “Edition” of the manual and the “Version” of the software to coincide, according to Libes and Ressler (1989, chap. 1), in the case of UNIX the “Edition” and “Version” are synonymous. Put another way, they were in the habit of naming UNIX releases after editions of the 127

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1975, was the first UNIX version that was widely used outside of Bell Laboratories. It is from this Version 6 onward that AT&T began to issue licenses to private sector and government users through Western Electric, a subsidiary and licensing division of AT&T (Libes & Ressler, 1989, chap. 1). When Thompson created the large-scale bug correction tape “50 Bugs” at the time of his arrival at UC Berkeley in 1975, distribution had already been halted by lawyers from AT&T, thus leaving him no option but to offer it secretly. Around this time, licensing regulations began to change and license fees began to increase dramatically (Salus, 1994, chap. 16). While Thompson and Ritchie’s names were printed on the covers of the first through the sixth editions of the UNIX Programmer’s Manual, the seventh edition’s cover published in 1979 altered its title to “UNIXTM TIME-SHARING SYSTEM,” not including the names of Thompson and Ritchie (Salus, 1994, chap. 6). Furthermore, the license for Version 7 forbade the research of source code by university professors, which led many universities to drop UNIX research and instead teach it only in theory. However, one researcher chose a different path despite such circumstances. Andrew S. Tanenbaum began to create a new UNIX-compatible OS without using a single line of AT&T code, calling his creation “,” which would later lead to the creation of Linux (Salus, 1994, chap. 17). In January of 1982, the Department of Justice and AT&T reached a new settlement by comprehensively modifying the 1956 consent decree, thus issuing a decision that would permit AT&T to participate in industries such as computers in exchange for its divestiture of telephone operating companies (Takayanagi, 1994). In response, AT&T released System V with drastically modified licensing agreements in 1983 (Salus, 1994, chap. 21), which became the forerunner to Sun Microsystem’s Solaris (Wayner, 2000, chap. 4).

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Meanwhile, a movement had begun at UC Berkeley to free BSD from the AT&T license (Salus, 1994, chap. 18; Wayner, 2000, chap. 5). Due to the development of Transmission Control Protocol/Internet Protocol (TCP/IP) at UC Berkeley for use with UNIX, a large licensing fee to AT&T was to be made in order to use the TCP/IP. It was at this time in November of 1988 that UC Berkeley released NR1, otherwise known as NET/1 (BSD Networking Release 1), which allowed the use of TCP/IP without proof of licensing from AT&T. Though redistribution was possible, NET/1 was launched in June of 1989 with a price tag of 1,000 USD. They also rewrote source code for the entire BSD (referred to as a “clean room operation,” that creates a without referring to the source code) to avoid infringing on the AT&T license. With the exception of six files, the rewrite of the kernel, which used source code written by both UC Berkeley and AT&T, was completed in the spring of 1991 and was released in June as NR2, otherwise known as NET2 (BSD Networking Release 2). There were two endeavors toward adding the six missing files of NR2 (Wayner, 2000, chap. 5). One of these was the 386BSD, to which Bill Jolitz added the source code of the six files to NR2, so that UNIX could run on an Intel 386 processor. Two groups then succeeded 386BSD: NetBSD, which focused on running code on any machine, and FreeBSD, which focused on running on the Intel 386. The second of these endeavors was by Inc. (BSDI), in which its own six files were added to NR2; it then advertised the sale of the source code in industry magazines for USD 995, cheaper than that of AT&T. In 1990, AT&T transferred its UNIX development and marketing departments from Bell Laboratories to its subsidiary UNIX Systems Laboratories (USL), granting USL independence, and commissioning USL with UNIX sales and trademark rights (Salus, 1994, chap. 21). As competition increased from BSDI, USL sued BSDI for plagiarizing 129

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AT&T’s source code. BSDI’s defense rested on the NR2 license obtained from UC Berkeley, thus dragging UC Berkeley into the lawsuit in 1992. In June of 1993, the regents of the University of California retaliated by filing a lawsuit claiming that USL had broken the agreement with Computer System Research Group (CSRG).5 USL was then purchased by in 19936 while the lawsuit was in motion. It was not until February 4, 1994 that Novell and University of California agreed to withdraw all related suits and countersuits against each other (Salus, 1994, chap. 29; Wayner, 2000, chap. 5).7 Because of UC Berkeley’s involvement in the lawsuit filed by AT&T (more accurately, filed by their subsidiary USL), BSD system development began a precipitous decline. Spurred by the reality that if AT&T had won the court case, any that had been developed based on BSD would have indefinitely required the AT&T license. Thus, people avoided the use of BSD until the court case was settled (Wayner, 2000, chap. 6).

5. The Last Major Piece of the Puzzle; Linux

As a backlash to AT&T’s efforts to profit from licensing, the (FSF) was established in 1984 to eliminate

5 Other than not changing the copyright information and crediting the University of California, BSD had almost no limitations and was considered as the world’s most lenient license. However, when AT&T sued UC Berkeley, it countersued AT&T for license infringement in failing to acknowledge UC Berkeley’s contribution in spite of AT&T’s inclusion of the UC Berkeley code. 6 The UNIX trademark was subsequently transferred to X/Open by Novell. In 1984, European makers became the focus, and X/Open was the industry organization established for the standardization of UNIX. X/Open was subsequently reorganized as “The Open Group,” the organization for promoting UNIX standardization. 7 Reflecting the agreement contents of the lawsuits, 4.4 BSD-Lite was released in June of 1994, and NetBSD, FreeBSD, and BSDI were revised in response. 130

UNIX license makes Linux the last major piece of the puzzle limits on the rights of people relating to the usage, copy, modification, and redistribution of computer programs. , proposed the term “free software,” the founder of FSF, attempted to develop fully integrable software systems known as “GNU” (recursively defined as “GNU’s Not UNIX”) as free software that were upward compatible with UNIX.8 Stallman was a part of MIT’s Artificial Intelligence Laboratory up to that time, but the United States witnessed a strong trend toward intellectual property rights during that period, even among universities. In the U.S., legislation commonly known as “The Bayh-Dole Act,”9 which added amendments to U.S. patent laws, was passed in December 12, 1980. To promote the use of federally funded inventions, this legislation, in principle, gave the universities, to which the inventors belonged, the right to assess their own inventions and obtain patents. In other words, research institutions such as universities could become patent applicants. This allowed universities to negotiate with corporations regarding patent implementation, a necessity in commercializing an invention. This movement was an awakening to universities to their intellectual property rights, and MIT was no exception. This meant that as long as Stallman resided at MIT, his codes and patents belonged to MIT. Stallman subsequently left MIT and established FSF in 1984. “Free” in “free software” proposed by Stallman referred to “freedom,” and did not mean “free” as in “no cost.” People are in fact free to sell copies of the GNU software, regardless of whether it is distributed at no charge or for a fee. While many people sought to avoid BSD due to the unease caused

8 http://www.gnu.org/ 9 The official name is “Public Law 96-517, Patent and Trademark Act Amendments of 1980.” It was known as the “Bayh-Dole Act” from the names of the two senators who sponsored the legislation: Birch Bayh and Robert Dole. 131

Takahashi and Takamatsu by AT&T’s (USL’s) lawsuit against BSD, the GNU project continued to develop, and were close to completion, with the exception of the kernel, by the early 1990s. However, the development of the kernel, which is a critical element, proved to be quite a challenge.10 It was at that time that the Linux kernel made its appearance. Linus Benedict Torvalds created Linux from the ground up as a student at the University of Helsinki, not infringing on the AT&T license. Linux enabled the free distribution of source code as well as enabled modifications. Torvalds was originally interested in Minix, a small UNIX-like11 system developed by Tannenbaum, and began the development of a “Minix more superior than Minix” (Torvalds & Diamond, 2001). Torvalds continued to work on his personal project until the software was at least somewhat operable, he then posted an article to the newsgroup comp.os.minix, expressing his desire to publicize the source code more widely. In this way, the first “official” version 0.02 of Linux was made public on October 5, 1991. This announcement verified the operation of - and gnu- as well as GNU project’s C compiler—the gcc GNU C Compiler (GCC). 12 Many programmers have since responded to Torvalds’ call through the internet to help create a fully functional OS of this —the “UNIX running on a PC”—that Linux has become today. From the beginning, many of the non-kernel programs that

10 Stallman offers the following problems in building the kernel as reasons for the delay: Litigation between Lotus and Apple, and insufficient communication among GNU project participants (Williams, 2002). 11 Although Minix (Mini-UNIX) is compatible with UNIX Version 7, its internal structure is somewhat different. It operated IBM-PC compatible machines and PC-9800. Because it was originally developed for academic use, the full source code was available at a low price from Prentice-Hall (USD 80 up until 1988), and was completely dissect in book form. Students were able to obtain permission to make copies and transfer it to different CPU’s for study purposes (Libes & Ressler, 1989, chap. 9). 12 According to http://www.linux.or.jp/ or http://www.gnu.org/ 132

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Torvalds used were tools developed by the GNU project. Torvalds and colleagues then worked on the problems with system install and , and modified the GNU C library (“glibc”) to combine Linux and GNU systems into a completely free software package to solve the problem, thus enabling the creation of a GNU system with a Linux base (GNU/Linux system).13 With miraculous timing, “Torvalds came up with the last major piece of the puzzle” (Wayner, 2000, p. 64).

6. Linux Makes Open Source Something New

Ordinary profit seeking companies generate income by directly spending funds to create superior products, thus creating competitive advantage. In contrast, “private collective” innovation (knowledge collection of a large number of individuals) becomes possible with open source (von Hippel & von Krogh, 2003). Learning from the success of Linux, would it be accurate to say that the use of open source is a new software development method that is able to compete with commercialized products? As long as companies can generate profits from somewhere within their entire business system, opening up of specific portions to the public can be a plausible strategy. As long as certain aspects of competitive advantage can be controlled, the rest can be left to an appropriate partner (Tatsumoto, Ogawa, & Shintaku, 2011). With open source, the partner includes not just companies but the entire community, thus “The Innovation Happens Elsewhere Strategy” is the strategy of acquiring innovation (Goldman & Gabriel, 2005).

13 Viewing the Linux system on a whole, much of it comprises GNU tools similar to the example stating the C Compiler being the GNU project’s GCC. Hence, GNU project team claims that the Linux system should be called “Linux based GNU system” or “GNU/Linux.” Stallman (1998) or “GNU Digest” (1998) 1(24). Retrieved from http://www.sra.co.jp/public/doc/gnu/Bull24j/Bull24j_2.html 133

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Entering the digital age implies nearly zero content replication costs; thus, higher sales imply lower per unit costs. Therefore, currently we should produce new ideas of generating profit under conditions of making contents free of charge (Anderson, 2009). Does opening software source code to the public making it free, and relying on the contributions of someone else mean a new business model for software development? Actually, the shipment date for Windows NT,14 the non-free server OS from Microsoft, and biggest rival to Linux, was October of 1993, which coincided with BSD’s blank periods of time as is the case for Linux. An interesting point is that Linux and Microsoft, the companies that stood at two opposite poles in the conflict between free verses non-free, and open source15 verses closed source, both adopted the development style referred to as “daily build” and both maintained development motivation through frequent communication (Cusumano & Selby, 1995; Raymond, 1997, 2001).16 The companies were very similar in their development style and motivation, and release timing. Perhaps these are the common key factors that both of these entities employed to achieve success.17 In Raymond’s (1997) The Cathedral and the Bazaar, Linux’s new method of development was compared to a bazaar. But the old-style centralized development which was compared to a cathedral was not Microsoft, but was in fact the GNU project. Even if the Linux method

14 Windows NT was changed to Windows Server series with the advent of Windows 2000. 15 Most open source software was referred to as “free software” after the GNU moniker. Currently, it is commonly referred to as “open source.” 16 The ease of specialization is the key. After closed source Mozilla reverted to open source, it was redesigned to a more modular structure (MacCormack, Rusnak, & Baldwin, 2006). 17 According to the research of Paulson, Succi, and Eberlein (2004), open source software had no difference in completion speed even though it involved more creativity (addition of new functions) and more code modifications. 134

UNIX license makes Linux the last major piece of the puzzle was superior to that of the GNU method, as Raymond (1997) claims, there is no reason to conclude that the difference arises from the open-source, free-of-charge nature of the software because both products possessed these fundamental characteristics.18 Open source appeared to be something new, as may be assumed from the actual results that Linux achieved and the high degree of completeness of the product in a short span of time; however, this success can be attributed to the miraculous release timing brought about by AT&T’s licensing strategy. Even if the software were free of charge, open source, and even if one were to read through an open source development manual (e.g., Fogel, 2005), there will probably never be a recurrence of the success in software development that Linux achieved.19

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Received December 16, 2012; accepted February 9, 2013

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