Counsel to live by (Business 2.0)

Business 2.0 has an interesting collection of wisdom from some of the business community's biggest names in this month's issue. My favorites? Penn Jillette and Eliot Spitzer (though this man is so full of himself that it's hard to take him seriously...until he files charges against you :-).

Make Deals With People, Not Paper

PENN JILLETTE, magician, author, and producer

This was the hardest thing to learn when I was 19. When we first started doing Penn & Teller shows, I thought that if you had a contract, it was enforced. I thought there were the contract police -- so you'd sign a contract that says you're going to give me a million dollars, and if you don't have a million dollars, someone will step in and give me my million anyway. Right.

That's one of the hardest lessons for a guy like me who has no interest in business but now runs a multimillion-dollar enterprise. A contract is not much of a legal document. It's just an agreement that two people who trust each other have made. You can't enter into a contract with anyone that you wouldn't make a handshake deal with, because everything comes down to a handshake deal.

The more experience I got in showbiz, the less I read the contracts. Now I don't bother. If I can't make the deal in a phone call, and have them understand it, then it's not a worthwhile deal. You're making a deal with the people, not with the contract. That's a mistake that people make a lot: "We've got it in writing now." The contract is clarification, but it's not enforcement.

This was one of the few things I learned at Stanford Law School: you never want to have to enforce a contract, because the clear interpretation of a contract becomes much less clear the minute both sides stop agreeing on that interpretation.

Which brings us to Mr. Spitzer's counsel:

Never write when you can talk. Never talk when you can nod. And never put anything in an e-mail.

I need help with this last one. I write waaaaaaaaaayyyy too much.

Just what constitutes an open source company? (RightNow Technologies)

I received an unexpected, but welcome, surprise in my email in-box today. Greg Gianforte, CEO of RightNow Technologies, emailed me to suggest a broader definition of an open source company. I've blogged this before, but not with the thoughtfulness that Greg's email evinces. (Tim O'Reilly has written on this before, as well.)

Is RightNow any less an open source company than Red Hat, which layers a "proprietary" certification/service offering on Linux? Or SugarCRM, which layers proprietary bits on open source? Or Novell? Or IBM? Or Alfresco? Etc. It seems to me that the only appreciable difference may be in how these companies choose to market themselves, and how they choose to provide incentives to prospects to become customers.

Anyway, to Greg's email. Thanks for letting me post it, Greg. RightNow is clearly in good hands.

Matt,

Imagine a car company that got its steel for free. So, instead of spending its money on costly raw materials, this company could invest in high-value differentiators such as better vehicle design, build-to-order manufacturing, and superb customer service.

Now imagine that this company also offered customers completely care-free car ownership. Its customers would never have to worry about gas or oil changes or insurance, because that would all be taken care of for them. All they’d ever have to do would be to get in and drive.

Obviously, that would be a great deal for the customer. Plus, with its cost-of-materials reduced to zero, the company could operate quite profitably while offering its extremely compelling value proposition.

This, in a nutshell, describes the business model of an on demand software vendor using open source technology. By eliminating the cost of databases, operating systems, and other infrastructure components, open source technology allows an on demand vendor to invest more in development, hosting, and services. And by providing software as a service, the on demand model frees customers from the valueless, budget-sucking burdens of IT ownership.

In other words, on demand software delivery is an extraordinarily effective way to monetize open source.

To understand how the “water” of open source is transformed into the “wine” of business value, let’s first review the case for on demand applications. Customers are embracing on demand applications because they prefer to spend their money on application functionality (which has lots of value to the business) rather than the ownership of IT infrastructure (which has none). On demand vendors enable customers to achieve this objective by hosting and managing the supporting infrastructure for the application—delivering functionality where and when it’s needed via the Web.

The customer doesn’t care which operating system or database the on demand vendor is using in the hosting facility, as long as the application is scalable, reliable and secure. So on demand vendors are free to leverage open source solutions such as Linux, MySQL, and Apache to keep their infrastructure costs low—and thereby invest more in important value-adds such as R&D, multi-version hosting architecture, and implementation support.

RightNow offers a prime example of how this formula works. We’ve pioneered a wide range of CRM innovations, especially in the way our software automatically learns about customers from their behaviors. We’ve built a uniquely sophisticated hosting environment that has supported over 1 billion customer interactions on behalf of our clients in the past few years at 99.98% reliability. Plus, our enterprise-class hosting capabilities let customers upgrade when they want to—unlike other on demand vendors that force their customers to upgrade simultaneously. We allocate significant resources to ensuring the success of our customers through a highly differentiated engagement model, closely tracking the effectiveness of their implementations and pro-actively pinpointing opportunities for improving their ROI. We’ve also grown revenue for 31 consecutive quarters and have been profitable since we went public.

All of this has been made possible because we decided to use open source—rather than become just another distribution channel for monopolistically priced technologies from Microsoft and Oracle. As operating systems, databases, Web servers, and other infrastructure components become increasingly commoditized, there is simply no good reason to pay through the nose for proprietary solutions that offer no discernible functional advantages over their open source counterparts.

So, while RightNow is not an open source vendor per se, it’s hard to name a company that’s more effectively taking advantage of the economics of open source.

Every business should strive to maximize the value it delivers to the customer and minimize the cost of doing so. The combination of on demand and open source allows us to do exactly that.

greg

---------------------------------------------------
Greg Gianforte, CEO and Founder
RightNow Technologies

The cost of proprietary software...to its vendors

Marc Fleury says it costs $2.50 for a proprietary, enterprise software company to earn $1.00 in maintenance revenues. John Powell, CEO of Alfresco, says (and he should know, having run operations at Business Objects) it costs $1.20 (to get $1.00 in license revenues). Either way you do the math, that's a terrible way to make a living. It's just too expensive to be a proprietary enterprise software vendor these days.

And it's even worse if you have to buy it. You pay 1x to get a bloated software package that only theoretically fits your needs, only to spend 4-10x that initial license cost to make that 1x work such that it doesn't become a -5x.

Open source looks increasingly like the conservative, safe choice. Proprietary software? Like a cruel joke played on both vendors and IT buyers alike.

Learning from the entertainment industry

When I've spoken at Open Source Business Conference, LinuxWorld, OSCON, or other open source conferences, I like to use the entertainment industry as a perfect example of what is happening to the software industry, or should. With every new technology - from the player piano to radio to cassette tapes to CDs to p2p file-swapping - the music industry has fought technological progress (and consumer convenience). The movie industry has been the same - from The Jazz Singer to betamax to DVDs to simultaneous day-and-date release - Jack Valenti and Crew have fought technology progress (and consumer convenience).

Fortunately for both parties, they've lost. Today, the movie industry makes a large majority of its money from the rentals aftermarket (60%+). The music industry? The shift to the dreaded CD, as just one example, vastly inflated the size of the market. It's unclear, given these industries' tremendous errors of judgment over the past few decades, that every one of them isn't fired. (Perhaps starting with the Sony executive who came up with the brilliant "rootkit" idea. They win the Bozo Award for 2005.)

In software, as you can see from this slide I use, it's no different. However much Microsoft et al. may want to control how/when/why software is used, the world is moving past them. If they're lucky, they'll get slapped around, get wise, and then get on board. If they're unlucky, they'll get mowed over.

Back to the entertainment industry (this time, the movie industry, in particular). As December's Fast Company reports,

The curtain is rising on Hollywood's "third act," and the drama is most stunning when you briefly recall the plot points of the first two. In the Old Hollywood of the '20s through the '40s, the seven studios...exerted awesome control ovre talent as well as movie theaters. Every week, about two-thirds of all Americas went out to the movies to see...well, whatever was playing at the neighborhood movie house. Because the moguls tightly controlled the costs of making films, and since they hardly had to spend on advertising, nearly every release made money....

The Old Hollywood system fell apart in the '50s when the studios were forced to divest the movie houses and let the stars become free agents. The studios' fall was accelerated by the rapid and inexorable rise of television, which decimated the movie-going audience. But eventually a new Hollywood emerged, and it was as brilliant and astonishing an invention as the original. [The industry consolidated into massive conglomerates] that combined them with TV and cable networks, cable and satellite connections, and video-rental stores. Now...the oligarchs have a 96% market share of the box-office take. They collect 98% of the national prime-time television advertising dollars. And they have 80% of the subscribers to pay-TV services....

This system has been imploding for two reasons. First, it depends on mobilizing a mass audience through mass marketing, and that's a daunting task these days [given how fragmented the viewing audience has become, with so many competing options]....Second [and hugely important for open source, nearly every movie loses money on its theatrical run these days....The theatrical release has become a loss leader to promote the studios' real money-maker, the DVD, which in turn often serves as a loss leader for Wal-Mart to draw in shoppers.

In the software context, this is roughly analogous to the shift away from large up-front license fees to an emphasis on maintenance and support revenues.

In other words, the software industry is shifting onto open source's home territory, and the smaller, more nimble competitor with a ready-made overhead to live off this kind of revenue stream will win. Ties goes to the disruptor.

If the software market is saturated...

...then open source may well be succeeding because it allows for "small bites" of IT. Subscription-based business models fuel this. So does free and open access to the software in advance of a buying decision. Ease of access and ease of payment makes for ease of adoption. In a saturated market where enterprises have already bought more IT than they know what to do with (NIck Carr has been interesting and controversial on this), rip-and-replace really isn't an option. But incremental additions through open source? Yep.

How many jackpots can software support?

It's late and the pumpkin pie is still baking (egg nog, by the way, is the secret to a killer pumpkin pie), so I'm reading Fast Company opine on Mark Cuban's foray into the movie industry (December 2005 - not yet online). Cuban's partner, Todd Wagner, says something that struck me as similar to what's happening in the software industry:

The duo [Cuban and Wagner] admit there was no initial plan to build a vertical media machine. The acquisitions [of movie theatres, production companies, etc.] were designed to tip the movie industry's daunting odds in their favor. "If you just invest in [producing] movies, that's like going to Vegas," Wagner says. "You might get lucky and win at blackjack. But if you go to Vegas often enough, the casino's going to beat you." With 2929 Entertainment, he says, "we wanted to start making ourselves look more like the house. We could make a movie, put it on our screens, play it on our TV stations."

After an interesting lunch conversation with Charles Forelle of the Wall Street Journal today, I'm wondering if this doesn't describe the software world (including its nascent open source component) perfectly.

Larry Ellison certainly seems to think so:

"We are no different than any other industry," he said. "You have good years ... and suddenly demand falls off, and there are more companies, there are more sellers than there are buyers for technology."

More vendors than buyers. Supply exceeding demand. Thus leading to heavy consolidation such that only a few vendors with mega-operations can more efficiently serve customers.

I'm not a big fan of big, but there's something to this. Name the top 10 largest software firms. Now name the next 10. The first time I did this I was shocked at how quickly the numbers fall. Microsoft, IBM, Oracle, SAP, and then you plummet to those few scraping $1 billion in revenues, and fall off the $1 billion cliff to find a maze of much smaller companies. For all the talk about amazing margins and big money in software, there really aren't that many companies striking it rich in software.

Including open source. This isn't a critique of open source, but rather a defense. I've wondered before about whether we over-hype open source by making believe that there will be thousands of winners. It seems that it's not a question of over-hyping open source, but rather of over-hyping software companies, generally. And not because there's something wrong with software (or open source), but rather because the world doesn't need 100 $1 billion software companies. There's not enough demand.

All that said, I'm witnessing firsthand surging demand for open source in the enterprise. It has been surprising in its scope, scale, and depth. Perhaps this means my employer, Alfresco, is one of the chosen few. Perhaps. But I think it's actually an indication that the buying community is tired of being treated as a captive consumer. "I'm Vendor X and I own this market - take my product or leave it."

Again, this is something I've witnessed firsthand at Alfresco: large, Fortune 500 companies approach us (and, I presume, our open source peers) as much for the open style of doing business that open source engenders as for our code. They want to take smaller bites of technology, at their own pace, rather than sucking down multi-million dollar feasts.

So, I still think there's opportunity in open source for consolidation. I don't view consolidation as a bad thing. As with Mark Cuban in his rage against the Hollywood machine, sometimes you have to play by the industry's rules - slightly tweaked in your favor - to win. The important thing is that open source companies not lose touch with the communities that keep them honest and make them different - consolidation of technology to the detriment of community is a losing strategy.

The Politics of Control

I'm still plowing through David Daniell's biography of William Tyndale, translator of the Bible into English (from Greek/Latin/Hebrew). As I read tonight, I came across this quotation from the Bishop of London, Cuthbert Tunstall, commenting on Tyndale's (and Luther's) translation:

Many children of iniquity, maintainers of Luther's sect, blinded through extreme wickedness, wandering from the way of truth and the Catholic faith, have craftily translated the New Testament into our English tongue, intermeddling therewith many heretical articles [though he was never able to name one, except when taken out of context] and erroneous opinions, seducing the common people; attempting by their wicked and perverse interpretations to profane the majesty of Scripture, which hitherto had remained undefiled, and craftily to abuse the most holy word of God, and the true sense of the same. (190)

For such alleged misdeeds, the Protestant believers were "scourged with whips, to make [them] revoke [their] opinions" (185) or, in the case of Tyndale, were burned alive.

Why? Once you parse through the various writings and reported speeches of the high-ranking clerics and government officers (like Sir Thomas More, John Stokesley, etc.), the answer is plain: because translation of the Bible democratized access to God or, at least, to His word (as held by the Christians). It took the clerics somewhat out of the picture. And so they killed to keep control over the minds of the people.

Except once the genie was out of the bottle, they couldn't put it back in. As the priests persecuted the translators (and readers thereof), it sowed the seeds of its own undermining:

There is detectable in London a reaction of puzzlement. Politically, the Church, led by Wolsey, was in fact making a great mistake, sowing the dragons' teeth which would before long yield destruction, and not just through Henry's [VIII] divorce and the break with Rome. Luther had torn down thousand-year old walls hiding the Bible. The bishops in England were building them higher. London men and women were not going to be soothed with the sops of Nicholas Love, the best the Church could manage, with the addition of the Lord's prayer in English. Luther was giving the German people the Epistle to the Romans, raw.... (194)

All of which makes me think of open source. There is a real struggle today over this same issue: how much control to leave to the common people (you, me, customers, partners), and how much to retain in the hands of vendors. It's not a matter of life and death, but it is a highly important political (and business) debate. Now that IT buyers have had a taste of the "open source Bible," will they be content to go back to "proprietary Latin" and "obfuscated Greek"?

On the one hand, you have the Luddites (who, as Dave Dargo reminds us, were not so much opposed to technology qua technology as they were determined to keep their jobs/livelihood intact). These are the companies that cling to their proprietary business models, hoarding their intellectual property and declaring that the commoners (customers) couldn't possibly benefit from it, anyway.

On the other hand, you have the "left wing" of the open source world who believe that everything should be free and open. Full, unfettered access to the "open source Bible," as it were.

The most interesting group, however, stands in the middle. These are the people and companies who are inclined toward open source, but cling to measures of control. There's a big part of me that wants to tell these people, "Get over it. Just abandon efforts to control the code, let go, and see what happens." But this is a scary thought, and it's not always practicable. And maybe it's not the right thing to do, anyway....

For example, in MySQL's case, it could surely go to a 100% "pure" GPL play. No dual license. The problem, however, is that this would immediately decimate its popularity (read: use), the company's profits, and we'd be back to Oracle, IBM, and Microsoft land. So, MySQL exercises some control over its code by retaining the right to dual-license, and give companies that want to embed the MySQL database a way to do so without open sourcing their code through GPL "infection."

I think the benefits of having MySQL widely used far outweigh any negatives that come from it being controlled by MySQL, and the code having the potential of being closed. Without this mechanism of control, MySQL would have a much harder time making money, which would limit the amount of development it could do, innovation it could foster, etc.

There are a range of open source companies today that give away most of their code, but keep some proprietary. In no case is this done because of a lack of open source commitment. In every case it is to help remind customers to pay, given that the products are good enough that they require little or no support after the first year. Thus, customers could take the code without giving anything (code or cash) back.

As we move up the stack, we're going to run into this "quandary" more and more. Applications are different from databases (often embedded) and a decentrally-developed operating system like Linux (which needs to be synthesized together, certified, and packaged). I'm not convinced (though I want to be) that the Red Hat model necessarily works higher up the stack.

Still, there's more Luther than Wolsey in me, and I'm trying to figure out if, in fact, the answer really is, "Just let go." What do you think?

My Treo-as-club

On a flight last night to Raleigh, I was standing by the cockpit door, waiting for access to the restroom. As I stood there, a somewhat scruffy-looking guy approached me and asked me to revive him if he passed out while he stretched. I wasn't sure what "reviving" him would entail, but I immediately became nervous and a little suspicious. Why was he stretching right in front of the cockpit?

As he leaned over I therefore did what any upstanding American citizen would do...I grabbed my Treo and waited for him to make a move on the cockpit door so that I could club him. :-)

(Ultimately, he wasn't a threat. Just weird.)

Pandora rocks

It has nothing to do with open source (except the tenuous "community" linkage), but Pandora is one of the coolest "apps" I've used in some time. Put in the name of a song or a band that you like, and it starts feeding you songs/bands that have a similar sound. You listen to them in your browser (sounds great), and are one click away from buying them if you like them. (It lets you listen to the entire song.)

Consider it a highly tailored radio station.

It's very cool. Try it out. (I'm now listening to Death Cab for Cutie because of its help. Need to find a good cross between Smashing Pumpkins and The Smiths now....)

Analyst: Infectious licensing: harmful or helpful?

Despite the title, Greg Vetter's paper on open source licenses [PDF] ("'Infectious' Open Source Software: Spreading Incentives or Promoting Resistance") has less to do with a rigorous analysis of the pros and cons of infectious licenses, and much more to do with an explication of what, exactly, the GPL/LGPL mean. Vetter does a great job on this and should be a required read if you're hazy on open source licensing.

Vetter does, however, make a claim that interoperability should trump infection in open source licensing:

Some estimate that infectious terms promote open source software growth by supporting community development norms and preventing proprietary poaching of the software, or converting proprietary software to open source. Even if some of these viably benefit open source, my analysis is skeptical that infectious terms, on balance, have beneficial effects. They adversely increase legal uncertainty for open source licenses and produce incentives detrimental to interoperability, compatibility, and coexistence between open and closed source software. As a result, open source licensing should precisely define infectious terms in order to support open source development without countervailing effects and misaligned incentives. (58-59. Footnote references omitted.)

I agree. Once you move out of operating system land, it becomes increasingly important to clearly delineate how different software can interoperate with yours.

Indeed, it is the operating system (or rather, the Linux kernel) that most clearly exemplifies this. Linus Torvalds (in The Linux Edge, page 108) identifies his decision on linking (allowing programs to make normal system calls into Linux without being GPL-infected) as one of the most important non-technical decisions to contribute to Linux's success. (See Vetter 114, as well as 158-159.)

While we live in a heterogeneous software world (and I assume we will for some time, and probably forever), it's important that one's license reflects this heterogeneity. This is why, for example, Alfresco opted for the MPL (Mozilla Public License) rather than the GPL. We wanted a more clearly written license that "infects" individual files, and not the "whole" of a program (as the GPL does). As Alfresco is both an application and a platform, this was critical for us - we wanted to maximize third-party integration into Alfresco.

I believe there are excellent reasons to use the GPL (as I've argued), but easy embeddability into other applications is not one of them. Consider MySQL. A large percentage of its revenue derives from those who want to embed the MySQL database into their applications...and so pay MySQL (under its dual-license scheme) to get a non-GPL license to the code.

Does this mean MySQL (and Alfresco, and Sugar, and...) is not open source? Of course not. No less so than Linux. What it means is that such companies recognize, like Vetter, that the road to open source is not through force/compulsion but rather through interoperability.

OSBC: Call for Papers (Deadline is December 1)

But I guarantee that we'll have it filled well before that. Please submit an abstract. (We extended the deadline because I forgot to tell anyone about the old one....The sessions are half-full already, but I figured fairness demands that I make a public announcement that you can still submit something.)

Also, take a look at our newest ad copy. I'm always impressed by what quality marketing people can do.

A matter of harm, not a matter of taste (Nick Carr on the tech industry's porn problem)

So, I'm a silly prude. I don't find porn ennobling (as unthinking feminists apparently do), titillating, or otherwise worthwhile. I think it is harmful, and not just to children. It has no redeeming value. It has no justification.

All of which makes me glad to see someone like Nick Carr attacking tech's cosy familiarity with porn. You've heard the drivel before: porn drives innovation in technology. Even O'Reilly's eTech conference shamefully had an entire session devoted to the issue. What losers we must be. Turning to Carr:

A week or so ago, the U.S. Senate held some hearings on pornography, including the internet's vast and various store of the stuff. Orrin Hatch, the Utah Republican, called porn a "problem of harm, not an issue of taste." Nobody, though, paid much attention to the proceedings. Popular blogger Jeff Jarvis, in a post titled A Nation of Hairy Palms, dismissed it all as "silly crap" from "conservative prudes."

Jarvis's reaction is typical of the blogosphere's, and, for that matter, the whole country's, laissez faire attitude toward online porn: Yeah, there's a whole lot of it out there, but it's basically harmless, even kind of amusing. Anyone who has the temerity to criticize it, or even call attention to it, is just a prude or a loser who deserves to be ridiculed and ignored.

Another common view of digital porn is that it's useful - as a case study for internet businesses. Paul Kedrosky, in a recent post, rehearses this theme: "I think that a valuable startup exercise would be to do a wholesale survey of all emerging technology in the promotion, selling, and distribution of online porn ..."

But maybe the most common reaction of all is simply denial. When Icann recently proposed setting up an online red-light district, under the .xxx domain, many politicians around the world, led by President Bush, attacked the idea, and Icann shelved the plan. Establishing a porn domain would have acknowledged the fact that the web is crammed with naughty pictures and videos. Without .xxx, we can pretend it doesn't exist - or at least distance ourselves from it.

I don't think I'm a prude (and I like to pretend I'm not a loser), but I'd like to suggest that internet pornography is bad. Very bad, in fact.

Well, I am a prude, and with good reason. And I agree with Nick. I'm not ashamed to say that, to the extent that technology is driven by a vulgar debasement of women (and men), I'm not sure I want to be on board. We can do better. Surely we can do better.

(Btw, before I leave, one of the greatest moments I've had in technology was during a strategy meeting I attended for Volantis, the leading mobile content company. The question was raised, "What is our policy toward porn? There's a lot of money in enabling porn for mobile phones." Without exception, every person in the room (~20) said that they'd rather make their money and still be able to look their families in the eye. And its CEO (and my good friend) Matt Harris said that he wouldn't run a company that fostered the porn industry. Bravo to Volantis, and brave to Matt. Would that we all had their integrity.)

The Open Invention Network: Too little?

LinuxGram is reporting that the Open Invention Network (OIN) - the patent-buying co-op founded by IBM, Novell, Red Hat, Sony, and Philips - only has $40 million to spend (despite initial intentions to credit it with $280 million). This is a shockingly low number, especially when one considers that Red Hat put in $20 million of it. That's a big chunk of change for Red Hat - it's putting its money where its (business) model is.

But what about the others? IBM, which had $1 billion to put into funding Linux, can't find a few tens of millions of dollars to protect that investment? (Of course, IBM no doubt continues to buy and build Linux/open source-relevant patents on its own, but apparently these are not to be shared?)

As for Novell, my alma mater, it's unclear what cash, if any, it put in, but it did contribute its $15.6 million CommerceOne patents. In-kind donations are always nice but, as I've learned with OSBC, cash is king.

Still, if it were me granting patents that would protect open source, I'd be putting those into the common pool that relate to an office suite that Novell once owned. Unless I'm much mistaken, Novell still owns highly relevant patents that would serve (and, indeed, serve today) to keep Microsoft at bay, because they go to the heart of Microsoft's Office cash cow.

Novell, however, isn't alone in owning patents that would be relevant to this open source and the OIN. IBM has them. Sony has them. Philips has them. (Red Hat probably doesn't, so it's exempt from this criticism.) Nokia and Yahoo!, who were also supposed to join OIN but backed out, also have relevant patents.

Let's call a spade a spade. $40 million is a symbolic gesture. It is not even a finger in the dike (if you remember the Dutch fable). These companies can do better. If they're serious about OIN and what it represents, fund it. Fund it with cash and with their highly relevant patents. If they're not serious, they should stop wasting our time and bandwidth on press releases.

Nokia swallows Intellisync...Funambol's turn?

News today is that Nokia is buying Intellisync to power its email service. What does this have to do with open source? Funambol.

Funambol, with 20,000 downloads/month of its Sync4j project, offers Intellisync-like sync functionality for any SyncML-enabled phone (which includes most phones on the market). Funambol is open source. Funambol is run by a Juventus (Patrick Vieira-stealing) fan, but that is its only deficiency right now. (And there's always hope that he'll come around to Arsenal. :-)

Now, I'm an open source bigot, so my perspective is suspect. But still I have to ask, Why would anyone want to build on Intellisync when they could build on a community? Why wouldn't you want to build on an open source, and open standard sync/email technology? It's not as if it's open nature would challenge your ability to charge for it. How many suit-inhabiting Wall Streeters do you think are going to download the code and set up their own RIM-like email service?

None.

Funambol is one of the most interesting open source companies today. If you're an Outlook user, you should head to its site to get set up on its sync service. Free, works great, and open.

What's not to love?

Tyndale's Bible and Open Source

I'm in the middle of David Daniell's biography of William Tyndale, translator of the King James Version of the Bible. (Tyndale's work represents ~90% of the New Testament and the first half of the Old Testament.)
Fascinating stuff, whether you're religious or not. As Daniell notes, the English language today is rife with Tyndale's phrasings ("the powers that be," "the spirit is willing," and "scapegoat," among others) and English cultural life (and, subsequently, the world's) was heavily influenced by the Bible (and Tyndale's translation of it).

It's hard to talk about Tyndale without bringing up words like "Christianity," "Bible," and "faith." I'm not going to try, and hope you'll excuse me. The commonalities between Tyndale's Bible and software's open source are fascinating, and worth a perusal here. (Besides, the disastrous effects on me aside proving the contrary, a little religion won't hurt you. :-)

In reading the book, I've been struck by a question: How does one person, against all tradition (and ultimately at the expense of his life), determine to Think Different (to borrow Apple's tagline)?

Tyndale thought very differently for his time. Consider:

Tyndale wrote in English. Most writing of his time was in Latin. The two most famous books in Europe, Sir Thomas More's fantasy known as Utopia and Erasmus's The Praise of Folly, were in Latin. To be a scholar and not to write in Latin was odd to the point of standing condemned....All university work and most printed books were in Latin; in 1605, of six thousand volumes in the Oxford University Library, only sixty were in English....Erasmus, so influential on his three visits to England, sharing the life of warm households, debating, staying in Magdalen [at Cambridge University], inspiring and being inspired, teaching Greek as Lady Margaret Reader at Cambridge, listening, commenting, writing letters, maintaining his friendships, spoke not a word of English. (45-46)

In other words, there was an intelligentsia built up around Latin (and Greek) - inaccessible to all but the elect (many of them priests) - that circulated Big Thoughts without sharing any with the little people.

Small wonder, then, that economic and intellectual riches were held by very few - the social "anorexics" that starved themselves out of sheer snobbery and ignorance. Sir Thomas More, a bit of a snobbish putz, refused to have Utopia translated into English because "it might fall into the hands of the simple and unlearned who might misunderstand and take harm from it" (69). How very thoughtful of him.

This, of course, led to religious practices that had little to no foundation in the Bible, but which served the (Catholic) Church's needs. More from Daniell:

...[Tyndale's English Bible] could be read and understood, without censorship by the Church or mediation through the Church, as it was written to be read as a coherent, cross-referring whole. Such reading produced a totally different view of everyday Christianity: the weekly, daily, even hourly ceremonies so lovingly catalogued by some Catholic revisionists are not there; Purgatory is not there; there is no aural confession and penance. Two supports of the Church's wealth and power collapsed. Instead, there was simply individual faith...found in Scripture. (58)

By making "public" the Bible, Tyndale enabled lay readers to discover Christianity for themselves, unmitigated (for better or for worse) by the Church. (Open source, as I'll explain below, accomplishes much the same thing, and with eerily similar results for the "Proprietary Church."

Back to Tyndale....Why did he choose to democratize access to the Bible?

...[T]he impetus for Tyndale to write in English when he began to do so had several origins: the expressive everyday phrases of the Vale of Berkeley [i.e., local language was rich - he didn't need Latin to express himself], and the Lollard pastoral concern that the Word of God should be in the vernacular; with...the example of Luther. (46)

A message for the people in the language of the people. Sounds obvious, but it wasn't (and Tyndale was put to death for his heretical act of democracy).

And it isn't obvious today in software development, either. (Btw, if it feels like I've taken a major step down here in theme, it's because I have. However much we may want to pretend that software freedom is as important as intellectual and religious freedom, it isn't. Not even close). We still have our High Priests of C++/Java/etc. that want to restrict access to code. This is expressed in proprietary software companies holding back code (the equivalent of requiring it all be in Latin), insisting that "the Plebians" don't want it, wouldn't know what to do with it, etc. While this is almost certainly true on one level and at a given period of time (now), I'm not convinced that it's valid in the long term.

When Tyndale's Bible came out, most of England couldn't read it (including the clergy!!! See page 78). Today, hundreds of millions have read his translation, and billions have been influenced by it.

Perhaps increased access to source code will be "translated" into easier and easier ways of interacting and manipulating it, such that a time will come when even "code Plebians" like myself will be able to hack. (I believe this is already starting - I can't code, but I've learned how to use HTML tags for this blog, and use Google and the "View Source" feature in the browser to look at other websites to help me find pointers on how to do different tags all the time.) HTML, open standard. Websites, open source.

Ultimately, in its own sphere, perhaps open source will have an analogous effect to Tyndale's expectations for his translation of the Bible. A flowering of democratized knowledge or, in this case, software. As Tyndale told a learned man before leaving England to commence his translation:

"If God spare my life, ere many years I will cause a boy that driveth the plough shall know more of the Scripture than thou dost." (1)

Let's hope so.

The open source lottery

I stumbled across an interesting post by Mike Bergman this morning. He starts by quoting an exchange at a Union Square session between Tim O'Reilly and Martin Nisenholtz:

NISENHOLTZ: I sort of call it the lottery syndrome. There was a Powerball lottery yesterday. Tons of people entered it. We know that someone won in Oregon...we also know that the chances of winning were one in 164 million....I guess what I'm struggling with is how we measure the number of peer production efforts that get started versus Wikipedia, which has become the poster child, the lottery, the one in 164 million actually works. Now it may not be one in 164 million. It may be one in 10. It may be one in 50, but I think that groups of people like [prominent Web thinkers] tend to create the lottery winner and hold the lottery winner up as the norm.

O'REILLY: Look at Source Forge, there's something like 104,000 projects on Source Forge. You can actually do a long tail distribution and figure out how many of them...but...I would guess that one in like...154 million are probably out of those 100,000 projects, there are probably, you know, at least 5,000 who have made significant reputation gains as a result of their work. Maybe more. But, again, somebody should go out and measure that.

Bergman then does just that, diving into the Sourceforge data to explore this "lottery effect."

Great data, with an interesting (implied) question: Do we sometimes overstate the success of open source (and Web 2.0, for that matter) by glomming onto the few winners, pretending that they are a widespread phenomenon? I think open source is a major trend, not a fad, and not relegated to a few chance successes. But I also feel that its future will be helped as we enable commercial open source to flourish.

Alfresco looking for a Valley-based senior sales engineer (Referrals, please)

I'm looking for someone to join Alfresco's Silicon Valley-based team. Senior sales engineer willing/able to wear multiple hats while we're in startup mode. (i.e., Good with customers/partners (Demos, presentations, answer technical questions, provide partner training/certification), also probably provide some second-line support.) It would be ideal for the person to have ECM experience, but I'm more concerned with general technical aptitude and good attitude. It would also be great if they have some (even nascent) open source experience.

Most of all, I want this person to care as much about the company as I do. This is someone that will work closely with me on large customer and critical partner opportunities. I want them to be aggressive but not obnoxious. A hard worker but not self-absorbed. Etc.

In my experience, a good sales engineer can have a huge positive impact on sales. If you know someone with whom I should talk, please email me. I'm looking to hire this person before the end of the year.

The perils of opening up

My two weeks with Alfresco has opened my eyes somewhat to the perils of starting an open source "commercial community." The development of a community de novo for a commercial entity entails all sorts of pitfalls that an organic community simply doesn't need to be bothered with. Or, rather, they do, but the stakes (reputation instead of financial) aren't the same.

For example, when a commercial open source's project is in its nascence, it is fragile. Subject to death by boredom (no one cares about the project), fork, and misappropriation. If you're Red Hat with millions of downloads and a growing business, this latter concern is, well, not very concerning. But if you're a new player like SugarCRM, it is.

In fact, SugarCRM dealt with this very problem late last year when vTiger apparently misappropriated its code, causing SugarCRM to add an attribution clause to its license. Foul! Some in the community cried, and maybe so. But consider what SugarCRM was trying to do: protect its ability to develop a community. Not one devoid of parasites (these will always exist), but one devoid of parasites who do actual harm to the project SugarCRM set out to build (and, hence, to the code/community vTiger was trying to leverage).

Beyond community-dilution issues, there is the issue of monetization of one's project. It's easy to point to Red Hat as proof that open source business naturally thrives, but I think Red Hat is a poor example. The company is clearly kicking tail. But it's not clear that open source companies will share this fate simply by being open source. Red Hat was able to grow its brand almost completely unobstructed (Who at the enterprise level cared about Linux then? And what other Linux company had the kind of market valuation and consequent cash in the bank to spend years figuring out a business model and branding itself?), whereas so much attention is paid to open source today that few companies will be able to grow their brand unnoticed in a largely non-competitive environment.

This is not intended (in any way) as a slight on Red Hat. Rather, it's meant to give pause to those who think that open source is logically a good idea for this or that product niche that is still dominated by closed-source companies. When you have millions of downloads (JBoss, MySQL, Linux), it's OK to only monetize a small percentage of those. But if you're in an application space, you (almost definitionally) have a smaller potential audience. This means that you must do things to increase the conversion rate.

So, you see companies like SugarCRM, Alfresco, JasperSoft, and virtually every new open source company offering both open and closed-source software (with the closed-source bits meant as a way to entice enterprises to pay). This is one of the biggest issues for JBoss and other well-architected software - paying for support is fine and good for the first year or two, but after that, once your users are highly familiar with the system and able to support themselves? (Red Hat found a clever way around this by effectively locking customers into a support contract, inseparable from the bits. I think this was a stroke of genius.)

In sum, it's not easy to launch an open source company. It's not easy to get people to pay for value. It's not easy to get would-be competitors to play fairly. And so, open source companies today are experimenting with nuanced approaches to open source which reveal not a lack of desire to be good open source citizens, but rather a desire to promote open source without being mowed over by some aspects of open source licensing that may not be naturally conducive to commercial success.

We could say, "Tant pis!" but the better answer is to look for ways to help. The more companies, the more (and more diverse) the open source code out there. Surely this is a good thing.

Whither ownership?

So, Host Marriott is buying $4 billion worth of Starwood Hotels properties. Note, however, that it was Host Marriott, and not Marriott Hotels, that bought the hotels. In other words, Host Marriott (which owns Marriott's physical properties) will now own Sheratons, etc. As described in a great Financial Times [Subscription !$!#!$ required], hotel companies increasingly see themselves as marketing/branding companies, and not property owners.

Who doesn't, these days?

Seriously, Google piggybacks on content owners. Red Hat piggybacks on Linux kernel hackers [though it is now actively leading that development). ESPN (Mobile) piggybacks on Sprint's cellular network. I could go on.

Doesn't anyone actually build things anymore? What will happen if we all turn into marketing machines? Will this leave us in a world devoid of substance or, in the case of open source, of software?

The false premise of open source is that there is a massive global community happily hacking, sharing code with all who want it. The reality is that there are actually communities of very small communities, creating somewhat narrow products that fit these somewhat narrow communities. This is as it should be. If no one is paying me to do the work, why should I write code that you want, rather than what I want?

This implies, therefore, that even open source companies need to build. Need to invent. Need to create.

Those VCs looking to fund existing communities should be equally anxiously engaged in trying to build out these communities through acquisition of development talent. Organic communities can (or, rather, will) only go so far. And so it's important to invest in people/projects/companies who know how to develop communities. Frankly, I know a fair number of such companies that aren't open source at all (like Microsoft).

There will only be so many Red Hats in the world. (Last I counted, there was only one.) But there can be many MySQLs, SugarCRMs, Alfrescos, and JBosses. Do not be deceived. There is no free lunch, or free community. Value still derives from tangible innovation. Not marketing.

Bigamous contrition and open source faux pas

I'm on a flight to LGW, and have had time to finish (yet another) Anthony Trollope novel - Dr. Whortle's School. I'm not sure what I'm going to do with myself once I've finished all 47 of Trollope's novels - I think I've read 45 or 46 of them already. It will be like closing off a great friendship. Trollope, like Mark Twain, is one of those people that I wish I could have shared a dinner with. He's so funny and sometimes acerbic in his analysis of the customs and attributes of his Victorian society.

One of which - the propensity to gossip and slander - he rebukes in Dr. Whortle's School (in reference to an unintentionally bigamous marriage of Mr. Peacocke, and the fall-out that ensues when the neighbors find out). Like any good book, this one had me wondering if I, like Mr. Peacocke's Victorian society, am a little too hard on people/companies at times.

So, for the moment at least, I'm determined (resigned? ;-) to be nice.

Take Shai Agassi's recent comments about open source. If ever someone gave opportunity to "make a man an offender for a word," Shai did. His words come across as somewhat ungenerous toward open source, and make SAP appear to be a bit naive in its understanding of open source.

I don't believe either is true.

I think Shai's comments simply reveal the ongoing internal battle that any successful software company must have. Microsoft is undergoing it now, and the company occasionally emits moments of brilliant apprehension (e.g., Jason Matusow's exceptional OSBC Boston keynote - should be out on IT Conversations soon), sometimes counterbalanced by equally goofy anti-open source vitriol. (However, you may have noticed, as I have, that the vitriol is subsiding, on average, and a fairly sophisticated approach to open source is emerging, befitting the collective intelligence of a very successful software company.)

It's the same process that Novell went through, and is only just now getting its feet under it, so to speak, to begin growing again. I lived through that experience at Novell - helped to foment it, in fact - and understand just how hard it is to change a company's culture, business processes, and business model.

In light of this, we should be apt to be generous with SAP and Shai. Take him (and the company) on the balance of his/its relationship with open source (Linux, MySQL). Help them find reasons to want to do more. It's a tough road for any successful proprietary software company. But Shai's comments, more than anything else, make me think SAP is actively trying to figure out how to work with, rather than against, open source.

Web 2.0: Free love and pricey lawsuits

Just when it seemed everything about Web 2.0 was cheap and easy (dirt cheap infrastructure (software and hardware), build on others' networks/bandwidth, etc), along comes a wake-up call. Nothing's free. Including, as reported today, user reviews, thanks to Amazon.

Haven't heard? I'll let Susan at InternetNews tell you:

The online retailer of books and just about everything else was awarded three new patents, covering its purchase circles, search and consumer reviews. While Amazon.com's patent police would go after Web publishers, not consumers, the review patent could put the kibosh on the social networking components of many search services.

Amazon.com's purchase circles can be based on everything from a hobby to an employer, or they can merely peep to see what's the hot book among Oracle employees. The patent covers methods of forming circles and marketing to them, for example, by showing one person looking at a book detail page and who else in the circle has bought that book.

The second patent covers a method of discovering and delivering as search results related products from multiple categories, such as books written by Steve Martin, as well as DVDs of movies in which he appeared.

The third patent is the real kicker. It covers methods for encouraging consumers to write reviews of items they've purchased by determining the optimal times to send them e-mails or reminders.

Uh-oh. Suddenly, it looks like someone just might own a fair amount of that "architecture of participation." (As for negative feedback on companies, Dave's got that one locked up, too. So don't even think about posting a negative reply to this! :-)

Where are they now? (Executive moves in open source)

A call this morning clued me into something that I found a bit shocking.

Moshe Bar is leaving XenSource. I say "shocked" because I had seen Moshe as XenSource. That may not be fair, given that XenSource has other great people (including the Cambridge UK-based development team originally responsible for Xen), but Moshe was the public face. I really like Moshe - never had a bad experience with him - and wish him well. He's apparently moving down to Texas and will be working more on OpenMosix, his open source Linux cluster project. (If you're down in Texas and want a great founding member of your open source team, here's your guy. If you can get him.)

Also, the indescribable r0ml (who left Optaros a few weeks ago) has landed, and I think it's a great landing place for him. Root Markets. Don't ask me what they do. R0ml explained it all to me, but all I understood was "root" and "markets." What little I did understand is that it's a perfect vehicle for r0ml to use his finance and engineering backgrounds, and bring an open source flavor to it all (though the company is not an open source software company).

Lastly, a question. Does anyone know where John Young (formerly VP of Marketing at Red Hat) has gone?

Forrester: Open source rising. Here's where.

Michael Goulde is Forrester's go-to guy on open source. I like his reports - definitely worth buying.

In a report he did in June - Open Source Usage Is Up, But Concerns Linger - Michael surveys a range of large enterprises (95+), and comes up with some interesting data (below). I've included some of it here, but highly recommend that you buy and read his full report to get the full story. (Btw, you can find some of Forrester's data from last year's report here in this eWeek article.

First, Goulde's research clearly shows that open source is rising.



Of course, "use" doesn't necessarily translate into "paid use." This is made somewhat clear when Goulde follows up this question with a drill-down on what open source products/projects enterprises are using:



For those who try out open source, it appears that there's no going back. Goulde's survey reveals a high level of satisfaction with those who have tried out open source. For those who aren't satisfied, I'm guessing that many (i.e., those who still think open source is about cost) simply bought on a somewhat false premise. Open source is not a price tag. It's much more than that.



If you correlate this with the "What are they buying" data above, then it appears that Linux (and, really, the LAMP stack) is paving the way for great open source adoption up the software stack. Linux and Apache paved the way for MySQL (and the Ps - Perl, Python, PHP), which paved the way for JBoss/Tomcat, which are paving the way for...open source applications. As the enterprise gets progressively comfortable with each new stage of open source encroachment, I think we'll see much wider use of open source software.

Now correlate this growing use of open source to the growing areas of enterprise software spending (from a different Forrester report):



Clearly, there is a massive open source software market waiting to happen. While I think there have been some weak investments in open source, I definitely don't think it's weak to invest in open source right now. Open source has a lot of room to grow.

Does the world really need another (open source) CRM company?

In Dave's last harangue (no, the one that came after spanking Shai @ SAP), he asks:

I think SugarCRM is proving that replacing proprietary apps is really not that big of a deal, but does the world need 5 more open source CRM companies?

My answer? Absolutely.

SugarCRM is helping to level-set expectations of what is really needed in a CRM system, and what it should cost [Note: I'm on SugarCRM's advisory board.]. Same with Alfresco in Enterprise Content Management [Note: I work for Alfresco], JBoss in application servers, MySQL in databases, etc. Some might call it commodification, or lowering the bar. I think it's the exact opposite. It's raising the bar, returning the software business to one focused on service/customer support, and not on 1s and 0s.

Having reset expectations, open source companies (and their associated communities, but mostly the core project leads) are able to innovate new features off the core, necessary functionality, rather than bolting it onto a bloated, 10-year old product that has been cobbled together to the point of being a complete mess.

My bias aside, look at what Alfresco has done with CIFS to make content management as easy as saving a file. Try that in Documentum....Alfresco likely wouldn't have gone this route had there not been a range of open source web content management projects (Mambo, Plone, etc.) out there doing website management. No doubt Alfresco's approach will give rise to other open source ECM companies competing with a different value proposition. This is wonderfully healthy for the industry. And for open source.

So, yes, Dave, we do need 5 more open source CRM companies. We need them to compete against each other on price/service/innovation as effectively as the old-school CRM companies used to do. That way, the value open source provides will only get better.

Open source: Room for two? Three? More?

Now I want to be Sarah Lacy's biggest fan. (Eat your heart out, Dave.) Sarah politely tells me that I'm waffling on calling a spade a spade.

Or, in this case, a weak open source play a "weak open source play."

It started with the Ingres announcement, but it's really much more than that. There's a thought out there, as Sarah captures in her thoughtful blog post, that being "the open source alternative" is enough. Get out the gate first, as Dave has argued, and you win. Quoth Dave:

Open source is an interesting animal in that first-mover advantage seems to turn into dominant player very quickly. Maybe it's the distro model or the community aspect, but once a project gains acceptance it tends to dominate. This is not to say that they are better than the competition, but I can't find many instances of challenger companies that have bested their rivals in the open source space. MySQL, PHP, Apache, JBoss, Firefox just to name a few.

If true, as I opined, then open source really isn't worth thinking about. According to this line of thinking, nearly every significant open source company has already been born. We just need to watch them grow up, steal market share from the proprietary incumbents, and then retire.

Snore....

Sarah asks,

...[H]ow will all these different open source companies compete with one another? Don’t they risk CIOs just throwing up their hands and saying, “Gee, I have no clue which one is better. I’m sticking with the proven proprietary winners.”

I don't think so, but what does history say?

History tells us that, over time, industries consolidate. [Interesting RAND paper on the topic (.pdf), with a US Department of Defense emphasis.] Technology is no different. Application servers? WebSphere, WebLogic...and JBoss. Server operating systems? Windows, UNIX (Many flavors)...and Linux. And so on.

It strikes me that industries start with a great deal of choice. Too much choice. So, as CIOs rip their hair out asking for simplicity, industries consolidate into 2-4 big players and grant their wish. Only CIOs prove a fickle lot, and start growing uncomfortable with the leverage they've handed their vendors, and start to demand choice again. Open source is one way that CIOs are getting this wish.

However, this rediscovered thing called choice is somewhat ridiculous if we achieve industry consolidation around one open source first mover (often simply because they were first). If open source is a serious market trend, then surely it's big enough to accommodate more than one vendor? If proprietary software can accommodate at least a few big players, why can't open source?

If software moves to an advertising-based model...

Ray Ozzie seems to think that we may be heading to an ad-based software age. I frankly can't think of anything worse - what's wrong with asking people to pay for value? I don't get my clothes for free (in exchange for watching lots of ads about...clothes(?!?)), nor my car, food, etc. About the only thing I get for free (ad-based) is entertainment (like TV and, theoretically, a lower subscription rate on BusinessWeek), but even this I'm starting to pay for (I don't watch free TV, for example - I pay Comcast so that I can watch soccer on Fox Sports Channel or GolTV).

Are we getting overly excited because Google found an ingenious way to monetize search? Search, after all, is well-correlated to an advertising model (because Google knows what you want at any given moment based on what you search for). Other applications like CRM don't strike me as having a close tie to advertising.

Even one that does - content management - seems like a bad idea. Yes, Alfresco or Documentum or FileNet could deliver ads against documents that people are working on. But that strikes me as almost indecent (never mind the privacy concerns) - who wants to look at ads all day long, and who could possibly want ads delivered against bad press releases, weak business plans, etc.?

Maybe the real question for Microsoft is this: "What can we [Microsoft] build that people will actually happily pay money for?" This shouldn't be too hard - you did it once with Office (and now need to do more than facades to justify further enterprise investment in it - Zimbra is a good example of all that you're not doing with email to make it worth buying) and Windows, but it's time to invent new and interesting things. XBox is a good start. But what's next?

I hope the answer is "Products," not "Product Placements."

Finally, a real database market

Market: the world of commercial activity where goods and services are bought and sold) "without competition there would be no market"....

Thus spake WordNet. The denotation doesn't state that there must be multiple vendors to make a market, but I think the implication/connotation is there. Whoever heard of a market with just one player? Besides the office productivity suite market, that is. :-)

And so, we heard yesterday that CA is spinning off Ingres to form an independent company. (With a great person - Dave Dargo - to run it. I knew Dave when he was at Oracle, then Olliance. He's a huge asset to the Ingres team.)

My friend and alter-ego, Dave, asks, "Who cares?"

Dave (Rosenberg) has a point. I doubt the world has been clamoring for Ingres to shake off its shackles.

But that's not really the point. The point is that the market has been clamoring for competition across the software industry. This move, as well as the launch of EnterpriseDB, offers database customers real choice again. Yes, we had MySQL before. And yes, I lead the Marten Mickos/Zack Urlocker/MySQL fan club. But having one open source alternative to lots of proprietary software vendors isn't real competition. It's just a step in the right direction.

Ultimately, this is what each market segment will need to look like. Not one open source winner standing on the carcasses of the open source losers (looking out at the two or three proprietary incumbents on their own little piles of proprietary carcasses). But a true market of open source alternatives to closed-source products, and open source alternatives to other open source products.

The Ingres announcement is wonderful news for MySQL and EnterpriseDB. It's not great news for Oracle, IBM, and Microsoft, however, as it's just one more sign that the market wants more choice. This is a good thing, regardless of Ingres' ultimate success. It will grow MySQL's and EnterpriseDB's revenues, because it will increasingly legitimize the open source database, and it will also drive these open source companies to continuously improve and differentiate themselves. It won't be enough to coast along with the "open source" tagline and expect that, alone, to bring revenues. (Not that either company had been doing so - I'm not making that argument.)

Welcome back to the community, Ingres. The open source business community. And welcome back to the fight, Dave (Dargo). You've been missed.

From Enterprise 1.0 to Web 2.0

I spent some time with Howard Morgasen last week, along with John Newton (Founder of Documentum and now Alfresco), and he noted something that I'd never thought of before. As he relates on his blog,

One of the challenges I see with Web 2.0 is that it is a major breakthrough in the way people communicate and share information. Unfortunately all of that information has to reside on the Internet. If I was a major corporation then I would have privacy issues because a lot of my information is behind corporate firewalls which cannot be seen on the Internet.

If you talk to most people who are developing Web 2.0 applications there is a heavy reliance on the internet being there for their application to work. In other words, if I pointed a Web 2.0 application at my network behind the firewall it would not function.

This is an interesting point on a number of levels. The first is the security/privacy issue that Howie points to. (He told John and me that when he asked the Web 2.0 companies about whether they could run behind the company firewall, they universally looked stumped - suddenly, the wizardry looked slightly less sexy.

But beyond this, there's also the reliance aspect. This is a blessing and a curse.

For example, I've heard it said, "Skype is wonderful because they don't have to invest in any infrastructure - the phone/cable/etc. companies provide it all for them, gratis." True enough, but only to the extent that these infrastructure providers want to. What happens if Comcast decides that it likes it's VOIP service more than Vonage's, or Skype's? They can do things on their network to privilege Comcast VOIP traffic to the detriment of these other "parasitic" applications. (Comcast is already doing this. Comcast has startedthrottling back speeds for users who clog their network, e.g., people who use Vonage). It's fine to build one's business on others' efforts, in other words, but don't be surprised when the producers fight back (Publishers vs. Google, for example).

Back to the bridge to Web 2.0. How does Howie see it happening?

I have defined a hybrid environment that would allow the Web 2.0 tools to function against the corporate data that exists behind the firewall. Since most of the Web 2.0 tools are based on Open Source standard tools I would need to find an application or set of applications that could simulate the backend Internet. I would call these applications the "bridge". The bridge would be installed behind the corporate firewall and would understand how to speak to Web 2.0 tools on one side and how to speak to legacy systems on the other side.

I have found the first application that I believe would be a great "bridge" application. The application comes from Alfresco, a relatively new company founded by John Newton (the founder of Documentum). Alfresco has come up with what is billed as an enterprise content management system. Of course you would expect John and his team to know a little about content management. I sat with John last week and discussed Alfresco and what it does and how it works. What the two of us came up with is that it is a perfect "bridge" product. I have never seen an application that was built from more Open Source Standards than Alfresco....

Self-congratulation aside, I think there must be a whole class of "bridge" applications out there waiting to happen. Things that will pull legacy content/data from curmudgeonly applications and display them in a Web 2.0 browser. Sounds cool to me....

Prediction: Stephe Walli will be trading MSFT shares in 10 years

Stephe has a provocative post about the imminent demise of Microsoft. He gives the Great Beast 10 years to live on as a publicly traded corporation, and then...nada. Gone. Delisted.

Not going to happen, Stephe. You paint an overly rosy picture of the rise of OpenOffice and the ODF. I'll forgive you this transgression, but not the extrapolation that even if OpenOffice did crush Microsoft's Office business, Microsoft would somehow disappear. It's possible, of course - anything is. But let's be clear: tens of billions of dollars don't evaporate overnight (no matter how many XBoxes I buy at a $50 loss to Microsoft on each one). And good companies adapt to technology change. IBM? Still with us. HP? Seems to be on the upswing. Apple? Still crazy after all these years.

There are things about Microsoft I don't like. Like SharePoint. :-) But there are many that I do (like Office for Mac, including Entourage - it's much better than anything else on the (fat-client) market, despite its deficiencies - tried Eudora email recently?). More important than my opinion or yours (or Massachusetts', for that matter) is the fact that millions of users prefer the simplicity of Microsoft.

Microsoft does many things wrong, but it effectively lowers the bar to computing for tens of millions of people. You either beat them at that game, or you go home. Alfresco beats them (I'd say this even if I weren't hopelessly biased - content management in a shared drive? Give me more of that). I think MySQL does, too. As do other rising companies (Zimbra, for example, on web-based email).

Of patent pools and open source

UPDATED.

I was talking today with Barry Klawans, CTO of JasperSoft, and he said something that I found extremely interesting. We were discussing ways to avoid being "InnoDB'd" (i.e., have a competitor acquire an open source project/technology upon which your own project depends, potentially to your detriment), and went through a list of possibilities:

1. Acquire the copyrights for every project/technology upon which your technology depends;
   
2. Disregard the threat entirely;
   
3. Disregard and fork if/when you have to (i.e., if the code upon which you rely is GPL or otherwise open source, you can always fork it and continue along the forked path); and
   
4. Selectively contribute to all projects upon which your code depends so that you own copyrights in them.

This last option strikes me as very smart. Why? Because it keeps you involved in projects you should be involved with, anyway, and prevents a competitor from being able to pull the rug from beneath your feet, as you own a piece (perhaps a critical piece?) of the code/bundle of copyrights they want to acquire.

I haven't thought this through fully (Alfresco is taking an amazing chunk of my time...imagine the nerve! :-), but it seems to be very much like how companies use patent portfolios. Some companies, like IBM and Microsoft, own gargantuan libraries of patents on everything, including the method by which I yawn when typing this. Others, like Novell, own far fewer patents, but those that they do own are important enough that they serve as a big deterrent to a competitor suing them over IP infringement. (You sue me, I'll sue you, and I can block your Office business by doing so....)

Why couldn't open source companies do the same, purely as a defensive measure? Yes, we all love each other. I know that. But there's no reason to believe that incumbent, proprietary providers love the community. Nor is there any reason to believe that open source will forever remain a jolly love-fest. Why not contribute great code, thereby benefiting a project's community, and earn some defensive measures as a result?

Am I missing something?

[A few things, as it turns out. Mike Olsen correctly points out that most open source companies require copyright assignment back to them, obviating the strategy above. Point well taken. I was referring primarily to true projects, not corporate projects. This, of course, begs the point that Ian and others made, which is that a good open source project will include multiple contributors from different organizations, mostly removing the threat of being "InnoDB'd."

I wonder if the right option isn't to do what JBoss does: hire the programmers on the project. Source of code matters as much - actually, more - as source code in the open source world. Hiring people is the equivalent of bringing that "IP" in-house. Something to think on further....]

Download: r0ml Lefkowitz's OSBC Boston presentation

r0ml gave an excellent presentation at OSBC Boston on "What's Wrong with Open Source?" I wasn't there to hear it, but heard lots of positive feedback on it. You can see for yourself by downloading the .pdf here. (The OSBC website will have it here soon enough.

Red Hat beyond Centennial

At last week's OSBC Boston I was surprised by how much Red Hat turned out for the event, or was parenthetically tied to a company there. But I don't mean current Red Hat employees. I mean those who have moved on. (From Centennial, which is what Matthew Szulik calls Red Hat headquarters.)

It's a familiar phenomenon - a company becomes successful and, as it does so, some of its brightest stars leave the mother ship to try to re-create that success elsewhere on their own. This is starting to happen with Red Hat. Until OSBC, however, I hadn't realized how fast this was happening.

Here are just a few examples:

• Tom Barton, former SVP of Client Services of Red Hat (joining the company through its acquisition of Cygnus Solutions), is now CEO of Rackable, a successful and growing provider of server and storage hardware (based on Linux).
  
  
• Bryan Sims, former VP of Business Development at Red Hat (2000-2005), is now an attorney with Squire, Sanders & Dempsey LLP, where he advises clients on open source legal issues (including M&A - he was heavily involved in the majority of Red Hat's acquisitions). [I met Bryan in person for the first time at OSBC. He's erudite, articulate, and competitive - someone should lure him back into the operational side of a startup, though he seems happy to be using his law degree again.]
  
  
• Billy Marshall, former VP of North American Sales for Red Hat (2001-2005), is now co-founder and CEO of rPath, a provider of customizable Linux solutions to the enterprise.
  
  
• Erik Troan, former VP of Engineering at Red Hat (and its first engineer), is co-founder with Billy of rPath and runs development for it.
  
  
• Kim Knuttila, former VP of Engineering at Cygnus until its acquisition by Red Hat (where he continued in a similar role), has founded Specifix, a provider of customizable Linux solutions for the embedded/appliance market.
  
  
• Kevin Thompson, former CFO of Red Hat, appears to have moved down to the Austin area where he is advising at least one open source company with whom I'm familiar. Sorry. I can't say more than that.

This is just a smattering of "The Red Hat Effect." I'm sure there are a range of others, more or less senior at Red Hat, who have moved on but still remain deeply tied into the growing open source market. It's a sign of a successful company that it can support such executive leakage. And it's a boon for the industry when it does.

Download: Jason Matusow's (Excellent) OSBC Keynote

Jason Matusow continues to prove that a monolithic view of Microsoft is as inaccurate as it is useless. He delivered one of the best keynotes/sessions of OSBC Boston, and the best presentation I've yet heard him give (and I always think he's interesting). Less sophistry, more rigorous analysis. It was Jason, and Microsoft, at his/its best.

IT Conversations will carry the MP3 in the next few weeks. Till then, you can download the file here (.ppt). We'll also have it up on the OSBC website under Jason's name soon, as well as the other presentations.

In this presentation, Jason largely debunks the popular (but, I largely concur, erroneous) belief that open source (and the web) enable true "Long Tail" distribution strategies. True enough that the Long Tail can deliver its onesies-twosies for...onesie-twosie customers/developers, but the real profit and growth comes from serving Kraus' 3%. In other words, there may be millions of markets of dozens, but who wants those markets? Not Red Hat. Not IBM. Not Novell. Not JBoss. Etc.

He also argued convincingly that Microsoft is starting to understand and apply (at a pace faster than most of us would have thought possible) the lessons of open source. This is not a stupid company. While I still believe Microsoft will have difficulty separating itself from the Office and Windows umbilical cords, and that these will ultimately strangle its opportunities for growth ("Live" notwithstanding), I no longer think it's taking a passive-aggressive approach to open source. The company is studying the phenomenon very closely. Don't believe me? Take a look at some of the lessons Jason et al. have pulled from the community (at left).

Take a spin through the presentation. It's an excellent piece of (business) scholarship.

End of (my) Novell train

Not for the company, but rather for my affiliation with it (as employer - I look forward to many years as a partner to the company with Alfresco). I wasn't able to have my final exit interview with the company until this morning (having been back on the East Coast for most of this week), and now it's official. My keys, badge, and old PowerBook (as well as the IBM ThinkPad running Linux and Windows - that one was easy to leave :-) are all back on my desk. I left the posters up and junk in the drawers, but I know that will be cleaned out by Monday.

It's a bittersweet feeling. Novell has been good to me these past 3.25 years. It's a good company, with great people. I made some strong friendships while there, and helped an organization undergo a dramatic shift (moving from proprietary to open source), and come out standing. Looking at Novell's current financial results, it's easy to forget just how far the company has come, and what it has accomplished. The cynic will say the company went through it all for nothing - that it has no future.

That cynic is wrong.

Novell is firmly (finally) well-positioned to capitalize on its transition. Most of the old mindset is gone. The infrastructure tying Novell to an old world software model has largely faded, too. Management has been upgraded, as well. It's finally able (it's been ready and willing for some time) to compete effectively with Microsoft and Red Hat.

I believe it will. Actually, I know that it already has. Competition is good. It's making Novell a better company, just as it is Red Hat, Microsoft, and others.

I wish Novell the best. In my new role running US operations for Alfresco, I expect to work closely with Novell and other great organizations. It's clear to me that there is no better time to work in the software industry. I'm just grateful to be part of it.

Open source events not to miss in 2006

Conference season is pretty much done for 2005, but here are the few shows you should definitely plan to attend in 2006. Why attend conferences? I find they're the best places to meet up with the relevant people in one's industry, and to get a sense for where an industry is going. I wouldn't miss these mentioned below.

• Open Source Business Conference (OSBC) San Francisco. February 14-15, 2006. San Francisco, CA. The place to discover emerging open source companies and business strategies (Vendor, IT, legal, venture capital). The theme? "The Rise of the Enterprise Communal Application." OSBC San Francisco 2006 will focus heavily on the rise of enterprise open source applications and how to build communities to drive them (and open source projects generally).
  
  
• O'Reilly Emerging Technologies Conference (eTech). March 6-9, 2006. San Diego, CA. Not really an open source event, but a great place to see what's coming next. Sometimes a bit too far out there for me (non-hacker), but perfect for the hacker/VC/etc. who wants to see what's coming down the pike.
  
  
• Novell's BrainShare Salt Lake City. March 19-24, 2006. Salt Lake City, UT. The source for all things Novell.
  
  
• LinuxWorld Boston. April 3-6, 2006. Boston, MA. Great place to browse the growing world of Linux (and an increasing array of open source software).
  
  
• MySQL Users Conference 2006. April 24-27, 2006. Santa Clara, CA. The source for all things MySQL.
  
  
• Red Hat Summit. May 30 - June 2, 2006. Nashville, TN. The source for all things Red Hat.
  
  
• OSCON (O'Reilly Open Source Convention). July 24-28, 2006. Portland, OR. An amazing geek-a-thon (though Gina has added a growing Open Source Business Review for IT executives). No better place on this earth to find out how to use all the cool new open source projects, and to see what's coming next.
  
  
• LinuxWorld San Francisco. August 14-17, 2006. San Francisco, CA. Great place to browse the growing world of Linux (and an increasing array of open source software).
  
  
• OSBC Boston 2006. October 17-18, 2006. Boston, MA. Much like its West Coast event, OSBC Boston provides access to the leading open source businesses and the people driving them.
  
  
• JBoss World. Dates TBA. Probably something in the spring (Atlanta, GA) and in the fall (Europe), if JBoss keeps to what it did in 2005.
  
  
• EuroOSCON. Not sure if they're doing it again, but O'Reilly should. I wasn't able to attend, but heard great things about it.
  
  
• OSBC Europe. Still under development....

Not yet an "Alfresco World" you can attend. But give us time. :-)

OSBC Boston 2006 - October 17-18, 2006

Just wanted to let you know that we will be staging an even bigger and better OSBC Boston in 2006, and have settled on the dates. October 17-18, 2006. This time, it doesn't conflict with any holidays, we've learned to start a little later in the morning (9:00/9:30), and we'll have the same high-caliber of speakers, sponsors and, most importantly, attendees.

Please join us there. Save the date.

Massachusetts and ODF: Now the politicians want a say (ZDNet)

David Berlind is reporting on his blog that

Two days after a Senate oversight committee in Massachusetts (1) questioned the authority of the state's IT department (ITD) to standardize on formats for storing public documents and (2) demanded that state officials take more time to study the potential impact of setting the OpenDocument Format (ODF) as a standard, an economic stimulus bill that goes before the Massachusetts Senate tomorrow (Thursday, Nov. 3, 2005) has been suddenly amended with text that, if passed, would essentially subjugate all IT procurements and ITD decisions including standard setting to a special task force.

Based on the way the amended text makes specific reference to document formats and technology selections for state workers with disabilities, it turns the stimulus bill into a bomb that could easily blow up ODF's already weakened chances of becoming a statewide document standard.

No secret that I wasn't a fan of how Peter Quinn et al. went about their original decision. But this is worse. At least Peter knows what he's talking about. It's unclear to me how a group of legislators (no doubt heavily lobbied by Microsoft in the past few weeks) would have highly informed opinions in the matter. It seems that this move is destined to reduce Massachusetts' IT decision-making to the lowest common denominator: politics.

This can't be good. I regret any impact (however slight) I may have had in nudging bureaucrats and politicians to feel the need to convolute the process with their presence. I trust Peter much more than I trust a roomful of politicians. Peter can't be bought or bullied....

Zimbra makes me a believer in Silicon Valley again

Scott Dietzen demo'd Zimbra's email technology this morning at the Open Source Business Conference. I was blown away. I had expected a jumble of buzzwords (Mashup! Web 2.0! Architecture of participation! Blah!), and I got that. But I discovered that, at least in Zimbra's case, those buzzwords are actually descriptive of a very cool product.

I've been an application-in-a-browser unbeliever - there just wasn't any compelling reason for me to go to a OK-but-not-as-good email client, OK-but-not-as-good RSS reader, etc. Zimbra showed me a reason today to care deeply about a browser-based interface. (Of course, my ideal would be to marry Zimbra's webification with my stolid confidence in a fat client, but we apparently can't have everything.)

The thing I liked best? Context-sensitive calendaring. That is, an email comes in that says, "Can you meet this Friday?" "This Friday" is "linked" (by mouse-over) to a quick window (that sounds clumsy, but the way Zimbra has enabled it, it's not - it's very, very slick) that shows my Friday appointments. It's immensely cool. Scott said that it would save me time, but I don't care about that. I care that it adds new functionality.

In other words, it finally, seriously upgrades the email experience. Innovation is here again. Thank you, Zimbra.

Microsoft: Open source Vista?

No, they're not planning to do so. But yes, it seems like an interesting idea.

Whose?

Gary Beach, Editor of CIO Magazine, who joined us for a (mostly) fantastic Open Source Business Conference. Gary and I were sitting next to each other during Dirk Hohndel's keynote, in which he identified over $1 billion Intel's IT department has saved through Linux since 1997. Gary pointed out that most of Intel's cost savings came in the last four years (2000-2004), and not in the initial few years.

This seems to have led him to an interesting blog entry today, in which he suggests that Microsoft could make more money open sourcing its upcoming Vista product than it could using its traditional license+maintenance route. [And yes, the particular session he was attending that led him to drift off was probably boring, as he said - we can't be 100% perfect ;-)]:

I havenÂ’t done the math, but Microsoft might be able to make even more money with an openVista version. If you want to see a grown person cry, say "no" to the three-year warranty question at the checkout counter of your favorite appliance store. ThatÂ’s where all the margin is made. Same with openVista.

In the proprietary world, Microsoft gets a one-time hit to its top line for each license it sells. In the world of openVista, Microsoft would steal a page from the playbooks of the open source community and create three levels of support and service where Microsoft and its cadre of global solution providers share recurring annual revenues for agreed upon support and service. Those levels could be as simple as openVista Home support, openVista SMB support and openVista Enterprise support. The operative, and most lucrative, word being "recurring."

The traditional wind behind the sails, and sales, of the Windows operating system has always been a dynamic third-party independent software vendor community which builds compelling applications that run on top of Windows. One of my major take aways from the Open Source Business Conference was this: The open source community has its sights set on the application layer of the software stack and the desktop: two areas Microsoft can not afford to lose in the future

If Microsoft introduces openVista, it could generate oodles of money by simultaneously creating an openVista portal, much like Google, where communities of openVista software developers would meet to share ideas on how to improve openVista and create cool openVista applications. The portal would, of course, be free. Where Microsoft would make its money is by selling sponsored advertising links to the tens of thousands of small ISVs who want to sell their tools and applications to that global cadre of openVista software developers.

By embracing openVista, Microsoft also takes advantage of possibly its strongest corporate asset: brand recognition. Most of the software vendors in the open source market have company names that sound like sandwiches at a boutique delicatessen.

Interesting take. Gary's a smart guy - not someone to dismiss lightly.

OSBC: Emerging Elite Showcase winners announced

As part of the Open Source Business Conference, we always have an Emerging Elite Showcase. This is a group of startups/early stage open source companies that we've filtered down from the tens (hundreds?) of open source companies sprouting up. From that Showcase we have a panel of VC/CIO judges who walk the floor, talk to the companies, and select three that they find the most promising. (Important point, given the below: I wasn't one of the judges.) (Here are the winners from OSBC San Francisco 2005.)

The votes came, and here are the Ones to Watch from OSBC Boston 2005:

• Centeris - Network management company providing familiar Windows-based management tools and improved integration of Windows and Linux servers, helping companies achieve the full benefits of running mixed networks;
  
• EnterpriseDB - Enterprise-class open source (PostgreSQL) database with drop-in interoperability with Oracle; and
  
• Alfresco - A rising leader in Enterprise Content Management from the founders of Documentum (and my new employer). The only open source document management company (most open source content management projects are really web content/website management systems).

Great, great companies. (I'm biased on the last one.) And, most importantly, evidence that the general caliber of open source companies gets stronger every day.

CIOs actually care about open source

I just heard the most shocking thing. I'm in the first day's closing keynote session at the Open Source Business Conference Boston, and asked the CIO panel a simple question:

"Do you actually care about open source? Do any of your organizations look at source code? Are you actively looking to buy more open source software?"

I expected them to say that they took a pragmatic approach; didn't care if it were open or closed, but paid for value; etc. After all, this was a very distinguished panel:

• Gary J. Beach (Editor, CIO Magazine)
  
• Ameet Patel (Former CTO, LabMorgan (JP Morgan Chase))
  
• Don Haile (President & CIO, Fidelity Investments)
  
• Ron Rose (CIO, Priceline.com)
  
• Jamie Cash (CIO, NLG)
  
• Barry Strasnick (CIO, CitiStreet)

What I heard, however, was shocking. Why? Because they said (universally), "Yes, we care about source code. Yes, we proactively seek out more open source. We like open source because we're pragmatic. The quality is very good. The support is excellent. [Note: Very little discussion of cost. That seems to be of secondary concern.] We are predisposed toward open source."

Wow. Clearly, open source has passed "the tipping point." (I dislike Gladwell's work, but I'll borrow the nomenclature.) Open source won't make a crappy company/product into a good one, but it's definitely the winning strategy going forward.

[All of which means you should attend OSBC San Francisco, February 14-15, 2006. :-) ]

OSBC Boston Report: Pitching the CIO

Updated: Network World's coverage here.

OK, this was a great move, including this session. (Thanks for the recommendation, Bryce.) The premise is simple: startups spend a lot of time pitching to VCs, and the VCs theoretically talk to CIOs for a gut check on the idea. We wanted to remove the "information middleman" and have the startups pitch CIOs, in real time.

The result?

Peter Yared (CEO of ActiveGrid) talked about their next generation application server (credible, given that the team came from BEA, IBM, Sun).

• He got a little negative feedback from Rick Carey (VP, Office of the CIO, Fannie Mae), who argued that ActiveGrid is a new approach to a market in retreat.
  
• Tim Vaverchak (Director, Open Source Strategy, Commonwealth of Massachusetts) questioned how close ActiveGrid's relationship with the open source LAMP development community is, and implied that his interest in ActiveGrid would grow commensurate with the strength of those community ties.

I wasn't able to hear Peter's rebuttal, but like ActiveGrid a lot and think the company will do well.

Andy Astor (CEO of EnterpriseDB) pitched his company's PostgreSQL alternative to Oracle (compatible with Oracle out of the box "at an open source price point").

• Jin Chun (Chief Applications Officer, State Street) indicated that he felt they could see a use for this sort of product, in part because the nature of the database matters less for his organization (so long as it's fast/robust/etc.).
  
• Tim Vaverchak said that they still have to debate the database level of the software stack, because it continues to be a religious issue (moving off Oracle to an open source database). So, they'd have to deal with the proprietary vs. open debate (interesting, given how aggressive Massachusetts has been on open source).
  
• Rick Carey indicated that the upfront cost isn't as big a deal as Andy presented.
  
• Charlie Brenner declared that EnterpriseDB's competition isn't Oracle - it's MySQL (which is a proven competitor, whereas EnterpriseDB's competition with Oracle hasn't really started yet). He also wanted to be sure that he could get out of EnterpriseDB as easily as EnterpriseDB makes it to get in.

Andy countered on the price issue saying that, in fact, EnterpriseDB offers a 90% licensing cost savings - the first few Oracle licenses might not be that expensive, but incrementally it becomes very expensive.

Moshe Bar (Founder and CTO, XenSource) presented last. Xen is one of the coolest projects in open source today, but I was a little unclear on how XenSource improves upon it. (Moshe talked a little about its Xen Optimizer product to respond to this question, among other things.)

• Rick Carey (fast becoming my favorite CIO cynic - I like his rigorous analysis) asked whether it would make more sense for XenSource to be selling to the hardware/software vendors that already sell to Fannie Mae, rather than selling directly.
  
• Maurizio Ferconi (Managing Director, Financial Engineering, Putnam Investments) wondered about licensing costs. He likes virtualization, but doesn't want to have to pay separate license costs for each of those virtualized instances. He thinks the problem will be solved eventually....
  
• Jin Chun really likes the idea. State Street overbought hardware during the boom, and is now looking to commodity software stacks to make use of the excess.

Unfortunately, I spent more time listening than writing, but you get the gist (hopefully). It was an exceptional session. Many thanks to the CIO representatives who participated, as well as the CXOs who had the courage to pitch their prospective customers in real time, in front of an audience. Fortunately, each is a highly promising company, and so can stand up to this close scrutiny.

The future of Red Hat R&D (...is open)

Red Hat has gone on the offensive. As ZDNet reports, Red Hat has gone out of maintenance mode, as it were, and is (finally) doing some lead engineering work on the Linux kernel. This is great news, and a very welcome change.

From the report:

Trying to take a more active role in open-source programming, Red Hat has created a team of 34 programmers to work on nothing but next-generation software, the company plans to announce Tuesday.

The move is enabled by the Linux seller's surging profit and ensures the programmers will have time for the development instead of worrying about customer support requirements, said Brian Stevens, Red Hat's new chief technology officer. The company plans to double the team's size in the next nine months.

The team has several priorities, Stevens said: incorporating the Xen software to let a computer run several independent operating systems at the same time; improving the "stateless Linux" software to try to make desktop Linux a cost-effective option; and maturing programming tools such as the SystemTap probing software.

"We're building an emerging-technologies team," Stevens said. "There have been a lot of great ideas that we haven't been able to give an incubator environment to before."

The move signals a more active phase in Red Hat's engineering efforts, which generally have incorporated software changes once they've attained broad support among open-source programmers. Now the company is trying to rapidly respond to specific customer requests for its software, even if it has to work more on its own.

Red Hat, like Novell, has always actively developed the Linux kernel. But it tended to be a follower in terms of the nature of that development. I'm glad to see that the company will be actively innovating in the kernel space now - this can only be good for the wider LAMP-based community (which, in case you hadn't noticed, is just about everyone these days :-).

It will be interesting to see how the company reacts the first time (and it will likely happen early and often) the Linux kernel community decides to diverge with Red Hat's planned direction for the kernel. Matthew has said the Linux kernel developers won't be managed by Red Hat, or anyone else. He's (mostly) right. It will therefore be interesting to see how the company chooses to exercise its clout when the community says "No."

Regardless, I applaud this move, and wish the company well.