January 2011 January 2011

Editorial Chris McPhee and Michael Weiss

IT Cost Optimization Through Open Source Software Mark VonFange and Dru Lavigne

Best Practices in Multi-Vendor Open Source Communities Ian Skerrett

How Firms Relate to Open Source Communities Michael Ayukawa, Mohammed Al-Sanabani, and Adefemi Debo-Omidokun

Private-Collective Innovation: Let There Be Knowledge Ali Kousari and Chris Henselmans

Control in Open Source Software Development Robert Poole

Nokia's Hybrid Business Model for Qt John Schreuders, Arthur Low, Kenneth Esprit, and Nerva Joachim

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Editorial 3 PUBLISHER Chris McPhee and Michael Weiss discuss the editorial theme: The Business of Open Source The Open Source Business Resource is a IT Cost Optimization Through Open Source Software 5 monthly publication of Mark VonFange and Dru Lavigne analyze the use of using free/libre the Talent First Network. open source software as a cost-effective means for the modern Archives are available at: enterprise to streamline its operations. http://www.osbr.ca Best Practices in Multi-Vendor Open Source Communities 11 EDITOR Ian Skerrett describes best practices for companies that wish to lower development costs and gain access to wider addressable markets Chris McPhee through engagement with open source communities. [email protected] How Firms Relate to Open Source Communities 15 ISSN Michael Ayukawa, Mohammed Al-Sanabani, and Adefemi Debo- Omidokun explore the relationship between firms and open source 1913-6102 communities. They illustrate the types of roles and strategies companies can employ to meet their business objectives. ADVISORY BOARD Private-Collective Innovation: Let There Be Knowledge 22 Chris Aniszczyk Ali Kousari and Chris Henselmans describe the benefits and risks of EclipseSource the private-collection innovation model, in which an innovator may Tony Bailetti chose to collaborate with others while still keeping some intellectual Carleton University property private. Leslie Hawthorn Oregon State University Control in Open Source Software Development 27 Chris Hobbs Robert Poole examines the perceived loss of control in open source QNX Software Systems software development and argues that a better understanding of the Rikki Kite mechanisms of control will help companies achieve their for-profit LinuxPro Magazine objectives using open source software. Thomas Kunz Carleton University Nokia's Hybrid Business Model for Qt 31 Steven Muegge John Schreuders, Arthur Low, Kenneth Esprit, and Nerva Joachim Carleton University describe the hybrid business model used by Nokia for its Qt cross- Michael Weiss platform application and GUI framework. Carleton University Recent Reports 37

Open Source Business Resource http://www.osbr.ca Editorial Chris McPhee and Michael Weiss

From the Editor-in-Chief From the Guest Editor

The editorial theme for this issue of the OSBR is An open source business is a business centered The Business of Open Source. I am pleased to around an open source offer. Companies can en- welcome as Guest Editor, Michael Weiss, Associ- gage with open source projects in different ways: ate Professor in the Technology Innovation Man- they can release code as open source and hope agement program at Carleton University. to increase the adoption of their solution; they can contribute to community-initiated open The editorial theme for the upcoming February source projects and leverage the solutions the 2011 issue of the OSBR is Recent Research and community develops; they can offer comple- submissions will be accepted up to January 15th. mentary services and products that add value to an open source product; and they can reduce For the March issue, we have invited authors the cost and risk of product development by from the Research Forum to Understand Busi- pooling their non-core efforts with other com- ness in Knowledge Society (http://ebrf.fi) to con- panies. tribute to a special issue on Co-creation. The Guest Editors will be Stoyan Tanev from the Uni- This issue contains six articles. The first two art- versity of Southern Denmark and Marko Seppä icles discuss cost reduction through open from the University of Jyväskylä. source, and best practices for multi-vendor open source communities. The remaining articles For subsequent issues, we welcome general sub- were contributed by graduate students in a class missions on the topic of open source business or on Open Source Business in the Technology In- the growth of early-stage technology companies. novation Management program at Carleton Uni- Please contact me if you are interested in sub- versity in Ottawa (http://www.carleton.ca/tim). mitting an article ([email protected]). This course explored why companies participate in open source projects, how companies man- Chris McPhee age communities around their open source offers, and how companies make money from Editor-in-Chief the open source projects they initiated or contribute to.

Chris McPhee is in the Technology Innovation Mark VonFange, Professional Services Manager Management program at Carleton University in at iXsystems, and Dru Lavigne, Director of Com- Ottawa. Chris received his BScH and MSc degrees munity Development for the PC-BSD Project, in Biology from Queen's University in Kingston, provide evidence of the increasing use of open following which he worked in a variety of man- source solutions in enterprise IT infrastructures. agement, design, and content development roles With its advancements in availability, usability, on science education software projects in Canada functionality, choice, and power, free/libre open and Scotland. source software (F/LOSS) provides a cost-effect-

3 January 2011 Open Source Business Resource http://www.osbr.ca Editorial Michael Weiss ive means for the modern enterprise to stream- execution of their product development line its operations. The article quantifies the be- strategy. Understanding the mechanisms of con- nefits associated with the use of open source trol inherent in open source projects and the be- software. nefits of hybrid approaches helps companies articulate those fears and make appropriate stra- Ian Skerrett, Director of Marketing at the Ec- tegic decisions to match their business object- lipse Foundation, identifies five best practices ives. for multi-vendor open source communities. Multi-vendor open source communities such as John Schreuders, Arthur Low, Kenneth Esprit, Eclipse, Apache, or Linux enable companies to and Nerva Joachim present Nokia’s Qt product lower development costs and gain access to (initially developed by Trolltech) as an example wider addressable markets. The article also dis- of a hybrid business model. They illustrate how cusses the importance of foundations in imple- the hybrid approach was implemented and the menting multi-vendor open source extent to which the approach has been effective communities. for Nokia. The Qt story illustrates how F/LOSS business models were developed during a period Michael Ayukawa, Mohammed Al-Sanabani, when participants were just beginning to under- and Adefemi Debo-Omidoku explore the rela- stand how to make money with open source. tionship between companies and open source communities. The article identifies the ways in Michael Weiss which companies can participate in open source communities and how they can benefit from en- Guest Editor gaging with the community. It also asks how open a company should be. Michael Weiss holds a faculty appointment in the Ali Kousari and Chris Henselmans weigh the be- Department of Systems and Computer Engineer- nefits and risks of companies moving from a ing at Carleton University, and is a member of private to a private-collective innovation model. the Technology Innovation Management pro- In this model, a company collaborates with oth- gram. His research interests include open source er companies by making its project public and, ecosystems, mashups/Web 2.0, business process in turn, may benefit from higher-quality, de- modeling, social network analysis, and product creased time to market, and maximized revenue. architecture and design. Michael has published on the evolution of open source communities, li- Robert Poole discusses how companies that rely censing of open services, and the innovation in on open source may fear losing control over the the mashup ecosystem.

4 January 2011 Open Source Business Resource http://www.osbr.ca IT Cost Optimization Through Open Source Software Mark VonFange and Dru Lavigne

“Waste neither time nor money, but make the best use of both. Without industry and frugality, nothing will do, and with them everything.” Benjamin Franklin

The cost of information technology (IT) as a percentage of overall operating and capital expenditures is growing as companies modernize their operations and as IT becomes an increasingly indispensable part of company resources. The price tag associated with IT infrastructure is a heavy one, and, in today's economy, companies need to look for ways to reduce overhead while maintaining quality operations and staying current with technology. With its advancements in availability, usability, functionality, choice, and power, free/libre open source software (F/LOSS) provides a cost-effective means for the modern enterprise to streamline its operations. iXsystems wanted to quantify the benefits associated with the use of open source software at their company headquarters. This article is the outgrowth of our internal analysis of using open source software instead of commercial software in all aspects of company operations.

The Coming of Age of Open Source Software formance as well as superior security and cost. Enterprises have been integrating open source Until recently, purchasing proprietary (closed solutions into their IT infrastructure at an in- source) software was considered to be the de creasing rate and reaping many benefits. facto industry standard. Organizations need applications that are robust, mature, and suppor- Reliability and Performance ted, and building long-term relationships with software vendors was simply the best way to Over the past several years, open source projects achieve this. As long as proprietary software led have matured as adoption rates have increased. the field in market share, performance, and reli- As companies adopt and integrate F/LOSS into ability, enterprises could not afford to take the their core technologies, they have the opportun- risk of using alternatives that had low adoption ity to drive development through participation rates, lacked professional support, and provided in the associated open source communities. This inferior technology. creates a self-perpetuating cycle whereby increased adoption brings about improvements in However, much has changed in the world of IT open source technologies which, in turn, brings in the past few years. As seen in Table 1, F/LOSS about even further adoption. As the market ma- is now widely used and accepted for both infra- tures, it has become more desirable for busi- structure services and desktop applications. The nesses to offer professional support and services reasons for widespread adoption include an for open source applications. In the current land- overall increase in product reliability and per- scape, businesses can choose F/LOSS applica- 5 January 2011 Open Source Business Resource http://www.osbr.ca IT Cost Optimization Mark VonFange and Dru Lavigne Table 1. F/LOSS Market Share as of August, The reliability advantage extends beyond operat- 2010 ing systems. According to the Coverity Scan Open Source Report (http://tinyurl.com/ F/LOSS Software Market Share 2bv2yox), participating F/LOSS projects have reduced their static analysis defect density by 16% Apache web server1 55% over the course of the last three years. The report has marked substantial increases in the number Sendmail, Exim, and 68% of projects that meet the qualifications of its Postfix Internet mail three-rung system of evaluation. Also, open servers2 source projects tend to be more responsive to BIND DNS server3 79% known software vulnerabilities. According to Veracode's State of Software Report (http://tiny Firefox web browser4 46% url.com/29gxsav), 36 days was the average turn- around time to fix a known defect in open OpenOffice office >1.2M downloads source software, compared to 82 days for com- software suite5 per week mercial software.

1 http://news.netcraft.com/archives/2010/08/11/august-2010-web-server-survey-4.html

2 http://www.securityspace.com/s_survey/data/man.200907/mxsurvey.html Not only has F/LOSS become more dependable, 3 http://ftp.isc.org/www/survey/reports/current/fpdns.txt it is highly competitive against leading propriet- 4 http://www.w3schools.com/browsers/browsers_stats.asp ary products in the area of performance. There 5 http://wiki.services.openoffice.org/wiki/Market_Share_Analysis have been many similar studies that demonstrate the performance advantages of open tions for their mission-critical operations be- source distributions in head-to-head testing cause support infrastructures exist to provide against proprietary distributions in a number of commercial, enterprise-level support. areas (http://tinyurl.com/c8dnrh; http://tinyurl .com/39nsvtf). These advantages extend beyond The very nature of F/LOSS development neces- desktop applications. For example, nine of the sitates the use of solid development practices to top 10 most reliable Internet sites run an F/LOSS manage the contributions of developers dis- operating system, with four of the top five run- persed throughout the world. To give an ex- ning FreeBSD (http://tinyurl.com/35tzszl). ample, the FreeBSD Project (www.freebsd.org) possesses a highly organized team of developers Ready for the Desktop who direct code implementation. The Project manifests a conservative professional approach Beyond operating systems and server applica- to software development (http://tinyurl.com/ tions, F/LOSS offers robust applications for per- nxxhkt), a vetted codebase that has been under sonal and enterprise desktop operations. For constant development for decades, and a example, OpenOffice offers nearly all of the fea- product release cycle that focuses on code stabil- tures of Microsoft Office, along with ease of use ity and quality assurance. This allows FreeBSD and the ability to handle complex operations. to run in an optimized manner for reliability and OpenOffice can open any Microsoft Office docu- stability and is a great example of how F/LOSS ment, operate with a similar interface, and use projects can provide superior, professional-level the same syntax for spreadsheet and database technology. operations (http://tinyurl.com/23lhoco). In

6 January 2011 Open Source Business Resource http://www.osbr.ca IT Cost Optimization Mark VonFange and Dru Lavigne terms of usability, OpenOffice offers an interface environments. There are several customer rela- that is as polished and intuitive as Microsoft Of- tionship management (CRM; http://tinyurl.com/ fice, and even superior in some aspects. It offers 4wh5vc) and enterprise resource planning (ERP; comparable performance to its proprietary coun- http://tinyurl.com/qdhwu) software offerings, terpart, support for all major operating systems, such as SugarCRM and Support Suite, which of- superior localization, and better support for fer a wide array of operational management cap- Visual Basic macros (http://tinyurl.com/ abilities and support packages. 2agr2c2). Putting Open Source Into Play: A Case Study of Open source email clients such as Mozilla Thun- iXsystems derbird (http://mozilla.com/thunderbird) and Zimbra (http://zimbra.com) offer all the func- As an outgrowth of BSDi (http://wikipedia.org/ tionality of Microsoft Outlook with the added be- wiki/Berkeley_Software_Design), iXsystems nefit of built-in security and privacy measures. (http://ixsystems.com) owes its very existence to Thunderbird is well noted for its speed of opera- F/LOSS. Since its inception in 2002, iXsystems tion and supports hundreds of add-ons1 to cus- has run all aspects of its operations exclusively tomize the email experience. Zimbra extends its on F/LOSS. Today, iXsystems has approximately email features with a collaborative documenta- 45 employees and runs 30 production servers as tion management suite. well as 40 to 80 testing servers. All of iXsystems' equipment runs either the FreeBSD server or PC- In the area of graphics, the imaging software BSD desktop operating system, as well as a vari- GIMPshop (http://gimpshop.com) offers a ety of open source applications for day-to-day powerful alternative to Adobe Photoshop. operations. This has led to significant cost reduc- Scribus (http://scribus.net) is a Desktop Publish- tions in all areas of operation. ing utility with functionality similar to Adobe In- Design. These open source applications provide If iXsystems were to operate at its current level a graphical design team with all the core tools with proprietary software, it would have to pur- necessary to put together quality, professional chase operating system and desktop application publications. licenses for 45 desktop machines, 20 laptops, and 30 servers. In addition to licensing costs, Open source web browsers, such as Mozilla Fire- there would be the costs of administration, sup- fox, often outperform their proprietary counter- port, maintenance, and periodic upgrades. parts in speed and performance benchmarks (http://tinyurl.com/yfctr8c). Google's Chrome The first and most obvious measure of cost is the browser is based on the open source Chromium initial price to obtain all the applications neces- project (http://chromium.org). sary to operate. If iXsystems were to purchase all proprietary software, these expenses would There are many mature enterprise-oriented quickly add up into the hundreds of thousands F/LOSS applications that can handle virtually of US dollars. The initial costs would be over every business-related function. PostgreSQL $10,000 for desktop operating systems, $34,000 (http://postgresql.org) is a trusted and widely for office suite applications, nearly $140,000 for used database program. Samba (http:// media and development software, $1,800,000 for samba.org) and Apache (http://apache.org) are server software, $23,000 for mail server software, popular server applications that are used in en- $69,000 for CRM and ERP applications, and terprise as well as small and medium business $180,000 for data archiving. As shown in Figure

7 January 2011 Open Source Business Resource http://www.osbr.ca IT Cost Optimization Mark VonFange and Dru Lavigne 1, these costs add up to a grand total of over $2 of operations is located, the median salary for a million in initial software licensing and support Unix administrator is $104,000 versus $85,000 package costs. This is in stark contrast to the for a Windows systems administrator total payout of $500 for all of the open source ap- (http://salary.com). However, Unix system ad- plications iXsystems uses in its daily operations. ministrators are generally highly experienced This allows for a significant reduction in the op- and have a diverse skill set. A competent Unix erational bottom line, which is certainly desir- administrator can support upwards of hundreds able for any organization, especially those just of desktop, server, and database systems. This is getting off the ground. partly a result of the integrated design of Unix operating systems; once the base system is con- Beyond the initial cost of purchasing enterprise figured, the administrator can script many main- applications, companies must maintain and sup- tenance and administrative tasks. iXsystems port their daily operations. This includes applica- manages to run a mail server, over 40 desktops, tion support as well as administrative support around 20 laptops, over 30 production servers, costs. If iXsystems were to run on proprietary as well as many test servers with one experi- software, yearly external software support would enced Unix administrator. run upwards of $350,000. While iXsystems handles all of its own support internally, any In a Windows environment, specific services are company could obtain similar support for its provided by different products, with each open source applications for less than $50,000 product requiring a discrete skill set. Due to the annually plus administrative costs. complexity of configuring and maintaining these products, it is rare outside of a very small net- At first glance, systems administration costs work to find one administrator who is skilled in seem to favour the hiring of Windows adminis- all of the products required in a typical business trators. In Silicon Valley, where iXsystems' base environment, for example, MS Exchange, SQL

Figure 1. Comparison of Initial Software Costs

8 January 2011 Open Source Business Resource http://www.osbr.ca IT Cost Optimization Mark VonFange and Dru Lavigne server, IIS, Sharepoint, domain controllers, print cost of upgrading software to the most recent servers, and desktop support. versions is negligible and can be considered part of the salary costs of the Unix system adminis- Due to these considerations, iXsystems determ- trator. Using open source also carries the hidden ined that, if it were to run in a proprietary envir- advantage of being able to keep up with the onment, it would need a dedicated database latest improvements in software as they are re- administrator, an MS Exchange administrator, a leased, rather than waiting until budgetary con- desktop support technician, and up to two gen- straints allow. The end result is increased and eral systems administrators. This would bring improved application features sooner rather administrative support costs closer to $400,000 than later, without the increased costs. for proprietary software versus a little over $100,000 for open source. This gives a cost ad- With F/LOSS, the costs over the course of five vantage of around $300,000 per year to iXsys- years are around $733,750 for a company with a tems for administrative support, freeing up setup comparable to iXsystems' current opera- further valuable resources for the core aspects of tions. If a similar company wanted to opt for pro- the business and lowering the bottom line. prietary software, they would have to spend approximately $5.2 million over the same time The next consideration when evaluating soft- period. That is five times the cost for the first five ware costs is the life cycle of the software. For years of operation. Over the course of 10 years, a most enterprise applications, a company will up- company comparable to iXsystems could save grade their software at least every five years, and over $8.7 million in software-related costs (Fig- some applications will have even shorter up- ure 2). This means that, in the short-run as well grade cycles. In our example, proprietary soft- as the long-run, companies can save consider- ware would carry a cost of $1.3 million every five able amounts of money by utilizing F/LOSS. years for software upgrades. With F/LOSS, the

Figure 2. Cumulative Yearly Savings Using F/LOSS

9 January 2011 Open Source Business Resource http://www.osbr.ca IT Cost Optimization Mark VonFange and Dru Lavigne Conclusion Mark VonFange is the Professional Services Man- ager at iXsystems, providing oversight and co- Running operations utilizing open source applic- ordination of its FreeBSD, PC-BSD, and FreeNAS ations has greatly contributed to the success of support and development services. The Profes- iXsystems as a business. The alternative costs to sional Services Team provides services ranging run licensed proprietary applications are simply from mission critical support to software and too great to justify without substantial increases firmware development to private consultation. in quality and productivity. While in the past, Mark also develops internal and external docu- proprietary software may have provided signific- mentation for division sales and marketing. ant advantages in the areas of stability and support, those advantages can no longer be claimed Dru Lavigne is the Director of Community Devel- in the current IT marketplace. Since open source opment for the PC-BSD Project where she leads solutions are competitive and mature in all areas the documentation team, assists new users, helps of enterprise applications, iXsystems cannot jus- to find and fix bugs, and reaches out to members tify such a substantial increase in company ex- of the open source community to discover their penditures. As demonstrated by iXsystems' needs. She is the former Managing Editor of the experience, open source solutions are now OSBR and author of BSD Hacks, The Best of preferable to their proprietary counterparts. FreeBSD Basics, and The Definitive Guide to PC- BSD.

This article is based on the whitepaper "IT Cost Optimization Through Open Source" (http://www.ixsystems.com/images/pdf/ iXsystems_whitepaper.pdf).

10 January 2011 Open Source Business Resource http://www.osbr.ca Best Practices in Multi-Vendor Open Source Communities Ian Skerrett

“If you love something, set it free. If it comes back to you, it's yours. If it doesn't, it never was." Proverb

Multi-vendor open source communities enable companies to lower development costs and gain access to wider addressable markets. This article describes best practices for companies considering this approach. First, the different types of open source business strategies are examined along the types of participants that contribute to the communities that support them. Next, five best practices are de- tailed to show how companies can maximize their engagement with open source communities. Finally, the importance of foundations in implementing multi- vendor open source communities is discussed.

Introduction 2. Open source distributors: based on the success of early traditional open source projects, Software companies are adopting open source like Linux, companies began to create business strategies to drive lower development costs or ex- around projects and contribute resources back pand an addressable market for their products. to the core of these projects. Red Hat (http://red A key success factor for a company's open hat.com) is the most successful company using source strategy is how to engage with an open this strategy. source community. It is often the community that will help provide resources to lower the de- 3. Single-vendor open source: software compan- velopment cost or create an expanded market of ies looking to disrupt an existing market will potential customers. Therefore, a company sometimes use an open source approach to needs to understand what the strategies that will change the market dynamics. These companies encourage a growing and engaged community. will establish an open source project and build a community around the project and technology. The 451 Group (http://tinyurl.com/2896jfc) and Then, they typically sell services and support or Dirk Riehle (http://tinyurl.com/28pmy3a) have value-add products to enterprise customers. The identified four types of corporate open source company maintains strong control of the open strategy and community engagement: source project and technology.

1. Traditional open source: these are the stereo- 4. Multi-vendor open source: this type includes typical open source projects started by a indi- open source communities that involve multiple vidual developer or group of developers working organizations working together on an open on interesting technology. Corporate involve- source project. The vendor collaboration typic- ment is limited. ally focuses on areas that are not part of the participating organization’s core asset. 11 January 2011 Open Source Business Resource http://www.osbr.ca Best Practices in Multi-Vendor Communities Ian Skerrett This article will focus on the best practices for Best Practices creating a multi-vendor open source community. More and more companies are realizing The starting point for any successful open that the multi-vendor open source community is source project is a concept that creates the best option for achieving their business something useful and has high-quality code. strategies. Having more companies involved However, great code is not always sufficient to provides incremental resources to work on the create an environment of collaboration and con- project and creates more incentive for compan- tribution. The following are five practices com- ies to create a market around the technology. panies need to consider following when creating a multi-vendor open source community. These Different Types of Community Participants practices are based on the experience of the author observing the dynamics of open source There are different types of participants in an communities and implementing many of these open source community that help contribute to practices in his work at the Eclipse Foundation. its health and success: 1. Engage a wider community by using a per- 1. Users: these participants are individuals or missive or weak copyleft license. The choice of corporations that make use of the technology for an open source license can limit participation. their own internal purposes. Typically, their mo- In particular, licensing a project under the GNU tivation is to improve productivity. General Public License (GPL; http://gnu.org/ licenses/gpl.html) can limit the number of or- 2. Adopters: these participants add value to the ganizations willing to participate as adopters. project technology. Companies will often incor- For example, a company that wants to use the porate open source technology into commercial technology in a commercial licensed product products or build services and components that will be excluded due to the terms of the GPL. Us- work on top of the open source technology. ing a permissive license, like the Apache Soft- ware License (ASL; http://apache.org/ 3. Contributors/committers: these participants licenses/LICENSE-2.0.html), or a weak copyleft are individuals and companies that actively license (http://wikipedia.org/wiki/Copyleft), like work to develop and advanced the project tech- the Eclipse Public License (EPL; http://wiki nology. This type of participant helps lower the .eclipse.org/Eclipse_Public_License), makes it development costs of the project. Typically a easier for a wider range of companies to engage subset of users and adopters form the core pool as adopters. of committers and contributors. A strong community of users and adopters is essential for a 2. Earn the trust of the community by not re- strong contributor/committer community. quiring copyright assignment. Mature open source communities will have contribution Successful open source communities appeal to agreements that stipulate the terms of a contri- all types of participants. In fact, there is often a bution. The basic term is under which license progression of users to adopters to committers the contribution is being provided, but some that helps create more core contributors work- contribution agreements will request the con- ing on the open source project. Therefore, it is tributor to assign the the copyright ownership to important to consider what best practices and a vendor. For single–vendor-dominated com- strategies are needed to encourage different munities, copyright assignment was required to types of participants. allow the receiving vendor the ability to create

12 January 2011 Open Source Business Resource http://www.osbr.ca Best Practices in Multi-Vendor Communities Ian Skerrett revenue streams by implementing a dual license 4. Have a clear policy on trademarks. The or- for the project code. MySQL (http://mysql.com) ganization that controls the trademark for the is the most common example of this strategy. project name can ultimately decide how the Unfortunately, this approach creates a revenue name is used. For instance, it controls who can stream that is unique to one company. In turn, use the trademark in a commercial product this inequality creates a barrier to involvement name, a company name, a service, or even a con- by other companies. ference name. In the case of a fork of the project, the organization that controls the trademark Successful multi-vendor open source communit- controls where the project name can be used ies do not require copyright assignments to a after it has been forked. single for-profit company. This is because organizations and individuals want to participate as Successful open source communities define equals in a community. If one entity is aggregat- trademark guidelines that describe how the ing a special right, in this case copyright to the trademarks can and cannot be used. These code, it creates a two-tiered system. Copyright to trademark guidelines should allow all organiza- contributions should be retained by the originat- tions the same rights and privileges. The actual ing contributor or a license should be granted to trademark may be controlled by a not-for-profit a not-for-profit foundation. For example, copy- foundation or a vendor may agree to equal ac- right of contributions to the Linux kernel or process for all participants. jects at the Eclipse Foundation remain with the contributor. 5. Implement a vendor-neutral governance structure. Successful communities have well- 3. Be truly open: develop in the open. In an defined rules for making decisions. The rules de- open source community, the development termine, for example how decisions are made on teams need to truly work in the open. They need admitting new committers, who decides the pro- to be using public issue trackers, public code re- ject roadmap and project release schedules, how positories, and public build systems, and they technical architecture decisions are made, etc. must not be developing behind a firewall. Multi- These rules also describe the process to change vendor communities inherently require distrib- the rules, strategy, and purpose of the com- uted development, but committing code to a munity. Over time, all communities need to ad- public code repository once a month is not suffi- apt, so it is important to define how things can cient. be changed.

The vendor’s development team also needs to A successful open-development community make sure updated project plans are published makes these rules visible in the form of a gov- and technical discussions occur in a public for- ernance document. This allows everyone to um, not a hallway in the vendor’s office. The de- know what to expect. A truly vendor-neutral gov- velopment team needs to start believing that ernance structure ensures that no single organiz- they are part of a larger community, not a tradi- ation is provided extra decision-making tional vendor-oriented development team. True influence within the community. open development allows potential participants to observe and learn how the community oper- Implementation: The Role of Foundations ates before beginning to participate. It also allows the existing participants to understand the These best practices can be implemented in a direction of the project. variety of ways and to different degrees. Many

13 January 2011 Open Source Business Resource http://www.osbr.ca Best Practices in Multi-Vendor Communities Ian Skerrett successful open source communities are set up Ian Skerrett is the Director of Marketing at the Ec- and managed by for-profit companies, such as lipse Foundation, a not-for-profit corporation Red Hat's Fedora and JBoss, VMWare's Spring- supporting the Eclipse open source community Source, and Google's Android. However, open and commercial ecosystem. He is responsible for source foundations have demonstrated a scal- implementing programs that raise awareness of able model for creating multi-vendor communit- the Eclipse open source project and grow the over- ies. Organizations such as the Apache Software all Eclipse community. Ian has been working in Foundation, Eclipse Foundation, Linux Founda- the software industry for over 20 years. He has tion and many others have implemented many held a variety of product management and of these best practices for their communities. product marketing positions with Cognos, Object Starting a new open source project under the Technology International, IBM, Entrust, and auspice of one of these foundations allows for a Klocwork. He graduated from Carleton Uni- project to start in less time and at a lower cost versity with a Bachelor of Computer Science and than without the help of the foundation, plus it has an MBA from McGill. also offers the benefit of leveraging an existing community.

Conclusion

Multi-vendor open source communities are the future of corporate open source. This model best allows companies to leverage communities by collaborating on development and thereby lowering their development costs and gaining access to a wider addressable market. To create a successful multi-vendor community, there needs to be a level playing field for all participants. No one company should be in a position to veto decisions, hold an institutional advantage on any potential profit, or control the intellectual property. Development teams also need to work in an open community, not behind a firewall. Vendors that participate in successful open source projects win by giving up control and following best practices to engage with their communities.

14 January 2011 Open Source Business Resource http://www.osbr.ca How Firms Relate to Open Source Communities Michael Ayukawa, Mohammed Al-Sanabani, and Adefemi Debo-Omidokun

"The key for us is to know what’s going on in different communities in order to assimilate that information and use it in our products. We follow a massive number of communities and what they develop, but only have the resources to build competences to use them in a handful." Interviewee from SOT Finnish Software Engineering Ltd. Quoted in Dahlander & Magnusson (2008)

This article explores the relationship between firms and open source communities. Open source communities create, adopt, adapt, or disseminate innovation in a manner very different from a proprietary approach. To put this in context, we first define what is meant by open source community and then examine the roles members may play in these communities. Next, we illustrate that a firm can participate in an open source development community in different ways, depending on its level of sponsorship of that community. We assert that the degree of influence desired by the firm should connect to its business strategy and the firm needs to determine how its participation and support can be used to enhance its competitive position and provide new value to its customers. We next explore three main strategies to leverage and engage communities. We also examine how community interactions are affected by the degree of openness when engaging the community and how this relates to the firm's ability to protect the competitive advantage of its proprietary assets. This discussion will help firms with strategic planning when considering how to tap into this source of technical innovation that lies outside their boundaries.

Introduction munities, online communities, technical communities, among other names. But such a list The success of free/libre open source software does not provide much insight into what differ- (F/LOSS) has focused attention on open source entiates an open source community from other communities. These communities create, adopt, communities. A definition is required so that we adapt, and disseminate innovation in a manner may identify open source communities. very different from the traditional commercial approach. Before analyzing the role and impact In this article, we use the following definition: an of open source communities on creativity, it is open source community is an interacting, self- important to first understand what is an open governing group involved in creating innovation source community. Many refer to them as innov- with members contributing towards a shared ation communities, knowledge-production com- goal of developing free/libre innovation. This

15 January 2011 Open Source Business Resource http://www.osbr.ca How Firms Relate to Open Source Communities Michael Ayukawa, Mohammed Al-Sanabani, and Adefemi Debo-Omidokun does not mean that active members of an open studying the creation of these communities, and source community cannot be commercial firms subsequently how firms can strategically lever- or employees of those firms, but the scope of age this source of innovation. As such, it became control, the innovation drive, and the resulting important to understand how a firm can relate innovation are mainly governed by the rules set to and interact with open source communities, by open source community itself. to both enhance the firm's opportunities and bring value back to that community. The best A firm (a corporation or business that generates place to start is in understanding the fabric of revenue from the sale of software products or these communities. services) can have three basic relationships with a software development team (Figure 1). In the Roles in Open Source Communities classic proprietary model, the software development team are all employees of the firm. In the Members in an open source community seek dif- two F/LOSS development models, the develop- ferent benefits from their participation, but have ment team can be thought of partially or wholly a common interest in creating the open source residing outside the firm. The notion extends solution. The community is made of members beyond the affiliation of a given developer to the that can be either firms or individuals. These firm (i.e., an employee-employer relationship) members constitute the governing body, spon- and includes the degree of influence on the de- sors, suppliers, complementors, developers, test- cision-making processes in the project. This in- ers, single and enterprise end users, advocates, cludes such factors as features, release promoters, and legal experts. The motivation for schedules, and the direction of the project. joining and contributing to the community can vary. For a firm, it can be to extend their market Open source communities are an important reach, to provide a non-proprietary solution to source of technical innovation that has helped their customers, to contribute to the public many firms develop successful market and profit good, or to learn from and use the resources in strategies. This further increased the interest in the community. By participating, it increases the

Figure 1: Relationship Between Firm and Development Team Under Different Software Development Models

16 January 2011 Open Source Business Resource http://www.osbr.ca How Firms Relate to Open Source Communities Michael Ayukawa, Mohammed Al-Sanabani, and Adefemi Debo-Omidokun firm's opportunity to sell complementary assets is more of a collaborative and open approach to and services to users and other members of the making decisions, an approach that is a result of open source product. the historical roots of the open source move- ment and its emphasis on the community prin- The momentum of open source is perhaps a ciples of inclusion and meritocracy. component of a more general trend towards openness in innovation. This shift to collabora- Strategy and Communities tion and partnering with communities is evident in the many dynamic roles firms have taken in F/LOSS and its communities are tools that the open-source environment. These roles are provides a new degree of freedom for developing mainly: a firms’ business strategy. Participation in a F/LOSS development community is an import- • supplier partnering and co-development ant strategic decision. A firm must first determine how it can leverage the community to • customer-based co-creation and crowd- enhance its competitive advantage and provide sourcing initiatives new value to its customers. Table 1 provides some examples of why participation in F/LOSS • co-opetition (competitive cooperation) with development may provide new opportunities or rivals cause undesired side effects for a firm.

• open-source community extensions to internal As an example, a firm may find itself in a weak development resources position competing against a more popular, but proprietary product. By releasing their code base • development of consortia and creating a F/LOSS community, they disrupt the competitive environment. New players are • open-outsourcing design and engineering to brought into the game, attracted by the lower instantiated or existing open source communit- costs to access this market. Every new entrant ies for initial or further development. adds momentum to the open source alternative and creates new value for end users through an In return, open source communities play import- expanding diversity of options and overall ant roles within this business environment: lowered cost structure. An implication for the firm is that it will find itself now competing • contributing to innovation and the creative against new entrants in this market, each of process which is leveraging the same open source solution and community. The firm must therefore • advocacy and marketing of the product of open think carefully about what other value they can source design bring to their customer base and how they will compete and profit in this new environment. • complementing competitive strategy and creating alternative business models How Open is Open Enough?

• providing feedback, testing, and bug reporting There are degrees of openness. A firm must consider how open is open enough with respect to Because these roles played outside of the firm, both engaging the community and protecting their management requires a very different ap- the competitive advantage that proprietary as- proach from the traditional "command and con- sets can bring to the firm. This is not an all-or- trol" relationships in a business organization. It nothing situation; many firms take a balanced or 17 January 2011 Open Source Business Resource http://www.osbr.ca How Firms Relate to Open Source Communities Michael Ayukawa, Mohammed Al-Sanabani, and Adefemi Debo-Omidokun Table 1: Reasons for a Firm to Engage in F/LOSS Development*

Reason Possible Strategic Implications

Promoting open development communities that Need to define the firm's role in fulfilling customer create new business opportunities through needs in a heterogeneous environment adoption by customers and their suppliers Promoting company branding with an increased Need to connect with the complementary mind share with developers in the open source products that support the firm's brand community Sustaining a product line in a small or declining Need to manage the loss of control in servicing markets and profit from sales of complementary this market. assets. Promoting an open standard and benefit from the Need to fit the open standard with product and network effect of expanded market share business goals

Lowering development costs by building from Need to manage the contributions back to open source components with more effort spent community (required or desired) and how this on the differentiating items for which customers may limit the ability to directly profit from code are willing to pay

Accelerating time to market by reusing open Need to pay attention to licenses and the possible source components with proven functionality need to rewrite code used in prototyping making it easier and faster to demonstrate capability

*Derived from Capek (2008; http://tinyurl.com/29qh674) and Weiss (2010; http://tinyurl.com/275qtr7) hybrid position. A firm can open commoditized • How will sharing increase the overall returns to layers that no longer bring a competitive advant- suppliers of complementary assets (positive age and continue to control others that continue feedback due to network effects) and thus justi- to differentiate their product. Table 2 summar- fy their participation in the community? izes the options available to firms with respect to the openness of product development. • How will the approach create lasting barriers to imitation? In determining the openness of its strategy, a firm might want to answer the following ques- • Is the approach likely to create a competitive tions: advantage because it add to customer value?

• How does pursuing such a strategy enable Leveraging F/LOSS Communities value to a broader base of users (e.g., through reliability, quality, cost, variety, and the avail- Once the decision has been made to leverage ability of complementary assets)? F/LOSS, it is important to consider how to engage and leverage these development com- • Will the firm be able to attract a critical mass of munities. Software firms make use of developers to serve these users? open-source communities that are associated 18 January 2011 Open Source Business Resource http://www.osbr.ca How Firms Relate to Open Source Communities Michael Ayukawa, Mohammed Al-Sanabani, and Adefemi Debo-Omidokun Table 2: Product Development Openness Options*

Product Development Characteristics

Proprietary • pioneering strategy • establishes barriers to imitation • appropriation of returns to platform owner • winner takes all

Open standards • favoured when a firm has low market share or limited market power • changes the balance of power based on adoption of open standards and shifting competitive advantages to other layers • more complicated to manage; may cause loss of revenues and lock-in • competition is based on marketing, customer service, product design, and operational efficiency • offensive strategy is to speed the adoption of a standard and other positive network effects

Open source • compete based on implementations, rather than erecting barriers to imitation • disclosing the technology prevents appropriation of the returns by any single firm • hybrid is a balanced approach that opens access to commodity layers while controlling or complementing layers to retain the opportunity for differentiation • increases interoperability • the partly open variant should have restrictions but still provide value to customers • limits the ability of competitors to use it directly

*Derived from West (2003; http://opensource.mit.edu/papers/rp-west.pdf) with their use, and benefit from the creative that firms can employ when engaging open ideas of individuals outside the company. But source communities: accessing, aligning, and as- the inflow of such ideas does not happen spon- similating. taneously. The community can help firms increase the resources they can draw upon in the The accessing strategy extends the resource base innovation process, and the firms must identify by creating new communities that attract out- where the knowledge resides and how it can be siders to firm’s area. Firms in these communities captured and subsequently used. The table be- identify and expand niches by developing low shows three strategies of engaging com- unique offerings, attracted by the opportunities munities. They are accessing, aligning, and that mass customization brings. To sustain these assimilation: communities, it is important to establish critical mass and firms must invest in the community. Dahlander and Magnusson (2008; http://tinyurl These communities themselves are a good mar- .com/3yvk853) have identified three strategies keting channel and can enhance a firms brand. 19 January 2011 Open Source Business Resource http://www.osbr.ca How Firms Relate to Open Source Communities Michael Ayukawa, Mohammed Al-Sanabani, and Adefemi Debo-Omidokun Alternatively, a firm can invest in one or more ex- firms shifts from internal development and man- isting communities without the need to build a ufacturing to assembling knowledge and com- new one from scratch. This avoids the cost and ponents available through open source risks related to community building but does communities. When firms rely heavily on com- have a drawback of fewer opportunities to dir- munities, the potential for firms’ specific know- ectly influence or control the community. ledge to provide competitive advantage will be reduced. Using communities is a way for a firm The second strategy is to align the firms strategy to increase the total amount of resources it can with that of the community. Alignment is not draw upon in the innovation processes, but at without its challenges since members are often the same time there is a counter-acting need to driven by different motives. One particularly im- appropriate the potential value of an innovation portant element to clarify is ownership of the by limiting other firms from accessing to the source code, which impacts the basis for collab- same resources and information. The distrib- oration between the firm and the community. uted nature of open source innovation puts dif- Clarity in licensing is needed for mutual trust ferent demands on firms aiming to use the and to avoid conflicts. Another alignment tactic knowledge residing in these communities for is to influence direction of the development by their business purposes and calls for new means providing incentives and creating stimulating to coordinate and control the development and challenges. This can be done through competi- use of knowledge over time. tions and awards for developing specific features. How to Build an Open Source Community The third and final strategy is to assimilate the work developed in open source communities. It is easy to start a F/LOSS project but it difficult This does require resources to evaluate and se- to succeed with it. There are many more failures lect source code from communities. The para- than successes in open source projects, with fig- meters for selection must include how the ures from SourceForge suggesting that 80% of all license may determine the future degree and hosted projects account for a very low propor- scope of control over the entire code base. The tion (0.5%) of total downloads (http://tinyurl firm also needs to decide what tasks are best .com/25yf3cy). This should not be surprising; done internally and how to best leverage the many things driven by human social dynamics community resources. In a reverse flow, non- follow such power-law relationships. Therefore, strategic source code can be delivered to the there is a real need to establish a critical flux of community, building legitimacy. Of course, a support and activity in the community. In careful decision must be made as to what re- simple terms, this means recognizing that there mains proprietary and outside the scope of com- is competition for resources and the project initi- munity development, given that competitors ator must pay attention to both attracting and will have equal access to the code and cannot be motivating developers for their project. excluded from the distribution. Joining or forming a F/LOSS community is not Firms can use these strategies to effectively scan without its costs, either to individuals or firms. the environment, evaluate the developments But in an open source community there is no outside the core areas of activities, and rapidly singular source of binding financial compensa- integrate the external knowledge and its com- tion for the membership. Therefore, there is a ponents to its products and services. Use of need to contend with the lack of traditional com- these strategies is fundamental to developing mand-and-control methods and to deal with the and sustaining a competitive advantage if a generally higher turnover, a usual feature of

20 January 2011 Open Source Business Resource http://www.osbr.ca How Firms Relate to Open Source Communities Michael Ayukawa, Mohammed Al-Sanabani, and Adefemi Debo-Omidokun F/LOSS communities. Understanding the join- Michael Ayukawa is a Master’s student in the ing process will help manage the barriers to join- Technology Innovation Management program at ing that new community members face. Carleton University and plays an active in several Typically joiners must show technical expertise emerging business ecosystem projects, including to make a contribution, which follows the prin- co-founding Cornerportal Inc., a company that ciple of meritocracy. The joining script is behavi- will help bring economic opportunity to more in- oural and is based on the type and intensity of dividuals in more communities worldwide. the activity. Often starting with lurking (quietly viewing) or reporting a bug, users will generally Mohammed Al-Sanabani is a Professional Engin- have to find a place to make a contribution eer and a Master’s student in the Technology In- themselves. Other project aspects can be re- novation Management program at Carleton viewed to reduce the barriers to joining, which University. His interests include charitable educa- includes modularization, forum management, tion foundations. His initiatives include establish- documentation, design framework for adding ing an education foundation for graduate features independent of the kernel, and choice students in Yemen: http://education4yemen.org of programming languages. There is also a need to establish trust within the community, which Adefemi ‘Debo-Omidokun is a graduate of Elec- might include commercial firms. This includes trical/Electronics Engineering, a telecommunica- making a clear licensing agreement and appro- tions professional, and a Master’s student in the priating and sharing of value among members of Technology Innovation Management program at the community. Carleton University. He is a motivational speak- er, founder and the President of the “Hero Ment- Conclusion ors” young heroes development and international mentoring initiative, a non-govermental organiz- F/LOSS and its communities help firms tap into ation with the vision of raising heroes. a source of technical innovation outside the boundaries of the firm. Going down this path will often require revisiting and tuning the firm's product and business strategies so it can profit from the new value that comes from the contributions of the whole community. In this article, we have shown how the creation and strategic cooperation with these communities can both enhance the firms opportunities and bring value back to that community.

Recommended Reading

• The Art of Community: Building the New Age of Participation, by Jono Bacon http://www.artofcommunityonline.org/

• "The Metropolis Model: A New Logic for Development of Crowdsourced Systems," by Rick Kazman and Hong-Mei Chen http://portal.acm.org/citation.cfm?id=1538808

21 January 2011 Open Source Business Resource http://www.osbr.ca Private-Collective Innovation: Let There Be Knowledge Ali Kousari and Chris Henselmans

"Man was born to be rich, or grow rich by use of his faculties, by the union of thought with nature. Property is an intellectual production. The game requires coolness, right reasoning, promptness, and patience in the players." Ralph Waldo Emerson

Many innovators (companies or individuals) opt for a private innovation model. This model uses resources to create a product whose intellectual property (IP) is protected by the firm. At the opposite end of the scale is the collective innovation model, in which innovators collaborate and expend resources to produce a public good. Many free/libre open source software (F/LOSS) projects rely on collective innovation. Some innovators are now combining the two models into a private-collective innovation model, in which an innovator may chose to collaborate with other innovators and spend private resources while still keeping some IP private. For example, a company may release its product’s source code to the public in the hope of attracting a community of contributing developers. Such a company commits its own resources to a project, but may still hold on to the intellectual property.

The success of private-collective innovation is dependent on many factors including: project interest and value, company reputation, and project status. There are benefits and risks to private-collective innovation which must be carefully weighed before making a decision to employ this model. Private-collective innovation involves the sharing of knowledge and, in some cases, the sharing of IP that may or may not be patented.

Introduction sources to create a public good. However, an innovator may choose not to release all IP to the During private innovation, an innovator such as public. There are both advantages and disad- a company or individual, commits private devel- vantages to the private-collective innovation opment resources and keeps all artifacts private model and these will be discussed further in this regarding the development of a good. In con- article. trast, collective innovation involves collaboration and resource sharing between several As an alternative to private software develop- innovators to develop a public good. Private-col- ment, a company may chose to make a project lective innovation is a blend of the two models; public and F/LOSS. IBM did this when it created an innovator collaborates and expend private re- an Eclipse consortium, which later became the 22 January 2011 Open Source Business Resource http://www.osbr.ca Private-Collective Innovation Ali Kousari and Chris Henselmans Eclipse Foundation (http://www.eclipse.org that any person or organization that uses the /org/foundation/). Instead of releasing all public good freely cannot withhold it from oth- source code, a company could elect to only ers (von Hippel & von Krogh, 2003; http://tinyurl make portions of a project open source and keep .com/2wjeww4). Innovations arising from the the remaining software private. This is usually public model are supplied to the public at no done to maintain control over a project or to pro- charge. By combining features of public and tect IP. The knowledge dissemination in private- private models, a new innovation model is cre- collective innovation includes IP and know-how ated in which participants invest in knowledge in process, architecture, and software. The shar- and disseminate it to the public free of charge. ing of knowledge during collaboration can lead An example is F/LOSS that is disseminated to to higher-quality products, decreased time to the public by companies that invested in creat- market, and maximized revenues. ing it. This type of knowledge sharing has become very common in the software world and it In today’s globalized economy, competition is is notable that all the participants benefit from it. harsh and the average life expectancy of a company is short. In order to survive, participants As long as the cost of making knowledge public have to come up with new processes and innov- is less than the benefits, it is appropriate to dis- ative ideas to create appealing products and de- seminate knowledge (von Hippel and von Krogh, liver them in a timely manner. Of course, 2003). Normally firms protect their knowledge private-collective innovation does not just hap- by creating processes and firewalls that are pen on its own. To attract individual contribut- costly. However, even though the risk of this ors or contributing companies, a project must be knowledge being exposed is reduced, it is still deemed of value and worthy of investing time. It present. By disseminating knowledge, the cost of takes effort by the originating company (the in- knowledge management is reduced significantly novator) to convince others that its intention is (Stuermer et al., 2009; http://tinyurl.com/ for all to benefit from a project. However, those 32v99uj). Moreover, knowledge sharing also has who benefit are not necessarily contributors be- benefits for the company releasing it, including cause the project is public and therefore avail- the enhancement of its reputation and position- able to anyone. Beneficiaries may be ing it as a source of expertise in the domain or in- competitors, therefore the benefits and risks to dustry. These effects promote trust among private-collective innovation must be carefully customers or end users and provide a competit- weighed before making a decision to do so. ive edge against potential competitors (Stuermer et al., 2009). Another argument for sharing know- Benefits and Costs of Private-Collective ledge is cost savings. The cost of innovation is re- Innovation duced since other organizations and individuals share labour costs and contribute previously de- The private-collective innovation model has two veloped components. components: private and collective (public). The private component is supported by private in- A well-researched example of private-collective vestment, which is usually protected through innovation is the development of the Nokia In- patents, copyrights, and trade secrets. The col- ternet Tablet (http://wikipedia.org/wiki/Nokia lective component relates to the provision of _Internet_Tablet). After studying this project, public goods that are defined by non-excludabil- Stuermer and colleagues (2009) identified seven ity and non-rivalry. Non-excludability means benefits of private-collective innovation:

23 January 2011 Open Source Business Resource http://www.osbr.ca Private-Collective Innovation Ali Kousari and Chris Henselmans 1. Enhanced company reputation: Nokia’s repu- Although the research was specific to the Inter- tation was enhanced among F/LOSS developers net Tablet project, many of these research find- by its willingness and expenditure in making the ings have also been corroborated by authors Internet Tablet software F/LOSS. studying other private-collective innovation projects. 2. No source protection costs: releasing software as F/LOSS eliminates the costs involved in Stuermer and colleagues (2009) identified five trying to protect the source. And as mentioned hidden costs of private-collective innovation earlier, source protection might be in vain since projects. These costs are: for some products source code leaks out to the public eventually. 1. Enabling others to contribute: an innovator needs to make the tools, training, and infrastruc- 3. Innovation without high R&D costs: F/LOSS ture available to allow easy entry for new con- may enable easier, faster, and lower-cost tributors. product development. 2. Releasing control: F/LOSS projects are con- 4. Leader advantage: being first to come out trolled by a community. An innovator's control with a new device can be an advantage if public is limited after releasing software as F/LOSS. involvement goes viral. The product technology can become the standard. 3. Lack of product differentiation: competitors can use the publicly available software to create 5. Opportunity to learn from others and by do- products similar to the innovator’s product. This ing: collaboration in software development reduces the ability of an innovator to create a provides many opportunities for learning. For unique product. example, developers can learn from experts in other domains. Also, junior developers have an 4. Protecting business secrets: since a develop- excellent opportunity to learn from more experiment community has to have some idea of a enced developers. product's direction to enable them to contribute to it, a business may have to carefully divulge 6. Reduced development cost: greater pro- sufficient information to empower the com- ductivity can be achieved despite reductions in munity, without tipping off a competitor. paid labour. Also, code written for one F/LOSS project often can be integrated into other 5. Organizational inertia: an innovator has to F/LOSS projects, which further reduces develop- check any third-party software for hidden IP. ment costs. This takes time and resources and has an effect on F/LOSS project progress. 7. Improved quality and maintenance: with greater numbers of individuals involved with How Firms Manage Private-Collective F/LOSS code and a greater number of individu- Innovation als contributing to testing efforts, software quality is likely to be better than an in-house Most of the research into open source innova- alternative. Software defects are identified and tion has focused on the participation and contri- fixed sooner in F/LOSS. butions of individuals in F/LOSS. Now, firms

24 January 2011 Open Source Business Resource http://www.osbr.ca Private-Collective Innovation Ali Kousari and Chris Henselmans choose to disseminate knowledge by releasing hardware are more likely to disseminate know- open source products and then find alternative ledge since they have the incentives to do so. For ways to increase their revenues, either through example, firms that have built a reputation in hardware or complementary software. It is use- hardware are more likely to disseminate know- ful to explore the characteristics of those firms ledge on their software product since it comple- that give out knowledge free of charge and exam- ments their hardware; it is cheaper to assemble ine how they can be profitable at the same time. and bundle existing F/LOSS products. It also reduces the bargaining power of specialized sup- According to a study conducted by Fosfuri and pliers of software by providing a more colleagues (2008; http://tinyurl.com/29wzhyo), customizable alternative (Fosfuri et al., 2008). the way companies disseminate knowledge is not by charity. They have full control over the How Knowledge is Created and Disseminated process to avoid product deviation. Interest- Among Teams ingly, those who have numerous software patents or copyrights are more likely to disseminate It is instructive to draw a parallel between knowledge and F/LOSS products. A key reason is private-collective innovation and collective that because they have complementary knowledge sharing. Collective knowledge shar- products, they still have other sources of reven- ing is the process of transferring innovation ue. Good examples are services or products sold from one innovator to another, and it is a com- on top of F/LOSS products. Another reason is mon attribute of open innovation teams. Inter- that companies that disseminate knowledge organization collaboration can bring consider- manage to conduct the evolution of products able value to products and can decrease the time either by having full development and feature needed to bring innovations to market. A good control or by enforcing rights and patents to pre- example of this type of collaboration is a stra- vent contributors from complementing existing tegic alliance, such as the SCOPE alliance (http:// knowledge. For instance, IBM has shown strong scope-alliance.org) which regroups major soft- support for F/LOSS by granting licenses for ware and hardware vendors and service pro- more than five hundred of its patents to any viders. By elaborating upon open specifications, open source initiative in the hope that other pat- all products offered by the alliance provide ad- ent holders join the effort to create a "patent ded value to customers by ensuring stability, in- commons." teroperability, and flexibility. When people from different companies have to work together and Firms that have an array of patents have share knowledge, the process becomes complic- stronger bargaining power and are in a better po- ated. The diversity of the teams can be a source sition to deal with infringed patents held by oth- of creativity but can also lead to social and com- er entities. Conversely, firms that have municative dilemmas (Chatenier et al., 2009; numerous trademarks have less incentive to re- http://tinyurl.com/28ewfc). Therefore, it is im- lease knowledge and innovation (Fosfuri et al., portant to know how this collective knowledge is 2008). The reason is that considerable invest- created and disseminated. ment has been made toward branding and im- age creation. It is part of the intangible assets of Chatenier and colleagues (2009) reviewed the lit- a firm. Therefore switching business models can erature on the process of collective knowledge be costly and can confuse existing customers creation. They split the affecting factors into who have adhered to a certain brand (Fosfuri et three main categories: team emergent states, al., 2008). Lastly, those who have trademarks on team composition inputs, and team-level inputs.

25 January 2011 Open Source Business Resource http://www.osbr.ca Private-Collective Innovation Ali Kousari and Chris Henselmans Team emergent states refer to cognitive, motiva- knowledge in a private-collective model, they tional, and affective states that occur when team must ensure that their strategies are clear on members work together. For instance, group effi- what they intend to perform. They must also ciency is a factor that measures the team capabil- consider the human factors at an early stage. ity and reciprocal commitment. In essence, those firms that participate in open innovation Conclusion must find a way to be good partners and openly share information and prevent strategic spillover Private-collective innovation has been a success of knowledge to competitors. for some companies. Companies like Nokia and IBM put in a considerable effort to maintain The learning climate is another important factor, private-collective innovation. Their involvement which includes team culture, atmosphere, and to commit physical and financial resources into the qualities of environment that facilitate learn- collaboration does not go unnoticed and helps ing and collaborations. There must be a balance build a good company reputation. All companies of trust between different teams. Too much trust that opt for private-collective innovation learn brings high levels of information sharing but can from their experiences and will be better pre- also diminish innovation if it causes teams to pared for any future collaboration. neglect checking each other's work. Insufficient trust can bring other forces such as the loss of knowledge transfer, suspicion, and skill depreci- Ali Kousari is a graduate student in the Techno- ation. Similarly, power distribution represents logy Innovation Management program at Car- another dilemma and teams must find a good leton University. He is currently CTO at Systema balance of power; its absence could result in loss Technologies in Geneva, Switzerland. He holds a of ownership and impact the knowledge-sharing BScH in Software Engineering from Carleton Uni- process. versity.

The above factors can affect the outcome of an Chris Henselmans is a graduate student in the innovation and they are directly related to know- Technology Innovation Management program at ledge sharing. It is important to consider both Carleton University. He has over 25 years experi- the practical (strategic) and the cognitive factors ence in embedded software development. He that lead to knowledge dissemination. When holds a BScH from the University of Waterloo and firms decide to disseminate information and a BGS from Athabasca University.

26 January 2011 Open Source Business Resource http://www.osbr.ca Control in Open Source Software Development Robert Poole

"I've always wanted to own and control the primary technology in everything we do." Steve Jobs

In this article, we examine typical fears associated with a perceived loss of control in an open source software development project. We describe various development models, including hybrid models that provide companies with control over key aspects of product development. Finally, a description of control within open source projects illustrates that self-regulating control mechanisms that exist in this model. A better understanding of control as a factor will help companies achieve their for-profit objectives using open source software.

Introduction When considering relying on open source to generate revenue, companies may fear losing con- Open source software has become a mainstream trol over the execution of their product tool that all companies consider as part of their development strategy, including: product development strategy. Open source provides entrepreneurs with a way to increase • development direction, priorities, progress, their chances of earning revenue quickly, often and product quality with little or no start-up costs. Senior managers of existing businesses use open source to innov- • ability to compete effectively ate faster, compete more effectively, and grow revenue. • protecting intellectual property

Fears of Losing Control Models of Software Development

Companies ignore the benefits of open source at Watson and colleagues (2008; http://tinyurl.com their peril. The legitimacy of open source as a /3yhzqu8) describe five models of software pro- credible business strategy is illustrated by a 2009 duction or distribution. The first is the closed, survey of 54 private investment firms by the 451 proprietary model, and it has dominated the Group (http://tinyurl.com/yfhw65c). The con- software industry for most of the past 40 years. sulting firm conducted the study to gauge the The second is the open communities model, commercial adoption of open source. They which has been around for the same length of found that almost three times as many investors time, but it is only in the past dozen or so years indicated that they would invest in an imaginary that various forms of development based on start-up that used a mix of open and proprietary open communities have grown in popularity licensed software over the same business that and support. The remaining three are open used only a proprietary licensing model. It is source models: i) corporate distribution of open clear that companies should not assume a pro- source software; ii) sponsored open source, and prietary model by default. iii) second-generation open source. Each of 27 January 2011 Open Source Business Resource http://www.osbr.ca Control in Open Source Software Development Robert Poole these three open source models are used by el makes them available for free. The OSSg2 companies to generate revenue from open model involves maximizing control over the source software in various ways and each of code so that the OSSg2 company can provide them provides at least a partial solution to the higher-value services based on the company's four fears described above. superior knowledge of the code. One of the ways that control is created is by not releasing all of The corporate distribution model provides a cus- the code as open source. Because these firms tomer with a packaged installation of the open control parts of the code, they can use a dual-li- source software combined with other comple- censing strategy to sell a traditional software li- mentary services, which are typically installa- cense in addition to the free open source license. tion, training, support, and custom Examples of OSSg2 companies include Trolltech development. The customer receives the soft- (acquired by Nokia in 2008) and MySQL (ac- ware in the same way that they would receive quired by SUN for $1billion in 2008). The OSSg2 proprietary software, thus maintaining a level model effectively addresses all three fears de- playing field with proprietary software vendors scribed above. Not only does this model maxim- and not diminishing their ability to compete. ize control over product development and provide an effective means of competing with The sponsored open source model involves the both proprietary and pure open source vendors, application of corporate resources to provide some elements of intellectual property protec- paid developers to work on an open source soft- tion are maintained and exploited. ware project. This approach, which can be used in combination with the corporate distribution Further Hybrid Strategies model, provides the vendor with influence or even control over some elements of the product West (2003; http://tinyurl.com/29u8yot) de- development, including development direction, scribes two hybrid strategies that combine ele- priorities, and progress. Ideally, the paid devel- ments of both proprietary and open source. The opment work undertaken would be of sufficient goal of this hybrid strategy is to maximize con- interest to the volunteer community so that it trol over product development in ways that max- can be leveraged and supported, thus realizing imize the advantages of both strategies while some of the significant advantages of the open minimizing their disadvantages. source approach, such as speed of development. This model also reduces the risk of poor product The first hybrid strategy is to open only those quality since testing can be one of the areas fun- parts of the product that do not provide a basis ded by the corporate sponsor. for competitive differentiation. The commodity layers, once opened up to external innovation, The third approach, that of the second-genera- can be used to both create communities of act- tion open source (also known as OSSg2 or pro- ive contributors and drive new product innova- fessional open source), represents a hybrid of tion. This strategy can also serve both to the corporate distribution and the sponsored undermine the competitive strength of compet- open source software models. OSSg2 companies ing firms and to drive broader adoption of the maximize their influence over the product by now-open parts of the company's product. In funding of much of its development. Packaged the extreme version of this strategy, the core software installations are available, however, un- product is fully open and the company derives like the corporate distribution model where revenue through the creation and sale of propri- packaged installations are sold, the OSSg2 mod- etary extensions.

28 January 2011 Open Source Business Resource http://www.osbr.ca Control in Open Source Software Development Robert Poole The decision whether or not to choose the "open velopment direction and quality, Gallivan (2001; parts" strategy comes down to evaluating where http://tinyurl.com/36zonl8) identified strong ex- the points of differentiation lie. If the value plicit and implicit forms of control in open provided to the company and its customers is source development practices. Explicit control derived from the entire core of the product, then refers to rules and norms provided in the docu- the company should retain proprietary control mentation and agreements; implicit control over the core. If the value lies in discrete, identifi- refers to the emphasis on individual reputation, able parts of the code, then the company should which is an important currency in open com- protect and control those elements and release munities, especially when non-monetary motiv- the remainder as open source. If the value to the ations are prevalent. company lies in either proprietary extensions to the core or in the provision of complementary Similarly, Markus and colleagues (2000; services, then the company should release the http://tinyurl.com/2uvwbef) noted the import- entire core as open source. ance of both self-control and social control in virtual organizations generally and open source Even if a significant proportion or even all of the development communities specifically. In this product is subject to an open source license, context, the desire of developers to preserve and modularization can be used as a strategy to con- enhance their own reputation provides self-control or at least influence development. The idea trol mechanisms; in contrast, social control behind modularization is to create separate de- mechanisms ensure that developers are mon- velopment initiatives for different parts of the itored by their peers, who provide openly posit- product to encourage contributions and ensure ive and negative feedback, potentially including that development of the entire product cannot sanctions as a further extension of explicit con- be as easily subverted or taken off-track (Bald- trol. win & Clark, 2006; http://tinyurl.com/2d7j3rw). In this way, control can be retained using an Companies can also exert control over develop- open source approach. Modularization makes it ment by offering incentives to developers to easier for others to contribute, but also allows work on particular features or tasks (Dahlander, the company to focus on controlling the key as- 2008; http://tinyurl.com/3yvk853). These incent- pects that are most important to their business ives may include competitions or even financial objectives. compensation. Similarly, more and more open source developers are being paid by their em- The second hybrid strategy described by West is ployers to contribute to open source projects, to impose disclosure or licensing restrictions which also provides a direct form of control that prevent the code from being shared or used from sponsor companies over development ef- in undesirable ways. The biggest challenge with forts. this approach is building a healthy, self-sustaining development community around the open The process of applying open source principles source components when restrictions govern to a product opens the innovation process to in- how the software can be used. dividuals outside of the company. This process also requires a change to the company's busi- Control Within Open Source Projects ness model and drives the need for entrepreneurs and senior management to make decisions It is important to examine the level and types of around who will control a product's develop- control available within open source software ment and how this control will be exerted, both projects. At least in the area of control over de- explicitly and implicitly.

29 January 2011 Open Source Business Resource http://www.osbr.ca Control in Open Source Software Development Robert Poole Customer Control Robert Poole is a Chartered Accountant with 15 years of experience building and deploying busi- Finally, companies should also view the control ness intelligence and social analytic solutions to issue from the perspective of their customers. Al- global enterprises. As a consultant, Robert has though the company may be giving up a degree provided his expertise to private and public-sec- of control, one of the key benefits of open source tor clients including Federal and Regional govern- software, as expressed by customers, is the in- ments. As an entrepreneur, Robert has created creased control over their own business pro- several technology-related companies and has ap- cesses. While the provider company may not peared on CNBC's Power Lunch. Robert is also a wish to reduce the switching costs of its custom- Master's student in the Technology Innovation ers through their support of open source solu- Management program at Carleton University. tions, this effect may be counterbalanced by an increase in customers who are attracted by the increased control offered to them.

Conclusion

Despite the success of many open source strategies, proprietary-minded companies may still fear the loss of control over product development, and the resulting impacts on progress, quality, competitive advantage, and the protection of intellectual property. Understanding the mechanisms of control inherent in open source projects and the benefits of hybrid approaches helps companies articulate these fears and make appropriate strategic decisions to match their business objectives.

30 January 2011 Open Source Business Resource http://www.osbr.ca Nokia's Hybrid Business Model for Qt John Schreuders, Arthur Low, Kenneth Esprit, and Nerva Joachim

“Business opportunities are there to be exploited if organizations opt for an effective business model. ... It is important to realize that there is not just one effective business model for the Internet era." Wendy Jansen, Wilchard Steenbakkers, and Hans Jagers

In today’s challenging economy, startup companies are finding it more and more difficult to gain a foothold and traction in the market. Free/libre open source software (F/LOSS) allows a company to gain exposure to their products. However, few firms offer F/LOSS solutions alone. The vast majority combine proprietary and open source products while receiving revenues from both traditional license fees and open source offerings (Bonaccorsi and Giannangeli, 2006; http://tiny url.com/22vo453). This dual practice of offering F/LOSS as well as a commercial license is a hybrid business model.

In this article, we focus on the hybrid business model for Nokia’s Qt product: how it is implemented, why it was implemented, and the extent to which the model has been effective. The Qt story illustrates how F/LOSS business models were developed during a period when participants were just beginning to understand how to make money with open source.

An Introduction to Qt Windows, Macintosh, or UNIX. Also around that time, a new operating system called Linux began Qt (http://qt.nokia.com) is a cross-platform ap- attracting serious attention from desktop and plication and graphical user interface (GUI; server communities alike. Linux provided a com- http://wikipedia.org/wiki/Graphical_user_inter pelling desktop environment called KDE in face) framework that enables web-enabled ap- which Qt was the underlying graphics engine. Qt plications to be run on all of the major operating provided software developers with a compre- systems. The key benefit is that applications can hensive library of classes ranging from GUI wid- be deployed across desktop, mobile, and embed- gets, database access, and multithreading ded systems without requiring modifications to support (among others) that could be easily por- the source code to support each device or oper- ted to all the major operating systems, thereby ating system. Qt was first developed in the mid- freeing development teams from maintaining a 1990s by a company called Trolltech in Oslo, separate source code configuration manage- Norway. At that time, Java was in its infancy and ment tree for each operating system. Over the its user interface capabilities lacked the perform- years, the Qt framework has grown from a GUI ance offered by platform-specific toolkits such toolkit to a fully featured application framework. as MFC and XWindows. The Qt framework allowed an application to be developed only once Qt and Trolltech were acquired by Nokia in 2008 and then easily recompiled for different environ- and recently, the Qt framework has propagated ments. The application design remains the same into the world of embedded applications, spe- regardless of whether the application runs on cifically on Nokia’s Symbian as well as embed- 31 January 2011 Open Source Business Resource http://www.osbr.ca Nokia's Hybrid Business Model for Qt John Schreuders, Arthur Low, Kenneth Esprit, and Nerva Joachim ded Linux platforms. Before Nokia’s acquisition, petitive advantage over its competitors and has Qt was offered under a hybrid business model. A delivered new value to its customers. stipulation to this offering was that open source users could only build Qt using open source Nokia's dual-licensing strategy for Qt actually in- compilers such as MinGW (http://mingw.org) cludes three distinct licensing options. The first and GCC (http://gcc.gnu.org), whereas commer- option is commercial; the user pays a licensing cial users could build Qt against compilers fee and receives a high degree of freedom. The offered by Windows. This stipulation was re- next two options align with the GNU Lesser Gen- moved when Nokia acquired Trolltech, allowing eral Public License version 2.1 (LGPL; open source developers to build Qt with com- http://gnu.org/licenses/lgpl-2.1.html) and the pilers from Microsoft. This suggests that Troll- GNU General Public License version 3.0 (GPLv3; tech's hybrid strategy fits with Nokia’s future http://gnu.org/licenses/gpl.html). Table 1 sum- plans for the Qt product. marizes the implications of these three licensing options. Nokia’s Business Model Strategy for Qt Hybrid business models, such as Nokia’s busi- From the beginning, Qt was offered as a dual-li- ness model for Qt (http://tinyurl.com/28wz533), censed product. Users could access Qt and its work on the concept of quid pro quo, which is source code free of charge and use it as they Latin for "this for that." Commercial users pay wish within the bounds of the General Public Li- for a license and, in exchange, can use the frame- cense (GPL). For users with needs beyond what work without the need to share their results. is offered by the GPL, the option of purchasing a Users from the open source community benefit commercial license is available. This creates a from the full functionality of the Qt framework competitive advantage for Qt over other and, in turn, they contribute back to the open products that provide only limited access via tri- source community. Nokia also benefits from this al versions of their software. This dual licensing open source relationship in two ways. First, it forms the basis of Qt’s hybrid business model. can use the open source community to test and Watson and colleagues (2008; http://tinyurl validate its products. Second, it can draw upon .com/2u35etk) describe this as an example of the open source community to fill its employ- second-generation open source (OSSg2), which ment needs. Trolltech’s CEO once remarked in is also known as professional open source. They 2008 that its approximately 230 employees were describe OSSg2 firms as a hybrid between cor- recruited almost exclusively from the open porate distribution and sponsored F/LOSS. They source community (Watson et al., 2008). One identify the attractive feature of this business could argue that these benefits do not make up model: "customers may use a product without for the risks involved with making a company’s paying a license fee; however, if they augment source code open for competitors and possible the original source code and do not wish to re- plagiarists to see and use. However, the risks of lease the modifications under an OSS license, patent infringements and copyright problems they must buy a commercial license." This al- are lower for an OSS company using hybrid busi- lows prospective customers ample time to use ness model, in part because of the visibility of and experiment with the product before being the code (Watson et al., 2008). required to purchase it, thereby increasing customer satisfaction. By offering Qt in a form that The risks of intellectual property theft are shad- is superior to the limited trial offers (either owed by the benefits, especially in light of recent through time or functionality) of products by emerging relationships from ecosystems within proprietary vendors, Nokia has created a com- the open source community. Dynamic open

32 January 2011 Open Source Business Resource http://www.osbr.ca Nokia's Hybrid Business Model for Qt John Schreuders, Arthur Low, Kenneth Esprit, and Nerva Joachim Table 1. Qt Licensing Options

Commercial LGPL GPL

License cost License fee charged No license fee No license fee

Must provide source No, modifications can Yes, source code must Yes, source code must code changes to Qt be closed be provided be provided

Can create proprietary Yes, without disclosing Yes, in accordance with No, applications are applications source code the terms of the LGPL subject to the GPL and v.2.1 source code must be made available

Updates provided Yes, immediate notice Yes, made available Yes, made available sent to those with a valid support and update agreement

Support Yes, to those with a Not included but Not included but valid support and available separately for available separately for update agreement purchase purchase Charge for runtimes Yes, for some No No embedded uses source groups such as the ZEA Group A commitment to an open source community al- (http://zeapartners.org) operate towards the follows organizations to align their objectives with lowing goal: “we are going to group together all the needs of the customer. By providing a com- the people who need a whole product made but mercial licensing scheme on top of the open can’t invest the resources to do it, and then take source solution, Nokia has provided a solution that whole product and make it offerable by any- to “the strategic problem of a firm whose cus- one in the network. It has so many benefits on tomer platform and product portfolio is based profitability” (as quoted in Feller et al., 2006; on proprietary software” (Bonaccorsi, Giannan- http://tinyurl.com/34eppr5). A for-profit-com- geli, and Rossi, 2006). On one hand, by offering pany like Nokia benefits from the synergy open the product under a dual-licensing scheme, a source generates, specifically in projects like company receives the benefits of open source KDE (http://kde.org). KDE is a popular desktop software, including its track record of reliability environment for the Linux platform and it uses and security, and the support of a distributed Qt as its underlying graphics library. By particip- network of developers who contribute to it. On ating in successful open source projects like the other hand, licensed software has gained an KDE, interest and confidence in Qt grow. This expectation for a certain standard of documenta- contributes to its adoption in other high-profile tion, maintenance, product updating, and bug applications, such as Google Earth fixing, as well legally binding requirement ex- (http://tinyurl.com/2wnplo8) which, like KDE, pectations (Bonaccorsi, Giannangeli, and Rossi, uses Qt as its underlying graphics library. 2006). By offering the quality expected in propri-

33 January 2011 Open Source Business Resource http://www.osbr.ca Nokia's Hybrid Business Model for Qt John Schreuders, Arthur Low, Kenneth Esprit, and Nerva Joachim etary software in an open source product, a com- platforms. By acquiring Qt, Nokia made a stra- pany not only encourages a loyal following of de- tegic step towards fending off the threat of Apple velopers willing to help test and improve it, but and Google with their own user experience solu- it also inspires confidence from commercial cus- tions. Further, Nokia acquired a user interface tomers eager to take advantage of the high qual- technology on par with or exceeding the techno- ity it offers. logies offered by competitors.

The Impact of Nokia's Acquisition of Trolltech Another compelling reason for Nokia’s purchase of Trolltech was the opportunity to undermine After acquiring Qt, Nokia took steps to make the the position of an old competitor. For years, product more open. Nokia now allows open Nokia’s primary competitor was Motorola and source users to build Qt applications using Mi- both strove to get the upper hand on the other in crosoft’s build tools, which previously required a the burgeoning mobile phone market. In order commercial license. By removing restrictions on to drive their newest smartphone offerings, Mo- using Qt within the open source community, torola began using Qtopia, a product from Troll- Nokia has gained more support and traction tech, to implement their user interface designs. with its customers and the community as a By acquiring Trolltech, Nokia made Motorola de- whole. Nokia further consolidated this support pendent on them for their toolsets. This placed a and traction to promote its own open source lot of pressure on Motorola, especially after the F/LOSS platform, Symbian (http://symbian Qtopia product line was discontinued in favour .org). of their Nokia Qt SDK in 2009. Without a solid toolset to rely on, Motorola was hard pressed to An operating system is nothing without the key develop products that could compete in the ever applications that compel the market to use it. In more hostile smart phone market. This ulti- order to create these applications, developers mately led to Nokia’s decision to purchase Mo- must have the development tools necessary to torola in July of 2010. design, build, and test them. Other embedded operating systems competing with Qt all offer The Impact of Changes to the Open Source freely available tools to the developer; in Apple’s Community case, the development tools are freely available after the purchase of a Mac OS X computer. Prior The emergence of free/libre open source operat- to acquiring Trolltech, Nokia realized it needed ing systems into the cellphone market changed to follow suit in order to compete effectively. the landscape for Qt. The Symbian operating system was originally a hidden platform within Trolltech not only provided the Qt library, but a Nokia and its partner companies, including number of tools that allow features to be integ- Texas Instruments. However, Nokia made the rated into integrated development environ- decision in 2009 to make the Symbian operating ments, such as Eclipse, Visual Studio, or system open source and controlled by a non- Trolltech’s own Qt Creator application. There- profit organization, the Symbian Foundation. fore, the purchase of Trolltech provided Nokia This move was undoubtedly in response to with the instant toolset it needed to make applic- Google’s introduction of the Android open ation development on the Symbian platform at- source operating system. Qt is widely considered tractive to developers. What also made Trolltech one the best open source GUI toolkits on the attractive to Nokia was the fact that the Qt plat- market and has “cut its teeth” by serving as the form had undergone years of testing and refine- backbone for KDE, the Linux-based desktop en- ment in the open source community on most vironment.

34 January 2011 Open Source Business Resource http://www.osbr.ca Nokia's Hybrid Business Model for Qt John Schreuders, Arthur Low, Kenneth Esprit, and Nerva Joachim As open source projects move further into the source along with a number of applications, in- embedded arena, Qt serves as the open source cluding a mobile web server, a SIP application solution for realizing the front-end layers for stack, and an S60 DSS browser. these new projects. Nokia has caught on to this trend; effort has been made to decrease the The missing link in Nokia’s solution however memory footprint of Qt or maintain its perform- was a set of development tools for building ap- ance on embedded systems. As more developers plications. This market push for development begin building new applications for these open tools provided strong motivation for Nokia to ac- source platforms, using a quality tool such as Qt quire an open source user interface design provides Nokia with brand exposure, while in- toolkit like Qt. creasing the breadth of applications offered on the Symbian platform. Another interesting devel- Conclusion opment in the open source community is the decision by Microsoft to offer a free IDE for Nokia’s actions have proven that the hybrid busi- building Windows applications. With an IDE be- ness model is “a very promising business model ing freely available, this opens the door for Qt to that could emerge as a dominant model for OSS integrate with these free tools. It will be very in- development in the coming years.” (Watson et teresting to see what new directions the Qt al., 2008). The hybrid business model that Nokia product will take as the result of the recent news has adopted for its Qt product has been very suc- that the Symbian Foundation will be closing cessful for the firm as well as the open source (http://tinyurl.com/28fb2ef). community as a whole. Nokia can be commen- ded for not only keeping its hybrid model but The Impact of Market Changes adding features and opening it up even more to the open source community. This lends cre- Many changes have occurred in the computing dence to the hypothesis that “hybrid business market leading up to Nokia purchasing Trolltech models are not a transient stage but rather a per- in 2008. To begin with, by 2008 manufacturers manent feature of the new industry” (Bonaccorsi had perfected the mass production of sub-50nm and Giannangeli, 2006). devices (http://tinyurl.com/2bq24qx). This resul- ted in much smaller, more energy-efficient By acquiring Qt from Trolltech, not only did a devices that included large amounts of static on- major corporation build goodwill with com- board memory. As devices became smaller, munity members, it also placed significant pres- more powerful, and more energy efficient, smart- sure on its competitor Motorola, who also phones became more accessible. Also, a stable, recognized the value of Qt and made it a corner- flexible operating system with a viable suite of stone in its smartphone solution. Once Qt was in applications was needed to draw consumers to its control, Nokia allowed it to be more integ- the smartphone market. At this time, three ma- rated with other proprietary applications like jor competitors existed: Nokia’s Symbian plat- Visual Studio and thereby making the frame- form, Google’s new Android operating system, work more attractive to developers. At the same and Apple’s iOS for the popular iPhone platform. time, Nokia removed support for its Qtopia Google offered both the Android operating sys- product line, sending Motorola’s development tem and associated tools for free while Apple cycle into a tailspin. Nokia has proven that the also provided iPhone development tools for free; hybrid business model and open source in gen- Nokia needed to provide a comparable develop- eral can be used as both a sword and a shield in ment environment. As a result, Symbian decided an ever-changing marketplace. to provide its Symbian operating system as open

35 January 2011 Open Source Business Resource http://www.osbr.ca Nokia's Hybrid Business Model for Qt John Schreuders, Arthur Low, Kenneth Esprit, and Nerva Joachim John Schreuders is a graduate student in the Tech- nology Innovation Management program at Car- leton University in Ottawa. Prior to his work at Carleton, John received his BEng in Computer En- gineering at the Royal Military College of Canada in Kingston, Ontario. John has 15 years of experience in designing real-time software systems in many different fields, including defense, aerospace, finance and telecommunications.

Arthur Low is a graduate student in the Techno- logy Innovation Management program at Car- leton University in Ottawa. He has over 18 years of experience in Integrated Circuit design. Art is an Electrical Engineer who uses open source IC design simulators and software development tools for his cryptographic Silicon IP business, Crack Semiconductor.

Kenneth Esprit received his BSc degree from the University of Pinar del Rio, Cuba in Telecommu- nication and Electronics Engineering, in 2004. He is currently a graduate student in the Technology Innovation Management program at Carleton University in Ottawa. He has over the 6 years of experience in mobile communication and has used open source software as an optimization tool for radio frequency planning and BTS maintenance.

Nerva Joachim is an Electrical Engineer and has over ten years of experience in electronic control systems design. He has worked in Montreal, Toronto, and the Ottawa capital region. He is currently a graduate student in the Technology In- novation Management program at Carleton University in Ottawa, where he is involved in a collaborative project with Ottawa University, the Natural Sciences and Engineering Research Coun- cil of Canada (NSERC), the Ottawa Centre for Re- search and Innovation (OCRI), and Kylowave Inc., a company that is a member of the Lead to Win ecosystem.

36 January 2011 Open Source Business Resource http://www.osbr.ca Recent Reports

IT Professional: Open Source Software

The November/December issue of IT Professional covers open source in law enforcement and education, open source in geographic information systems, and open source in web services. The article on free/open services was co-authored by Michael Weiss, guest editor of this issue of the OSBR and faculty member in the Technology Innovation Management program. http://www.computer.org/portal/web/csdl/abs/mags/it/2010/06/mit06toc.htm

Computing Now: The State of Open Source

From the Introduction: "Open source has become a serious and substantial component of applications, embedded systems, operating systems, and common devices that consumers use daily. It has altered software development, licensing, hardware, methodologies, and a myriad of devices used by individuals, businesses, and governments, while simultaneously impacting the lives of people across the socioeconomic scale around the world. Additionally, the evolution of open source as a business model hasn't followed the path predicted by anyone "in the know" in the late '90s, or in the early 2000s, for that matter. And as open source has meandered down its evolutionary path, technologists, businesses, and governments have faced new and interesting challenges—and opportunities. This month's Computing Now theme compiles a variety of articles that show the many current faces of open source." http://www.computer.org/portal/web/computingnow/archive/december2010

CENATIC: Report on the International Status of Open Source Software 2010

From the Introduction: "The report we present here analyses the International Status of Open Source Soft- ware, enabling us to put the current situation in Spain in context based on the knowledge of technology trends around the world, the promotion and use of open technologies in the Spanish Private and Public sectors, and the contribution of Spanish Communities of Developers and Universities to important initiatives on an international scale. It is, in conclusion, a thorough overview of the international context of open source software, creating a starting point for the identification of new business opportunities for Spanish companies, and new fields of study for CENATIC to continue promoting the use and development of open source software in Spain." http://tinyurl.com/2d6za4z

37 January 2011 Open Source Business Resource http://www.osbr.ca Upcoming Events

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39 January 2011 Open Source Business Resource http://www.osbr.ca Contribute

The goal of the Open Source Business Resource When writing your article, keep the following is to provide quality and insightful content re- points in mind: garding the issues relevant to the development and commercialization of open source assets. 1. Thoroughly examine the topic; don't leave the We believe the best way to achieve this goal is reader wishing for more. through the contributions and feedback from experts within the business and open source com- 2. Know your central theme and stick to it. munities. 3. Demonstrate your depth of understanding for OSBR readers are looking for practical ideas they the topic, and that you have considered its can apply within their own organizations. They benefits, possible outcomes, and applicability. also appreciate a thorough exploration of the issues and emerging trends surrounding the busi- 4. Write in third-person formal style. Formal ness of open source. If you are considering first-person style (we only) may also be contributing an article, start by asking yourself: acceptable.

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3. Do I believe that I could have saved myself time, money, and frustration if someone had explained to me the issues surrounding this topic?

4. Am I constantly correcting misconceptions re- Upcoming Editorial Themes garding this topic? February 2011: Recent Research 5. Am I considered to be an expert in this field? For example, do I present my research or exp- March 2011: Co-creation erience at conferences? Guest Eds.: Stoyan Tanev, Univ. of Southern Denmark; If your answer to any of these questions is "yes," Marko Seppä, Univ. of then your topic is probably of interest to OSBR Jyväskylä readers.

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