The Open Source Revolution

R ELEASE 1.0 11-98 ESTHER DYSON’S MONTHLY REPORT 19 NOVEMBER 1998 OPEN MIND, OPEN SOURCE By Esther Dyson At a time when Microsoft’s business practices are under attack in the courts, its development and business models are under attack at home. Much as IBM’s big problems two decades ago were in its business rather than in the antitrust courts, Microsoft should probably be paying more attention to Open Source than to Open Courts. Open source (described at length below) is basically software developed by uncoordinated but collaborating programmers, using freely distributed source code and the communications facilities of the Net. Of course, history repeats itself, but never exactly. We doubt Microsoft will cede to its competition the way IBM did. More likely, just as Micro- soft did with the Internet, it will recognize the threat of Open Source to its business model and figure out how to embrace and exploit it. (Or perhaps open source is just one more piece of the Internet “threat,” and we’re only in the middle of that war.) In the case of open source, Microsoft is perhaps lucky that the trial is drawing attention from what otherwise might be big news: the Halloween Document. This is an internal memo from Microsoft that somehow found its way onto the Web (at www.opensource.com/halloween1.html). It is one of the great artifacts of software history, a found document laying out some of the fundamental questions of business and development models. Please read it along with the issue below. INSIDE In this document Microsoft employee Vinod Valloppillil lays out lucidly OPEN MIND, OPEN SOURCE 1 the threat posed not by Linux in THE OPEN-SOURCE REVOLUTION 3 particular but by the open-source Free software to open source. approach in general. As noted by Foundations of the Internet. open-source pioneer Eric Raymond in SIZING THE COMMUNITY 7 his annotations, what Microsoft BUSINESS MODELS 8 keeps missing is that open source is Branding and distribution. not just about bug-fixing, which can Adding proprietary value. be done in a massively parallel Making money on the side. fashion. It’s about competing inno- OPEN-SOURCE LICENSING 12 vations, which live or die in a mar- HIDDEN OPEN SOURCE WINNERS 15 ket of other people deciding to DISTRIBUTING DEVELOPMENT 16 adopt/enhance them, or ignore them. OPEN SOURCE AND THE WEB 17 Interestingly, this is an informa- Next-generation infoware. tion market, unencumbered by prices THE NEW RENAISSANCE 22 on the one hand or by bundling deals THE IETF AS OPEN SOURCE 24 or marketing on the other. ======> RESOURCES AND CALENDAR 27 PC FORUM INVITATIONS IN THE MAIL! Names, phones, dates, URLs. EDVENTURE HOLDINGS INC. 104 FIFTH AVENUE, 20TH FLOOR, NEW YORK, NY 10011 - 1 (212) 924-8800, FAX 1 (212) 924-0240 2 (Although probably a new feature from, say, BIND creator Paul Vixie would draw more trials than one from Juan or Alice.) The Microsoft approach keeps asking: Where is the leader? And the OS approach keeps answering: The leader is whoever is ahead, by acclamation. Now the Microsoft approach is clearly the best one for building a company; Bill Gates has done that par excellence. But it might not be the best approach for building commodity software. And here is the crux of the matter: One major way to make money is to lead a market into commodity-hood — sell something at a value-based premium while your cost structure matches that for a commodity. As other people enter the market, the leader can enjoy high profits while competitors scramble to catch up. But over time the market does turn into a commodity one. For now, the open source still has a shortage of enterprise-oriented development tools, infrastructure and support. But as attention and capi- tal flow into the open-source world, that will change. That’s the challenge that Microsoft is now facing in systems software — and perhaps what was once known as applications but is now increasingly user tools for manipulating an information-rich environment on the Web. One approach is to fight by fostering proprietary protocols (a.k.a. inte- gration), as outlined in the Halloween document. But Microsoft in general and Bill Gates in particular have shown a unique ability to learn. So the real question is: How could Microsoft apply the open-source business model? Perhaps the company will break itself up, without action by the DOJ, into a collection of content-focused businesses that use OS software as a base. They may never reach the vast economies of scale and mass pro- duction that Microsoft has enjoyed recently, but that era is over. Alternatively, it could extend its consulting and services business — a reliable source of revenue, but one that depends almost linearly on the number of employees and is not as profitable as selling copies of software. Microsoft shows a unique ability to recognize reality. With its accumu- lated wealth and talent pool, it is probably in a better position than any other company in the world to succeed in the future if it can successfully leave the past behind. About this issue A note on the context for this issue: We are grateful to the work of Tim O’Reilly and his editorial team for the content of this issue. As a big promoter in the concept and an investor in some of its instantiations, O’Reilly is clearly partisan, but he is partisan for the concept rather than for particular products or companies. We believe he did a fair job here of focusing on business issues, and we can’t imagine finding anyone more qualified. Consider it an experiment in editorial approach much as Open Source is an experiment in business and development models. Yes, Open Source may be a moral issue to some, but for most it is also a matter of taste and business models. Read below, and judge for yourself. (Some adherents prefer to capitalize Open Source, as in the Open Source movement. We use lower case in order to make it clear we see it as the open-source model, although indeed it is both.) Release 1.0 20 November 1998 3 THE OPEN-SOURCE REVOLUTION By Tim O’Reilly* Free software becomes open source It starts like an X Files episode, with a series of puzzling statistics: A university student in Finland writes an operating system kernel and gives it away. Within a half-dozen years, Linux boasts more than 7 mil- lion users, and is the fastest-growing server operating system. An administrator at a Website development company starts a mailing list to share patches to a free server no longer being maintained by its creators. Within a couple of years, the “patchy server” runs more than 50 percent of all visible Websites, and has dominant market share despite hundreds of millions of dollars spent by commercial vendors hoping to unseat it. Starting from their dorm room, using only freely-available software, a couple of college students build not just a new business, but a new multi- billion dollar industry. The most important computer standards body in the world consists of whoever participates in the mailing lists and shows up at meetings held three times a year. Something strange has been going on right under our noses. Just what it is and why it’s important is the subject of this issue of Release 1.0. A year ago, if you had asked the IS manager at a large company about free software, he’d have told you he didn’t use it. It’s unsupported, he might say. Not robust enough. Not commercial quality. Suddenly, in a flood of mainstream activity, that perception has changed. In January, Netscape shocked the industry by deciding to make the source code for its flagship Communicator product freely available. While there will be an official Netscape version of the product, anyone who wants to build and sell competing products on the code base is free to do so. Net- scape’s decision was inspired by Eric Raymond’s ground-breaking paper, The Cathedral and the Bazaar (www.tuxedo.org/~esr/writings/cathedral-bazaar), which argues that a key to both the technical and market success of Linux is a distributed software development methodology based on freely redis- tributable source code. Raymond claims that open-source software is not only more robust than comparable proprietary code, it is better supported and more innovative. In April, O’Reilly & Associates (owned by the author of this issue) hosted a high profile meeting of leading free software developers to discuss the implications of Raymond’s paper, and to launch an effort to raise the profile of free software. A key outcome of the meeting was the developers’ agreement to use Raymond’s term “open-source software” in order to escape the baggage associated with “free software.” (Despite the dual meaning of * Contributors to this issue include Mark Jacobsen, Stig HackVän, Mark Stone and Dale Dougherty. Release 1.0 20 November 1998 4 free — “Think ‘free speech,’ not ‘free beer,’” says Richard Stallman, originator of the term — people have come to think that free software must necessarily be non-commercial, rather than simply non-proprietary.) In relatively quick succession, Corel, Informix and Oracle announced that they have already or will soon be porting their products to Linux. In July, IBM announced that it was joining the Apache Group, making the Apache Web server the core of its WebSphere product line. It is dedicat- ing a team of programmers to helping to develop Apache on the NT platform.

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