Off-topic: Arsenal wins the World Cup

Is it just me, or has Arsenal (i.e., Arsenal players) been at the center of virtually every positive thing that has happened to the World Cup? Germany beats Argentina thanks to Jens Lehman. Spain won (up until it bumped into another Arsenal squad) because of Fabregas and Reyes. Sweden went far because of Ljungberg. And so on.

I don't know, Fabrizio, I think it's time to shop for a new team. Serie B (or C?!?) won't be much fun, and there's no more exciting football to watch on this planet than Arsenal. I think you already have a shirt, too.... :-)

Martin Taylor, RIP

I found this out in passing at OSBC London: Martin Taylor, the supposed devil-prince of anti-Linux marketing, has left Microsoft. (Apparently, I'm the last to know.)

I always liked and respected Martin (apparently because I've been subverted by Microsoft, as Dave says. :-). I'm really sorry that he's gone. He was a competitor worthy of the competition.

I have no idea where he went. Can anyone fill me in? It would be classic if he, like many Microsofties before him, has left to start, join, or fund an open source startup.

A call to arms: Europe and open source

As mentioned in this CNET article, Tuesday at OSBC London I opened the conference with a suggestion: Europe, the birthplace and cradle of the open source revolution, needs to reassert itself as the center of the open source phenomenon. Linux, MySQL, JBoss (Well, Marc is French with influences of Spain in him... :-), Trolltech, etc. These early open source leaders all came out of Europe.

As open source has commercially matured, however, the United States has taken over. Silicon Valley has funded the next round of open source, and we're not necessarily the better for it. There is an ethos in the projects and startups that emerged from the social democracies of Europe that one doesn't necessarily find in the capitalism-spawned companies.

Let's be clear: I am an unabashed open source capitalist. I live in the US and think the world of many of the rising open source leaders that make their home with me there. But I also have a sense of history, and history points to Europe as the birthplace of most successful open source companies, as well as the headquarters for the most active and successful open source VC, Danny Rimer (Index Ventures) (One of Business 2.0's "50 People Who Matter").

The United States will continue to churn out exceptional open source projects and companies. Fine. But that's no reason for Europe to relocate to Silicon Valley and abandon its former leadership. It's time for VCs to stop insisting that their portfolio companies relocate to the Valley. (Aside from MySQL, that serves the Web 2.0 market, few companies - open source or proprietary - will find their customers in the Valley, so why move to Vendor Land?)

It's time for European open source startups to leverage the rise of open source within their government organizations. And it's time for Europe's SIs to assist in the matter by not treating open source as a matter of cost (free), but rather one of code freedom.

In short, it's time for Europe to regain its pride of place in the open source pecking order. There is something about the European mindset that lends itself well to open source software. There's no reason to capitulate on this, and every reason to exult in it and build many new and exciting open source commercial enterprises.

Please?

Being hip

Martin Musierowicz and I were looking for a place to eat last night in London, and Sebastian (a helpful sales clerk at Marks and Spencer) sent us to the Roof Gardens off of High Street Kensington. It's apparently a celebrity hangout, with paparazzi hanging around outside and bodyguards to keep the riffraff (like us) out. The week before we were there, a Wimbledon party was in full-force - Claudia Schiffer had been sitting in my chair.

Very hip.

Unfortunately, we are not (hip, that is). (Well, I'm not, anyway. How hip can you be with four children and a minivan?) I apologized to the server that I was not Tom Cruise or someone special. She took it in good stride. For the time we were in the restaurant, however, with the technobeat drowning out any attempt at meaningful conversation, I suppose those outside the restaurant thought we, the denizens of the hipness temple, were hip. I probably could have donned some oversized sunglasses like Beckham's wife and pretended to be famous on the way out.

My 15 seconds of hipness.

In the business world, it's possible to pretend at "hipness." The Web 2.0 world certainly has a lot of cachet at present, as does open source. But the only way to remain perma-hip is to actually sell things. Lots of things. Perpetually. The minute you don't, you're history.

With this in mind, my primary goal at Alfresco is not to make friends (downloads) or good PR. It is to make sales. That is the work ethic that made Red Hat what it is today - sometimes disliked and unhip because it was prickly to work with, but always successful in the way that corporations are measured: money.

Windows as the new high-performance OS?

I spent some time yesterday with Nick McGrath, Director of Platform Strategy at Microsoft. Nick and I first met at LinuxWorld UK a year or two ago - we were on a panel together. I appreciated Nick's candor then, and was very glad to meet him again at OSBC London.

Nick mentioned something to me that came as a complete shock: Windows HPC. I did some consulting for Linux Networx 2-3 years ago, and got to know the HPC (High performance computing) market reasonably well. When you think "HPC," you should think of supercomputing clusters at national laboratories, number crunching clusters doing portfolio optimization at large financial institutions, and oil and gas companies looking for ways to fill those trendy Prius hybrids. This is not wimpy computing. It's the most demanding computing anyone does, anywhere. Microsoft has set up a High Performance Computing Centre at Southhampton University to help build out the product. (It's being developed in the UK.)

All of which makes it very interesting that Windows is now playing in this market. Whatever your views on Windows - Blue Screen of Death and what-not - no one runs crash-prone software in HPC environments. If Microsoft proves itself here, it should be able to effectively shelve its history of crash-prone software. In addition, the work it does in HPC should trickle down to the desktop, making the software run faster, with fewer crashes. (XP has largely solved that issue, anyway.) The one thing HPC won't necessarily help Microsoft with is security - performance is king in HPC, not necessarily security.

This is an area that everyone in the Linux community should watch closely. If Microsoft pulls this off, it will be very telling for the company's quality and strategy going forward.

Marc Fleury @ OSBC London (The JiHat continues)

Marc Fleury is giving the opening remarks at today's OSBC London, and is talking about the rise of open source. As Marc said, it's no longer a question of "Why?", but rather of "How?" with regard to open source. Open source is not going away - it's only going to thrive and dominate.

A few interesting points:

1. Debt to IBM. He talked a bit about the debt we owe to IBM for getting open source started with its $1 billion commitment to Linux, but noted that IBM seems conflicted now on that initial support for open source. It has a range of software businesses that compete with open source, rather than leverage it, in his words. True enough. In a company the size of IBM, you never get a single, consistent vision.
   
   
2. Bottom-up and top-down phenomenon: the system administrators are driving adoption from the "bottom," whereas CIOs are pushing for adoption from the top down.
   
   
3. Customers need to understand that open source is a viable business model. It's not about "peace, love, and software falling from the sky," but rather about sustainable profit.
   
   
4. Three empirically proven open source business models: "Pure" support play. (Examples: Red Hat, JBoss, Alfresco) "Protective"/dual-licensing. (Examples: MySQL, Sleepycat) "On-ramp" model. Start with a free/open product, and pay for proprietary extensions. (Examples: IBM, SugarCRM)
   
   
5. Customers need to understand the solidity of open source development models. You need a "professionalized core" of development. (See my comments here.) This is an optimized factory - you leverage community involvement, but you take responsibility for core development.
   
   
6. JBoss develops/acquires code in four ways: 1) Self-developed, 2) Acquire other open source projects, 3) IT buyer-generated innovations, and 4) JBoss third-party developer creations.

Marc has been one of the primary innovators in the open source world. Love him or hate him, you've got to respect his candor and dogged determination which made JBoss one of the most successful companies on the planet, open or closed. That's something I respect. You should, too.

Steve Howe and enterprise-driven open source projects

Steve Howe had one of the most unfortunately named sessions of OSBC London - "Openadaptor - Efficient System Integration and Migration" - and one of the most interesting. Steve is Global Head of Open Source Initiatives for Dresdner Kleinwort Wasserstein, a Europe-based investment bank.

The company started its Openadaptor project to "provide an easy and standard way to allow DrKW to interact with a standard message bus." Innocuous enough. The purpose was to "stop the needless duplication of effort that would otherwise have ensued." Again, vanilla. The company wanted to coordinate and leverage a community - including its competitors - to offload support costs and improve development.

Did the dream become reality?

Not really, Steve said. He noted that DrKW received a lot of advice and contributions from outside the company, but not necessarily a community. As Steve said, "we made some good friends," but that's it. Why? Steve suggested it's because the "itch" they were scratching was probably fairly well-localized to DrKW - it wasn't a huge need that lots of people felt.

Was it a mistake, in Steve's mind? No. But it required a lot more work than expected, because it's very difficult to get outside contributions. Marc Fleury addressed this in his opening remarks, as well. Those who take a "If I built it, they will come" attitude are going to fail. Completely. They won't come. Not without a lot of work.

Some of Steve's conclusions, based on the Openadaptor experience:

1. Community development of software is possible at the lower end of the stack as there are fewer design choices to be made.
   
   
2. At an even slightly more complex level such as openadaptor it becomes much more difficult to develop communally.
   
   
3. Highly complex applications will never be able to be developed communually as there is too much scope for religious differences of opinion. [Asay: This is a different riff on a theme r0ml raised at OSCON 2003 and reprised at OSBC 2004 ("(More) Missing Open Source Projects").]
   
   
4. There is scope for open source business software, but the development model will need to be different to that of traditional open source.
   
   
5. Finally, remember the key differentiator between open source and proprietary software is quality, not cost. It is important not to lose support for open source as a whole by overselling what is possible today.

As ever, experiences speaks wisdom. Thanks for sharing with us, Steve.

Are all communities created equal?

Watching the World Cup this year (and yes, I've watched many of the matches - last night's Switzerland vs. Ukraine match took years from my life - it was the essence of boredom), I've been reminded at how differently teams can play the same game. England with its obnoxious long balls into Peter Crouch. France with...well, so far, with nothing. Argentina with its flair and momentum.

Italy, however, takes "difference" to a new level. From today's The Times:

Italy’s method is rooted in pessimism. Ask an Italian whether the glass is half-full or half-empty and he is liable to reply that it is poisoned. Ask an Australian and he will ask if it is a free bar.

The Italian I know best - Fabrizio - is no pessimist (He's taking on one of the most interesting and sexy markets on the planet), but the football/soccer he watches certainly is: Italian soccer is dull to watch. (Sure, not everyone can play like Arsenal, but that's no reason to abandon all hope to Italian football. :-) Heavily defensive with sporadic counterattacks.

Another aspect of Italian football is the incessant, over-the-top playacting. From The Guardian's The Fiver email update:

Since the merest whiff of contact will cause Italians to hurl themselves to the ground claiming to have been brutally fouled, you might as well brutally foul them. Constantly.

All my quips about Italian football aside, they're winning.

Winning matters.

In open source, different projects and companies operate in very different ways, despite the similar "game" we're all playing. SugarCRM has its tiered product model. Alfresco and Red Hat have a certified binary model. MySQL and the-company-formerly-known-as-Sleepycat have a dual license model.

The differences go beyond licensing models, however. Different companies have different deal sizes, different sales models, different communities. And as closed, proprietary companies increasingly seek to partner with open source companies, we'll need to support the added complexity of all the different models associated with these companies. Heterogenaiety is good.

I hope that as we work to provide clear messaging to the market about why open source matters, and how to maximize value from it, we won't forget that differences are good thing in software, just as they are in soccer/football. This is our strength.

Simon Phipps on "The Zen of Free" (OSBC London)

Simon Phipps, Chief Open Source Officer for Sun Microsystems, is keynoting today's OSBC London, which has turned out quite well. (I didn't know what to expect from this show, given that I didn't organize it or do the heavy-lifting on the content. Informa has done a fantastic job. Glad to see I'm irrelevant.) He's addressing the topic of different open source business models.

He said a few things I found important and interesting.

1. Open source gives you a way to "hire" developers without actually hiring them. Not because you don't want to hire them, but because you can't hire them, because they don't want to work for you (or whatever). You leverage the self-interested motives of these developers by tapping into their development projects.
   
   
2. Synchronized self-interest. Related to the above, open source doesn't work because it's selfless and loving. It works because it's an increasingly efficient free market. The genius of open source is that it is "connected capitalism" (as Simon said).
   
   
3. Software (Market) 3.0. The software is already "just there." You assemble/select it as needed. You pay for software at time of value (when needed). Simon argues that we need to shift away from a "right to use" model in software, and toward a value model - targeted "bundles of value" to specific vertical market segments.
   
   
4. "In the world of open source software, everything is free to someone, and nothing is free to everyone." This seems like an astute observation to me. I may have a customer that needs to buy support, but doesn't need help with implementing. Everyone, somewhere, will pay. They may not pay me, but they will pay someone.

Great stuff, Simon. Another reminder that open source is as close to free market capitalism as we've had in software...ever.

Red Hat's partner ecosystem: Upbeat but not ecstatic?

Forbes recently ran an article on Red Hat's prospects, as viewed by its partners. A few key findings emerged from the 130-partner survey:

1. Most [partners] were upbeat and expected their Red Hat business to grow by more than 31% in the 2006 calendar year, lower than Banc of America's own revenue growth estimate of 35%. [Asay note: Red Hat has become a key partner of Alfresco and other open source applications companies....I wonder if our collective growth estimates would exceed 35%? I expect they might.]
   
   
2. Red Hat's partners are excited but still ignorant about the JBoss acquisition. The company is going to need to invest in partner education to help explain the rationale and product strategy going forward.
   
   
3. 35% of the survey respondents said [that pricing pressure] was the greatest risk to Red Hat's revenue stream. More than 50% of them said pricing for Red Hat's enterprise version of Linux, REHL, had to come down or face pressure from customers later on.

This last issue is exceptionally interesting. It likely means a few things. One is that Red Hat needs to continue to add value to its core business. Operating systems are nice, but application servers add a lot of value. What's next?

Also, this price pressure may mean that Red Hat's initial pricing is probably on par or perhaps even higher than proprietary vendors'. Is this a good thing? Of course it is, because it would mean that Red Hat has managed to move the conversation out of "Open source is nice because it's cheap" land and into "Open source is great because it's more robust, faster, more secure, etc. And you should be happy to pay for that quality."

After that first year (or two), customers are demanding even more from Red Hat. If Red Hat has shown anything, it's that the company knows how to deliver value. Red Hat can handle it.

MySQL: The database Maverick

Jason Maynard of Credit Suisse First Boston, enfant terrible of the software analyst community (well, if you're a proprietary vendor, anyway), is at it again. He's got a great "Mavericks vs. Microsoft" series going, with a June 23, 2006 report coming from a call with Marten Mickos, CEO of MySQL. He makes some interesting points, including:

1. Currently a private company, MySQL is...the world's most popular open source database with more than 8 million active installations.
   
   
2. The primary revenue stream for the company comes from the conversion of free downloads of its database product into support contracts. So far, the conversion rate to paying customers runs about 1 for every 1,000 downloads. MySQL’s database has been downloaded close to 100M times since it was released. To date, only about 100,000 downloads have resulted in a paying service and support contract, leaving a relatively large potential opportunity for the company. We think the company can achieve a better download to paying customer ratio as the functionality and support offerings improve over time. In addition to the revenue stream coming from support contracts, the company sells an embedded license to those customers who embed the MySQL database in its own products. This second revenue stream is much smaller than subscription revenues. [Asay note: This is surprising, as I had heard (I thought from the company itself) that OEM revenues were close to 60% of total revenues. Need to check on this.]
   
   
3. MySQL has grown sales over 100% a year for the last 5 years.
   
   
4. The company is not focusing on competing directly with vendors like Oracle and IBM. Instead, MySQL is deriving growth from the rapidly expanding number of Web applications and Web 2.0 online businesses. The company centers its development and sales efforts on these emerging segments because they are more cost sensitive and have unique requirements around ease of use and simplicity.
   
   
5. According to Gartner and IDC, the database market...totaled about $14B in 2005. The market is dominated by the three primary infrastructure vendors, Oracle with about 48% market share, Microsoft with 15% share for its SQL Server product, and IBM’s DB2 with 22% share. Over the last year Linux database servers and Microsoft’s SQL Server had the strongest momentum, according to Gartner. The three largest vendors, Oracle, Microsoft, and IBM, have a substantial installed base in existing ERP applications and transactional business applications from which they derive a significant amount of maintenance and support revenue. In our opinion, Oracle is gaining share at the high end of the market from IBM while Microsoft and upstarts like MySQL are fighting it out in a number of lower end segments.
   
   
6. MySQL’s emergence as a new player in the database market is significant because its focus, ease of use, and business model has enabled it to tap into an underserved market. We think MySQL, and the LAMP stack in general, are building a presence as a viable solution for rapid deployment, and as a result are emerging as a roadblock to Microsoft’s enterprise ambitions.

It's great to see the company doing so well. Marten and team recognize that they have to fight a different war - on its terms. Smells to me like they're winning it. Go get 'em, Marten!

Thinking (and eating) different

The Wall Street Journal ran one of the interesting articles I've read in a long, long time. About Applebees, the United States' 9th largest restaurant chain. I hadn't thought much about Applebees until I read this - it's not my kind of place.

But it's apparently perfect for a huge swath of Middle America:

The Friday night crowd at the Applebee's in Hays, Kan., is so robust that nearly a dozen parties are waiting outside for tables. There are families, old folks, and young singles like Anne Speier and Rhonda Eckler, who're downing cocktails at a table near the window. "We just got paid and wanted to splurge a little bit," says the 25-year-old Ms. Speier.

Choosing Applebee's is easy in a place where there's little other choice. There is no Chili's. No Houlihan's. Not even a Bennigan's. In this community of roughly 21,000, Applebee's is the only brand-name casual dining restaurant.

The scene in Hays helps explain why Applebee's International Inc. is the star of the $440 billion restaurant industry. While competitors battle for space in the parking lots of suburban shopping malls, the Overland Park, Kan., chain is entering rural markets that never before boasted an upscale restaurant -- or at least one that passes for upscale hereabouts.

The rural-market strategy is part of Applebee's larger effort to be America's restaurant. Its roughly 1,600 units, the majority owned by franchisees, already make it the undisputed king of the industry's fastest-growing segment, casual dining. But Applebee's wants more. It wants its red-apple logo to be as recognized as the golden arches of McDonald's Corp. It wants to be the nation's most profitable restaurant chain....

Meanwhile, Applebee's is becoming something in small towns that it never did in large suburbs: a vital cog in the community. Applebee's managers are viewed as leaders in many small towns, often welcomed with a picture on the local newspaper's front page. The restaurants become places where high school seniors take post-prom dates. Garden clubs meet there, too. "Applebee's becomes a cultural piece of the community, and so this has been a wonderful strategy," says Mr. Lumpkin.

Think about this in the context of software. If you're a startup, you can compete against the BigCos by doing what they do better (and lose most of the time, because it's just too much of a pain to buy from a new vendor), or you can compete by doing what the BigCos do differently. Or, rather, selling/distributing/developing in some fundamentally different way.

Applebees could go out and fight head-to-head with Chilis, etc., and it does. Applebees competes in the metropolitan markets with all of the big chains. Even here, however, the company does it differently, Fast Company reports: they concentrate restaurants in these areas, rather than spreading them out, not fretting about cutting into each other's territory.

But the growth Applebees is experiencing is due to its rural strategy. It's going where it's competitors aren't. It's creating restaurant markets which had been without. And it's raking in the cash as a result.

Open source companies shouldn't waste time with RFPs. They shouldn't over-invest in a direct field sales force. They should bring value back to support (it's considered a necessary evil in most software companies - for open source companies, it's lifeblood). Etc.

Be different. Win by fighting open source's battle. Not the proprietary vendors'.

Open source: the path to development savings

I was on a customer call with Kevin Cochrane today and a customer prospect. The prospect wanted to know how big Alfresco's development staff is, which we were happy to tell him (open source companies tend not to keep silly secrets): 15. (Not everyone is on the site, for some reason, both developers and non-developers, but whatever.)

"15? Isn't that small?"

Kevin's answer was classic. In his experience at Interwoven (similar to mine at Lineo and even Novell), the vast majority of "developers" within a company are not core developers at all. They're people writing drivers, doing QA, etc. In an open source company (just as in an open source project), the core development team tends not to scale well beyond 15-25 people. As noted in the link above for open source projects, the vast amount of code production (83% in terms of Linux, Apache, etc.) is done by ~15 people. Very few.

One of the exciting things about an open source company is that you take advantage of highly leveraged development, where the drivers, localization, etc. is done by the community, not your core development team. This means open source companies can spend proportionately less on development while simultaneously investing a lot more in core development.

Net result for the customer: better products, both because the core development team is innovating faster, better, longer, and the "peripheral" development is managed by a development community that reflects the diversity of an industry's requirements. So, no one at Alfresco speaks Italian, but we have great Italian language support because our partners and customers speak Italian. Ditto for Japanese, Brazilian Portugese, etc. Our community shapes Alfresco in its image, while we focus on the core Alfresco platform. Everyone wins.

Except our competitors, of course. Or SugarCRM's. Or Red Hat's. Etc. Their competitors lose. They just can't keep up with lower sales and marketing costs 1, coupled with lower development costs (and higher development investments). Yes, it's unfair. But the proprietary vendors will get over it. Or they'll come work for us. :-)


1 NOTE: See the link for more information on open source sales and marketing costs. One thing I don't talk about in the other entry, however, is that open source sales teams necessary to close a deal - even large deals - tend to be much smaller than in the proprietary world. So, sales costs truly are smaller, even over time.

Talking the talk, not walking the walk

I'm growing a wee bit impatient with the major enterprise ISVs and their alleged support of open source. Oracle has been out in front of they "we love open source" hype, yet the company continually underwhelms on delivery. Last week the company announced "content management for the masses," with accompanying quotes from OpenText calling it a "watershed event." (I think OpenText's chairman needs to review the definition of "watershed event" so that he doesn't persist in misusing it.)

So what do we have in this Big New Exciting Product? A feature-weak, closed source, closed standards CMS. It doesn't even support JSR-170, the minimal baseline for standards in the space, and is egregiously limited in how one gets content into our out of the system. It appears to allow users to have a file, a folder, and have policies one sets on folders. That's it. It would be hard to find many other ECM systems as minimally functional as this.

But Oracle will undoubtedly improve this with time. No, the big slam against the product is its inexplicable lack of support for basic industry standards. OpenText's chairman heralds Oracle's entry into the market because "ECM players such as Open Text have been waiting for systems companies such as Oracle to provide base-level content management so that they can focus on higher level functionality." Guess what, Mr. OpenText: in a commodity market, no one builds on non-commodity foundations. Oracle is giving you (and the "masses," which truly will need to be "asses" to buy into this lock-in) a one-way trip into Oracle databases, from which it will be expensive and time-consuming to get out.

Oracle, of course, is not alone in this, and it's not just an ECM thing. Across the board, we hear from the ERP, CRM, office productivity, operating system, etc. markets that they're getting religion on open source. Yet the big vendors keep piling proprietary, closed-standards products on the market. They talk the talk, but refuse to walk the walk.

If you're an enterprise IT buyer, you need to keep in mind that every time you buy into a proprietary ERP system, or whatever, you are ceding control of your IT to your vendor. You are giving them control over your employees, your data, your productivity. You are allowing a supplier to control your company.

Lest you think this hyperbole, go ahead and get a quotation on what it will cost you to move from Documentum's ECM, or Siebel's CRM, o SAP's ERP. Once you stop crying, start planning ways to build on open platforms in the future.

In our day, thee is no compelling reason to lock oneself into closed source and closed standards. There are compelling alternatives to the enterprise vendors in virtually every product category. You owe it to yourself to be master of your own IT fate, given that IT increasingly provides the backbone and heartbeat of an organization.

This is innovation?!?

I don't understand the Google fetish. BusinessWeek certainly has it. Its latest issue has a cover story called "Champions of Innovation," and Marissa Mayer of Google on the cover.

Why? What has Ms. Mayer, or Google, done (lately) the is even remotely innovative?

Yes, Google search is awesome. But so it was years ago. I would have thought BW would focus on current innovation, not 5-10-year old innovation. (Besides, Google's primary innovation is its original insight that ads marry well with searches. Its search is great, but not necessarily much better than Yahoo's or MSN's.)

Can you name any other Google innovations? Before you sputter out "Calendars! Email! Spreadsheets!!!", let me remind you of the definition of innovation:

1: a creation (a new device or process) resulting from study and experimentation [syn: invention] 2: the creation of something in the mind [syn: invention, excogitation, conception, design] 3: the act of starting something for the first time; introducing something new (Source: Princeton Dictionary)

So, let's run through the Hot New Products that Google has introduced in the past few years, and give them grades on innovation (and utility and polish, while we're at it), keeping in mind that I'm not criticizing Google, but rather the image of Google assigned to it by the media:

1. Search. It wasn't the first, but it's clearly the best. A+
   
2. Orkut (Social Networking) - F (Was there every any need for this? Did anyone ever use it?)
   
3. Picasa (Photo sharing) - D (Acquired, not developed in-house. Tired retread of Flickr, which is better)
   
4. Froogle (Comparison shopping) - F- (Possibly the best idea and worst delivery of anything new Google has done. But it stinks)
   
5. Spreadsheets (Um, spreadsheet) - D (Didn't Microsoft do this much better decades ago? So now it's on the web...who cares? It's not nearly as good as Excel. Certainly nothing innovative about it.)
   
6. Calendar (PIM) - C (A decent product, but not innovative)
   
7. Google Earth - A (Not very useful, but very cool. For about 20 minutes, and then it's time to get back to work and the real world again)
   
8. Google Maps - A- (Pretty cool. Moderately innovative in the ability to scroll maps. But that's really the only innovation.)
   
9. Google Mobile (Text) - C (I love texting Google for answers, but it's hardly innovative. Others have been doing a better job of it for years.)
   
10. Google Hubris - A++

You can find a list of other Google products on its site (the only cluttery thing about Google), no doubt developed during that magical 20% free time Google offers its employees. But you won't find anything innovative there.

Don't get me wrong. I think Google is a great company for what it does well: search. I think it's abysmal at just about everything else. I certainly don't think it belongs on the cover of a BusinessWeek edition highlighting the world's most innovative companies. Like Microsoft, it has done one thing well and will spend at least a decade milking it. Unlike Microsoft, however, it has only done one thing well (search). Microsoft has both Windows and Office for which it can take credit. Google needs to come up with something else.

Perhaps, like Microsoft, it will find that some innovation doesn't come from Stanford PhDs. Because, at its core, the best innovation solves human needs, and not many humans are engineers. It may be time for Google to start "scratching" a wider variety of "itches."

Garbage in...

...garbage out. So goes the adage, and it's true. At no time was it more apparent to me than while watching England stumble to win against Trinidad and Tobago today.

Peter Crouch has talents, but they are not on par with the top footballers' in the world. He barely belongs in top-league football anywhere (even the MLS). He certainly doesn't belong as a starter on England's otherwise excellent team. One year ago, Crouch was limping along with relegation-prone Southampton, and some goofball suggested that he might be a "threat" due to his gangly, 6'7" height for the English National team. Shortly after that, he was made part of the England squad, and then Liverpool picked him up.

And so he has been a threat. To England's chances of winning. He managed to score today, but only after bungling at least two shots that should have been in.

In Crouch manner, some lame open source projects get promoted to the big time by IBM, Oracle, or whomever. A big vendor's support can't turn rubbish into quality, just as Crouch has not improved much by the increased exposure and playing time he's had at the highest levels. Instead, he just exposes his fallibilities the more he plays. Just as weak open source communities look uglier and uglier the more someone gets behind them.

Thus, it was refreshing to see Red Hat give up on JOnAS in favor or JBoss, with Matthew Szulik admitting to Linux Insider:

We are very impressed by the people at JBoss and the technical capabilities of that organization. We think they are superior to the Red Hat Jonas implementation. What we would like to do is take the best from the Jonas implementation and make that available to the JBoss developer team where that makes sense.

We need more candor like that. When an open source project (or proprietary bit of software) proves to be a dog, dump it for something better. Take Crouch out of the game, as it were, and put something better in: something proven (Rooney), something exciting and promising (Walcott). But anything but Crouch.

(Btw, France looked TERRIBLE against Switzerland. I'd find it shocking to find out anyone on the team actually likes each other - they play with zero team spirit. Trezeguet should have played. And Ribery, we (Arsenal) no longer want you. No one cares how well you can dribble - just how well you can slot a pass into Henry or someone else who actually knows how to shoot.)

The GPL, Stallman, and the persistence of evil

I'm in Southern Utah, taking in Zion National Park and a family reunion. In between mountain biking, group hugs, diaper changing, and eating (Asays always eat, no matter where we are or what food is available - we eat a lot), I managed to finish reading Jon Levenson's Creation and the Persistence of Evil. The premise underlying the book seemed interesting, and I figured it might help me understand how Dave Rosenberg manages to exist despite a benevolent creation. :-)

Unfortunately, it's not very interesting reading. Academic to a fault, and dry to the point of sin.

Still, the central thesis is interesting. The best summary comes from a reader's review on Amazon (link above):

...Levenson makes a compelling case for the idea that the act of creation consisted (and consists!) of God's mastering preexistent forces of chaos rather than the simple, unopposed production of something out of nothing--and that these forces were not vanquished but continue to exist under restraints that are subject to fluctuations in God's vigilance. In this view, creation is neither static nor finished but is, as the subtitle suggests, a drama requiring ongoing application of divine attention and energy. And creation was, and is, a process of ordering reality by separating things, by establishing and maintaining boundaries.

In other words, things were not created ex nihilo (which is a poor translation, anyway) but rather ordered out of chaos. A nice bridge to the scientific view of the earth's creation, too, but this is not the place to stir up that silly debate....

Now, lest you find this post overly religious in nature (it's not intended to be), I actually find it oddly familiar to the "creation" of open source. (Yes, I see open source everywhere and no, I will not equate Richard Stallman with God, no matter his St. Ignucius jokes on this subject. :-)

The GPL, to be effective, couldn't have been created ex nihilo. Instead, it had to conform to the existing copyright system. In many ways, it orders that system for the benefit of customers and developers. No, it doesn't allow Microsoft to take without giving back, but that's a good thing, not a bad thing. The GPL, as Eben Moglen beautifully describes [Video] in his Red Hat Summit keynote, is quintessentially American. It, not the proprietary software shams masquerading as "American as apple pie". It is copyleft that looks/feels/smells like free market capitalism.

But to succeed, it had to order the existing intellectual property world. This was Richard Stallman's greatest genius.

Open source, of course, has not "conquered evil." Nor will it if it manages to completely displace proprietary software (which is unlikely), because proprietary software is not evil. It's just chaotic. Inefficient. Weak.

But if you're competing in the market right now, you know that open source has, without question, restructured competition on its terms, and in its image. The question is no longer "Why open source?", but rather "Why not open source?" Customers are asking this question, and there is a growing tide of open source vendors who are ready with exceptional open source licensed-products at the ready.

Over time, more and more vendors will recognize the inherent weaknesses of proprietary software licensing, and will opt for open source. In the meantime, the best vigilance against backsliding into chaos (proprietary software, where interoperability and integration happen either not at all or by subjugation, with sparse middle ground between the two) is winning with open source.

Just be sure to rest on the seventh day. :-)

Microsoft: We love open source! (Wash hands to remove GPL infection)

Peter Galli of eWeek has an interesting article entitled "Can Windows and Open Source Learn to Play Nice?". It's a decent attempt to bridge the (apparent) divide between Microsoft and the open source applications, and other software, that run on Windows.

"Open source is a way of building software and, in its most basic sense, there is nothing incompatible [between] the concept of open source and commercial software.

"But the GPL has an inherent incompatibility that is, to my knowledge, impossible to overcome," Bob Muglia, the senior vice president of Microsoft's server and tools business, told eWEEK in an interview here at Microsoft's annual TechEd developer conference on June 12.

A commercial company has to build intellectual property, while the GPL, by its very nature, does not allow intellectual property to be built, making the two approaches fundamentally incompatible, Muglia said.

Licenses like the BSD (Berkeley Software Distribution) and commercial software, on the other hand, are quite compatible with one another, he observed.

"We are open to ways of working with the open-source community broadly, and even in the GPL space we are trying to find ways in which we can build bridges to GPL, but the bridge has to be carefully constructed," Muglia said.

I think, first off, that Bob needs to drop "commercial" versus "open source." I have to think that Red Hat considers itself very commercial. So, though the nomenclature might suit you, Bob, try using the more accurate term for Microsoft: closed. Proprietary. Whatever. I don't think you view the word as

Secondly, the GPL flap strikes me as much about nothing. Over half the downloads of SugarCRM, JBoss, Alfresco, etc. are on Windows. Not Linux. Not Solaris. Windows. And everything is just fine. No, these are not GPL products - they're MPL or LGPL. But a GPL application could run on Windows with nary a hint of trouble for Microsoft. This is old news. Apparently, Microsoft hasn't been reading the news for the past, oh, six years?

Speaking of "better late than never," it seems that part of this open source outreach has been spawned by a realization that not everyone cares to run on Windows:

The goal, from both sides, is to meet customer needs, he said, adding, "This is just the more mature view of the way the world is evolving, and we want to make sure that if customers are choosing Linux or other open-source-based products that we have ways of interoperating and working effectively with that."

Can I just say, "About time!"? I've been advocating this move for over a year. It's a clear, important strategic move. But it has apparently been lost in the glaciers of Redmond. I credit Bill Hilf (and Jason Matusow, before him) with getting this moving. The next step, of course, is to help open source projects/companies interoperate with Office, and not merely Windows/IIS/SQL Server. Anything can run on Windows - that's easy, and only marginally interesting. For open source applications companies, integration with Microsoft applications is the higher value partnership.

I genuinely think Microsoft wants to cooperate with the open source world. Not because it is generous, but because it is in its shareholder interest to do so. This is the right motivation for any corporation. It still has a lot to learn but, then, so does the open source world.

One thing that I wish is that Microsoft would cast aside some of its cherished positioning. Some of it was noted above, but here's a final one that drives me crazy:

...[I]ntegration is tough in a distributed environment, and architectural boundaries have to be set up between components, which is a good thing, he said. Now Microsoft plans to do as much of that as it can in the future.

Open source, on the other hand, historically has had a tough time building integrated solutions in that distributed fashion, Muglia said, and, "Our customers demand that from us. So there are certain things we have to do that are core to our development and our customers that we can't learn from open source because they are not doing that."

The (major) quibble I take with Bob's statement is that the kind of integration he's talking about only works between Microsoft products (and even then not very well much of the time) - the rest of the world has understood "distributed integration" for some time, because we live in a heterogenous world. Welcome to it, Microsoft: glad to see you may have to play by the rules the rest of us live by, now that you're winning a lot less often than before.

Come on in. The water is fine. Just don't mind the sharks. :-)

52.5% will wait on Vista

Well, actually, 100% of the world will wait on Vista, because it's always on the horizon...never quite getting here.

According to an article in SearchSecurity.com, there are a myriad of reasons for this. Most interestingly to me, though, is that many of these same IT professions surveyed seem to have no hard-and-fast aversion to Microsoft products at all. The delay in their adoption seems to be similar to their past delays in adopting Microsoft (and any other new) products:

When Windows XP Service Pack 2 (SP2) was released nearly two years ago, most IT professionals said they were worried about compatibility problems and that they'd wait a while before deploying it in their enterprise.

The full release of Vista, the next big upgrade for Microsoft's operating system, isn't due out until early next year. A new survey though suggests Vista is already being viewed with skepticism similar to what was directed at SP2 in 2004.

According to a survey by Boca Raton, Fla.-based Amplitude Research conducted on behalf of Albuquerque, N.M.-based security firm VanDyke Software, more than half of respondents said they have no plans to deploy Vista when it comes out, despite all of the security improvements that Microsoft says will be baked into the operating system.

Amplitude culled the information after surveying 255 network and system administrators last month from a variety of industries. The enterprises also varied in size. Of those polled:

• 10.98% are testing the limited beta version of Vista.
  
• 19.21% are waiting until the public beta release to begin testing.
  
• 25.49% are waiting until the official release to begin testing.
  
• 5.09% have plans to deploy after successful completion of beta testing.
  
• 20% will deploy after successful completion of testing of the official release.
  
• 11.37% will deploy after Service Pack 1 for Vista is released.
  
• 11.37% will deploy only on new PCs with Vista pre-installed.
  
• 52.15% said they have no current plans to deploy Vista.

Of those who do plan to test or deploy it, 58.33% said their primary interest in Vista is its "enhancements," while 30.12% cited "improved usability."

To those of you interested in Vista's "enhancements," I'd recommend you get Macs. You'll get double the improvements in stability, ease of use, etc., and infinitely more security.

To Microsoft, I'd heartily recommend you do with your product what (increasingly) everyone else does when they want to make it secure: open source it. Sure, this is a naive statement for a company that has been the poster child of Proprietary, but you would boost trust, arguably find a wider, deeper array of bugs before (and after) general release, and a more efficient distribution mechanism.

Try it. You'll like it. Even Mikey likes it.

Gartner: Open source applications are hot

For those of us deep in the open source applications business, this is not news. But for those who still think we're light years away from open source applications going mainstream, you need to jump ahead with your handy-dandy time machine. The future is already here. Thus reports IT Week:

Speaking ahead of next week’s Gartner Open Source Summit in Barcelona, the research firm’s Nikos Drakos predicted a new wave of programs beyond the relatively mature open-source operating system, development tool and database sectors.

These will include collaboration, portal, content management and business intelligence tools, said Drakos. “Open source is moving beyond infrastructure,” he added. “There’s already a lot of fairly mature and popular products in middleware, operating system and programming tools and on top of that there’s various bits and pieces in process repositories, search engines, database drivers and templating tools. It takes a lot less effort to think about portals and content management systems and there is now a basis on which high-value tools can be developed.”

Drakos pointed to examples of companies such as Zimbra in messaging, SugarCRM in customer relationship management and Alfresco in content management.

He's right. I can say from my own experience that enterprises - both big and small - are moving heavily into open source applications. No better time than now to capitalize on the interest in open source with the excellence of open source.

Off-topic: Why Americans don't like soccer

A friend sent me this very funny article from Slate (by Mark Eggers), about why the United States persists in being oblivious/ignorant of soccer. I'm excerpting a little of it here (the article, btw, is just an excerpt from a larger book - worth buying/reading):

Our continued indifference to the sport worshiped around the world can be easily explained in two parts. First, as a nation of loony but determined inventors, we prefer things we thought of ourselves. The most popular sports in America are those we conceived and developed on our own: football, baseball, basketball. If we can claim at least part of the credit for something, as with tennis or the radio, we are willing to be passively interested. But we did not invent soccer, and so we are suspicious of it.

The second and greatest, by far, obstacle to the popularity of the World Cup, and of professional soccer in general, is the element of flopping. Americans may generally be arrogant, but there is one stance I...stand behind, and that is the intense loathing of penalty-fakers. There are few examples of American sports where flopping is part of the game, much less accepted as such. Things are too complicated and dangerous in football to do much faking. Baseball? It's not possible, really - —you can't fake getting hit by a baseball, and it's impossible to fake catching one. The only one of the big three sports that has a flop factor is basketball, where players can and do occasionally exaggerate a foul against them, but get this: The biggest flopper in the NBA is not an American at all. He's Argentinian! (Manu Ginobili, a phony to end all phonies, but otherwise a very good player.)

But flopping in soccer is a problem. Flopping is essentially a combination of acting, lying, begging, and cheating, and these four behaviors make for an unappealing mix. The sheer theatricality of flopping is distasteful, as is the slow-motion way the chicanery unfolds. First there will be some incidental contact, and then there will be a long moment - —enough to allow you to go and wash the car and return - after the contact and before the flopper decides to flop. When you've returned from washing the car and around the time you're making yourself a mini-bagel grilled cheese, the flopper will be leaping forward, his mouth Munch-wide and oval, bracing himself for contact with the earth beneath him. But this is just the beginning. Go and do the grocery shopping and perhaps open a new money-market account at the bank, and when you return, our flopper will still be on the ground, holding his shin, his head thrown back in mock-agony. It's disgusting, all of it, particularly because, just as all of this fakery takes a good deal of time and melodrama to put over, the next step is so fast that special cameras are needed to capture it. Once the referees have decided either to issue a penalty or not to our Fakey McChumpland, he will jump up, suddenly and spectacularly uninjured - excelsior! - and will kick the ball over to his teammate and move on.

American sports are, for better or worse, built upon transparency, or the appearance of transparency, and on the grind-it-out work ethic. This is why the most popular soccer player in American history is Sylvester Stallone. In fact, the two greatest moments in American soccer both involved Sylvester Stallone. The first came with Victory, the classic film about Allied soccer-playing POWs, and the all-star game they play against the Nazis. In that film, Stallone plays an American soldier who must, for some reason - —no one can be expected to remember these things - replace the goalie on the POW team. Of course, Stallone knows nothing about soccer, so he must learn to play goalie (somewhere, Moron McCheeby grins triumphantly). Stallone does this admirably, the Allies win (I think), and as the crowd surrounds them, they are hidden under coats and fans and sneak away to freedom.

The second most significant moment came when the World Cup came to the United States, in 1994. It is reported that Stallone attended one of the games and seemed to enjoy it.

It's inevitable, given the way the U.S. teams are improving every year, that eventually we will make it to the semifinals of the World Cup, and it's likely, one would think, that the United States will win it all in the near future. This is a country of limitless wealth and 300 million people, after all, and when we dedicate the proper resources to a project, we get the job done (see Vietnam, Lebanon, Iraq). But until we do win the Cup - and we have no chance this particular time around, being tossed into the Group of Death, which will consume us quickly and utterly - soccer will receive only the grudging acknowledgement of the general populace. Then again, do we really want - or can we even conceive of - an America where soccer enjoys wide popularity or even respect? If you were soccer, the sport of kings, would you want the adulation of a people who elected Bush and Cheney, not once but twice? You would not. You would rather return to your roots, Communist or otherwise, and fight fascism with your feet.

Despite American transparency - an open source trait if I ever saw one - it remains true that Europe, not the United States, has given birth to the majority of successful open source projects. I've yet to see Marten Mickos "flop," but maybe he saves it for home.

"Marten, hunaja , jälkisäädös te haluta ajaa rikki jätteet?" ("Marten, honey, will you please take out the garbage?")

"Ouch! Minun housunlahje on hajalla!" ("Ouch! My leg is broken!")

It could happen.

The Walking Dead

I'm reading through an excellent JMP Securities research note called "Turning the Software Model Upside Down: The Proliferation of Open Source." [Subscription required.] It's a good overview of the open source business phenomenon - the how's and why's open source is increasingly dominating software - but I particularly like its analysis of proprietary vendor's likely responses to open source:

• Proliferation of enterprise license agreements ("ELAs"”). Large enterprise software vendors such as Oracle Corporation, Microsoft and IBM may aggressively pursue ELAs with customers. Our due diligence suggests Oracle has employed this practice over the past few years. ELAs reduce the cost advantages of open source software since they are often structured as "“all you can eat" type of deal. Effectively the marginal cost of deploying proprietary software goes to zero in some cases, reducing the cost advantages of open source software.
  
  
• Free software offerings from enterprise software vendors may crimp the low-end. Free versions of proprietary software products could slow adoption of open source software at the low end of the market. IBM, Microsoft and Oracle, for example, have all released free versions of their database products. As mentioned previously, Sun has gone a step further and open sourced a significant portion of its product line.
  
  
• Savvy strategic moves. Oracle's recent purchase of InnoDB and Sleepycat illustrates the potential for proprietary vendors to slow the progress of open source software products through savvy strategic moves. With these purchases, Oracle now owns two of the most popular transactions engines that plug into MySQL database, not a trivial matter.

For the record, there have been very few "savvy strategic moves" by the big proprietary vendors. Generally, their response has been "Huh?" In CRM, ECM, ERP, and various application markets, the big vendors have reacted to open source with indifference or scorn, just as the operating system, database, application server, and web server vendors did before them. This is one reason it's so much fun to compete against the FileNets and Documentums and SAPs of the world - they have no idea how much they're being hurt, and won't until it's too late to stop the rising tsunami. I'm reminded of a great new Morrissey song:

You have killed me, you have killed me.
Yes I walk around somehow,
But you have killed me, you have killed me.

It will take a long, long time for these companies to dwindle, but they will. Maintenance contracts will slowly peter out over 5-10 years; customers will hang on as long as they possibly can. And then the vendor will capitulate to open source - far too late - or die fighting it.

Capitulation, incidentally, is not easy. JMP has a great chart (below) showing just how hard it is to make the transition to open source.

Basically, the only vendor that looks good on the comparison of company valuation to percentage of revenues derived from open source is the one company with a pure-play open source strategy: Red Hat. I think there's a potent lesson in this.

Keep in mind that there's a LOT of money in open source going forward. So you don't want to fetter your ability to share in it. Here's the total market:

And here's where those dollars are going:

"Other" includes applications, among other things. It's a great time to be in open source.

Don't go half-way on open source. This will be the natural tendency of big, proprietary vendors. Your best first bet is the ELA strategy noted above. It's a great way to lock-in your customers - not great for them, of course, but since when have proprietary companies cared about that? In my world, they're using proprietary ECM repositories to lock in content/data and, hence, the customer. It's a good tactic, though it's only a temporary stopgap.

Eventually, unless you go open, you'll go under. Sorry about that. It's one of those harsh realities.

In case you're American and didn't know...

...the World Cup starts this Friday. Please don't call me until July.

By then, one of my teams - England (Did my graduate studies there) or France (Lived there for 2 years) - will have trounced Italy, embarrassed Brazil, and walloped the USofA. (Yes, I am a traitor when it comes to football. Because life is too short to watch bad football/soccer.)



Besides, my family comes from France and England, originally. I always knew I had a striking resemblance (pun intended) to Thierry Henry.

OSBC News: One Big Happy Conference

I have some good news and some even better news. First, the good news: after talking with a wide range of former and prospective attendees, we've decided to return to the Open Source Business Conference's roots and only offer one show per year. We had a great Boston event last year (with nearly double expected attendance), but we've worried that we weren't serving our market well by attenuating OSBC between two US events. A good conference is always about hallway chatter and networking, and splitting the event was counterproductive to this goal.

We've therefore decided to consolidate the US shows into one mega-show (this is the "better news"), the way O'Reilly has always done with OSCON. The next Open Source Business Conference will therefore be



OSBC continues to be the premier event for discovering and creating the future of open source as a business phenomenon (a perfect complement to OSCON as the premier open source development event and LinuxWorld as the top open source solutions showcase). At OSBC IT buyers get to see the latest, greatest open source companies and investigate their offerings, as well as learn how to manage open source from a legal and cost perspective. One Fortune 500 senior architect told me

"[T]his was probably the best conference that I have attended ([Our CIO] concurs with me on this point)....The message that [my CIO] got was that open source is grounded in business with the appropriate drivers and motivators and is not a fad. I have two or three others that I'd like to see attend from xxxxx."

Another from a Fortune 100 financial institution told me that it's "The best open source conference, period." And I heard this from a top open source CEO:

"This is an important show. There are plenty of open source conferences, but no other osBc [as in Business] - that'’s important."

Of course, I agree, but then I'm biased.

Between now and May we'll be scouring the planet for the best and brightest. We'll also plan on having fewer panels in the future, a better way to demo (the 5-minute pitches didn't work), continued growth of the Startup Showcase (which has been a huge hit), and more Clayton Christensen-like keynotes. Thanks to all who provided feedback. It's going to be the biggest and best OSBC yet.

In the meantime, I'm happy to report that OSBC Europe (June 27-28) has been a runaway hit. Frankly, I'm surprised. I didn't think we'd get much sponsor and attendee interest, but the inverse is true. Things are going so well there, in fact, that we're looking at doing several more international events. No Boston this year, but be watching for shows in Asia-Pacific, South America, and the Fatherland. Still TBD, but we're surprised and excited by the positive international response.

Novell: Better than it appears?

Sarah Lacy at BusinessWeek has a good article on Novell, including a short interview with Ron Hovsepian. Novell has been struggling to convince Wall Street that it's turning the corner on Linux sales. While I was there, I definitely saw an upswing in interest from corporate IT buyers. Ron Hovsepian was behind that.

Here's a choice snippet:

What is it about Novell? It never seems to get the benefit of the doubt on Wall Street?

I don't think we've earned that right. In the past five to six years, the company has not delivered, and it has made a lot of promises. I have been manically focused on delivering. I told them what we'd do first quarter, and we delivered on that. I told them on the second quarter, and we delivered on that. I would have liked it to be more on both quarters, but I am on a path with this team to deliver on commitments. It's really important to build up that credibility over time. Until they see a trend of three or four quarters where we deliver on what we said we'd get done, I don't think we've earned the right yet.

Are things at Novell better than it appears from the outside?

Absolutely. Our core Linux business grew 20% quarter-over-quarter. Why? Our strategy is different than Red Hat's. They are approaching this as an edge server play, and it's an enterprise play. [In other words, Novell sells Linux as part of large company-wide deals, not just to run on individual servers.] We are making extra investments in Linux on the desktop and [products for retail] point of sale and banking that we think are going to be very successful. Desktop revenue grew 100% last quarter. Granted it's still a small sub segment. Customers want to buy an enterprise story [that includes] servers, desktops, and all those pieces. We are focusing the company on building that strategy. Target (TGT) picked us over Red Hat, and they picked us because we had an enterprise story.

What about Red Hat? They had a great run last year, then surprised and delighted analysts again by doing the gutsy acquisition of Jboss (see BW Online, 04/11/06, "Red Hat's Red-Hot Deal"). How does that affect you?

I think it'll have a positive impact on us, but that will be seen over time. We've really focused on what we do well: dealing with mixed environments (where there's Linux and traditional software). What Red Hat did (when it bought Jboss) was poke IBM and Oracle right in the eye and said: "We're going to go after this application server market."

Novell's future depends on Ron being right about the "holistic" enterprise Linux strategy being the right one. Today, "edge servers" seem to be doing just fine for Red Hat....

The Re-education of Enterprise IT buyers

Enterprise software pricing is one of open source's biggest opportunities...and biggest headaches. On the opportunity side, it's a huge amount of fun to compete against the bloated, unconscionable prices of my proprietary competitors. There simply is no reason for an enterprise IT buyer to pay so much for so little.

On the "headache" side, enterprise buyers (not being foolish folks) recognized the disparity between cost and value some time ago, and have been demanding hefty discounts. (Because license fees are just Monopoly money anyway, enterprise software companies have heavily discounted them as much as 80%, anyway, to win deals and gain market share, as PeopleSoft did when competing with Oracle, as just one example.) The bad news for open source companies is that IT buyers don't generally immediately recognize the difference between proprietary vendors' funny money and the lower-margin, higher-value support and service-based prices open source companies offer.

Hence, open source vendors should go into a deal with a firm grasp on what their proprietary competition will likely offer. The best place I've found to gather pricing information is GSA Advantage. It has discounted (typically, ~10%) pricing that vendors use to sell to the US federal government. True, it won't show you the actual deal a proprietary vendor is quoting a prospect, but you can generally assume the proprietary vendor won't cut its prices (much) more than 50% on any given deal, especially with the consolidation in the market (as this article notes).

Once you have your competition's prices in hand, you need to help customers recognize the different pricing models. Their upfront license fee? $500K (or whatever). Yours? $0. Their ongoing support/maintenance fees? Typically 18-20% of the upfront license fees. (SAP is currently experimenting with different tierings of support at different rates. Looks interesting.) Most open source pricing tends to be cheaper than even the support/maintenance charges from proprietary vendors. Call it out. IT buyers need to see that there really is no meaningful price comparison between most open source products and proprietary products: open source from established vendors is simply better software at an almost criminally low price.

With this established, there needn't be much haggling over price. Unfortunately, on your bigger deals, there will be, because enterprise salespeople have taught enterprise buyers to distrust vendors and expect a high initial quotation to be dickered down. It will take 1-3 more years for buyers to recognize the value they're getting at the outset with an open source vendor, but it will come. In the meantime, expect negotiations.

Just don't discount your support/maintenance fees too low - after all, unlike in a proprietary deal where discounting means cutting a bloated 85-90% margin on a product (and maybe some sales commissions), discounting in the open source world quickly cuts into the support/engineering resources necessary to service the customer.

Your primary value isn't your price, anyway: it's in better software. Hold to that.

Humble pie and OpenOffice

I just upgraded my NeoOffice to the 2.0 alpha (PPC), and when I went to save my document in .sxw, it asked if I wanted to save it in .odt instead. So I did. Nothing disagreeable happened. My document is still intact. I then saved it into Microsoft Office's .doc format, and back into .odt. Beautiful. When I did the same thing with a PowerPoint file, I had a minor error with one of the graphics in my presentation, but it was otherwise perfect. Not a single font change. (For me to admit this is very telling - I've long deprecated Open Document Format.)

The bigger surprise for me was the marked difference between NeoOffice 1.1 and 2.0. Patrick has done a phenomenal job translating OpenOffice to the Mac. I'm now convinced that I can use OpenOffice on my Microsoft Office documents without any concerns as to compatibility. (Keep in mind: I'm VERY finicky about file compatibility, and not price sensitive on the cost of the office suite. I wouldn't say NeoOffice/OpenOffice is better than Microsoft Office. It's not. But it's now a pretty slick clone.)

Is it manna from heaven? No. But is file compatibility darn-near perfect? Yes.

Now will you leave me alone, Sam? :-)

The only good management theory is practice

I was an English major turned International Relations graduate student turned juris doctorate student (i.e., law student). Now I'm in business, and it's funny to remember back to what Plato and virtually everyone I read in literature/philosophy thought of the merchant class: not much. Meaning, merchants might well be a necessary evil, but you wouldn't actually want to be one of them.

So now I'm a "merchant," and love it. I do find, however, that most of the management theory out there is absolute drivel.

I'm not alone. Matthew Stewart has a funny, sometimes insightful piece in this month's The Atlantic on management theory, and what those MBAs learn in their two years at school. Very little, according to Stewart, which is in keeping with my friends who went to Harvard, Stanford, and the other "elite" schools.

(Btw, you can read Nick Carr's commentary on Stewart's piece here. He doesn't like management theory, either. Paul Kedrosky may not, either, but he hates Stewart's piece. Oh, well. Paul is wrong, but his occupation sort of forces him to pretend there might be something to the styrofoam MBA. Sorry, Paul. :-)

Stewart writes:

After I left the consulting business, in a reversal of the usual order of things, I decided to check out the management literature. Partly, I wanted to “process” my own experience and find out what I had missed in skipping business school. Partly, I had a lot of time on my hands. As I plowed through tomes on competitive strategy, business process re-engineering, and the like, not once did I catch myself thinking, Damn! If only I had known this sooner! Instead, I found myself thinking things I never thought I’d think, like, I’d rather be reading Heidegger! It was a disturbing experience. It thickened the mystery around the question that had nagged me from the start of my business career: Why does management education exist? (80)

Stewart then goes on to sort through the history of management education, but I liked his article less for what it says, and more for what it reminded me of. First of all, business is about relationships and experience. Neither can be taught.

Management theory (at least the books I've read, and I'm ashamed to say I've read quite a few, including the canonical Porter books, which put me to sleep) tends to be about truisms:

...[M]uch of management theory...is at its core a collection of quasi-religious dicta on the virtue of being good at what you do, ensconced in a protective bubble of parables (otherwise known as case studies)....The thing that makes modern management theory so painful to read isn’t usually the dearth of reliable empirical data. It’s that maddening papal infallibility. Oh sure, there are a few pearls of insight, and one or two stories about hero-CEOs that can hook you like bad popcorn. But the rest is just inane. Those who looked for the true meaning of “business process re-engineering,” the most overtly Taylorist of recent management fads, were ultimately rewarded with such gems of vacuity as “BPR is taking a blank sheet of paper to your business!” and “BPR means re-thinking everything, everything!”

Each new fad calls attention to one virtue or another—first it’s efficiency, then quality, next it’s customer satisfaction, then supplier satisfaction, then self-satisfaction, and finally, at some point, it’s efficiency all over again. If it’s reminiscent of the kind of toothless wisdom offered in self-help literature, that’s because management theory is mostly a subgenre of self-help. Which isn’t to say it’s completely useless. But just as most people are able to lead fulfilling lives without consulting Deepak Chopra, most managers can probably spare themselves an education in management theory. (82, 84)

Even when such dicta is culled from valid, valuable experience, it's rarely something that can be transmitted to others. In my small corner of the world, I can tell people what it's like to run an open source company, but until you are a quarter away from hitting the wall unless you can turn downloads into dollars, it's all just...theory.

So what should we be reading instead, if anything? I think Stewart's (mostly) dead-on:

According to my scientific sampling, you can save yourself from reading about 99 percent of all the management literature once you master this dialectic between rationalists and humanists. The Taylorite rationalist says: Be efficient! The Mayo-ist humanist replies: Hey, these are people we’re talking about! And the debate goes on. Ultimately, it’s just another installment in the ongoing saga of reason and passion, of the individual and the group.

The tragedy, for those who value their reading time, is that Rousseau and Shakespeare said it all much, much better. In the 5,200 years since the Sumerians first etched their pictograms on clay tablets, come to think of it, human beings have produced an astonishing wealth of creative expression on the topics of reason, passion, and living with other people. In books, poems, plays, music, works of art, and plain old graffiti, they have explored what it means to struggle against adversity, to apply their extraordinary faculty of reason to the world, and to confront the naked truth about what motivates their fellow human animals. These works are every bit as relevant to the dilemmas faced by managers in their quest to make the world a more productive place as any of the management literature. (86)

I'd take this one step further, and argue that we're much better off reading Dickens or Popper than we are Malcolm Gladwell and the other pretender-theorists.

In summary, management theory isn't going to get you far in actually becoming a good businessperson. You don't need business orthodoxy - you need business orthopraxy. Practice. Experience.

Along the way, if you want an MBA, get one. It certainly helps since most of the people hiring you will have one, and it's somewhat of a rite of passage. But if you'd rather study law, like 10.8% of the S&P 500's CEOs, do so. Or philosophy (as Stewart suggests), or English, Mathematics, or whatever. (Only 38% of the S&P 500 CEOs have an MBA, according to SpencerStuart.) The critical component is experience, and learning personal lessons from that experience. You can't replicate such experience in any classroom. But I prefer to apply lessons learned from Trollope to open source than truisms from Gladwell.

At least Trollope intended his books to be fiction.

Ho-hum piece from Foreign Policy

Back in my international relations days, reading Foreign Policy and Foreign Affairs was an imperative. And yet I never found Foreign Policy to be nearly as informative as Foreign Affairs.

Unfortunately, I must report that FP's coverage of software is even worse than that of international relations, if this piece by Caroline Benner of the University of Washington is any indication. Benner rightly points out that governments moving to open source should be thoughtful, not knee-jerk, in so doing. But that's about all she manages to say, and not as well as others before her.

Here's the best section from the piece:

...[G]overnments tend not to like software they can’t audit for trapdoors that would allow an outsider access. Many countries also argue that open source is better than proprietary software at adapting to local needs, because you can change the behavior of the program by changing its code. With tiny budgets to spend on foreign-produced information technology and little infrastructure to create their own, open source looks like an attractive way for poor nations to gain access to the information age.

Trouble is, the benefits of open source are not always so clear-cut. Software is too complicated a creation to be captured in rhetoric, and assertions about some of the technical benefits of open source fail to tell the whole story.

Consider the issue of security. In a 2002 letter to Microsoft, Peruvian Congressman Edgar David Villanueva Núñez noted that, “Relative to the security of the software itself, it is well known that all software (whether proprietary or free) contains ‘errors’ or ‘bugs’ (in programmers’ slang). But it is also well-known that the bugs in free software are fewer.” Yet, ask computer security experts and they’ll tell you that’s not necessarily true. Software, with its millions of lines of code, is so complicated that experts don’t know for sure that open source has fewer bugs, nor can they say with certainty that having fewer bugs makes open source more secure. “There are really two reasons that it is very difficult to know whether software is secure,” says Stanford University computer scientist Alex Aiken. “The first reason is that even the simplest software program consists of hundreds of thousands to millions of parts, and potentially all of these have to be correct, or the system may have security vulnerabilities. The second reason is that we have no technology for systematically checking that the parts are correct and fit together in a way that ensures security.”

In this section and throughout the short article, however, Benner misunderstands the security benefits open source offers. It's not that open source is inherently more secure - it is, after all, just software that someone has written, just as proprietary software is.

The real difference is in the visibility both "good guy" developers and hackers have into the source code. If someone cracks a security flaw in Linux, for example, I don't need to wring my hands and wait for Microsoft to fix it (at their leisure, and when it's good for their quarter). Instead, any active Linux user with competency can report and/or fix the problem. It is the breadth of the developer population available to fix a problem - 24 hours/day, 365 days/year - that is arguably open source's great security asset.

Sure, you might counter, this is true of the "big projects" like Linux and Apache. What about the others? Well, for these others, they don't face the same malevolent hacker threat, in the first place. In the second place, even with 200,000 downloads, as an example, my own company gets plenty of outside feedback (from customers, prospects, and partners) on our code. It's enough for our needs. In short, the security community scales with the security threats in open source.

Benner questions other open source benefits - like the flexibility to tailor software to local requirements - but while her caution is welcome, it's not particularly interesting. Of course, no one should blindly adopt open source. By the same token, no one should blindly stay with proprietary software. Both have their strengths and weaknesses. I'd prefer to deal with the weaknesses of open source, rather than those of proprietary source. It appears I'm not alone.

A return to sanity?

I was talking with someone the other day about my Lineo experiences, and it recalled to my mind just how insane the dot-com boom was. Lineo was on a strong path to IPO - we had almost no revenues (a few million dollars), were grossly unprofitable, had no differentiating product (embedded Linux, which customers were happy to buy consulting around, but not pay for the software itself, and wouldn't pay anything for support), and had a massive burn rate.

This was IPO material?

To be fair to us, a large reason that we had the burn rate was because our investment bankers (very respectable, big-name bankers, mind you) told us that we needed a large employee base to justify a high valuation. Think about that for a minute. Not revenues. Not profits. Employees. And so we acquired 6 companies, went from 40 to 440 people virtually overnight, and completed our S-1.

Then the market imploded (This was in 2000) and took our inflated IPO dreams with it. Rightfully so.

Today, in open source we value downloads a bit too much, I think. (Or we value developers to the point that we forget to measure them in terms of paid usage for what they develop - there have been several open source acquisitions that fit this critique.) Or, in the non-open source world, we value eyeballs. Never mind that most of these "Web 2.0" companies that Google and others have bought have made no money - just lots of friends in their free-riding users who love sharing pictures, music, their personal journals, etc. They still command unconscionable valuations.

And, like Lineo back in the day, otherwise intelligent investment bankers, venture capitalists, MBA entrepreneurs, etc. go along with the charade, group-hugging and telling them/ourselves that this time it makes sense. This time those downloads or eyeballs equal dollars (because we've got a new savior: advertising. Strange to say, this was the same savior the last time, but this time it's different?). This time it makes sense to pay obscene amounts of money for potential.

Well, maybe. But last time I checked, in the open source world, the only companies making serious bank are Red Hat, MySQL, and JBoss. What do they have in common? Years. Lots of them. Years of building up enough volume to build a business on low conversion rates.

Are things changing? Sure. SugarCRM is registering dramatic growth, as is Alfresco, and as are several prominent open source companies. Both companies mentioned have done or will do significantly more revenue in our first year of existence than Red Hat, JBoss, or MySQL did. We are the beneficiaries of all the hard work they put in - companies are buying open source business intelligence applications today because they bought Linux, JBoss, and MySQL software yesterday. So, the market has definitely matured.

But we're not yet to the point where any of the open source applications companies should be acquired. Not yet. There is still a lot to prove. And a lot of money to be made. Because in the end, if you're a corporation, that's the only metric that matters: money. Shareholder value. Not downloads or eyeballs, except as they are converted into cash.

(As for Lineo, given that our valuation was apparently measured in employees, you do the math on what the corporation was worth when most employees had to be RIF'd....)

Hiring, open source style

I just got back from lunch with Ryan Money, CEO of HireVue. HireVue enables remote interviewing (through video) of job, student, etc. candidates. You give HireVue the contact details of the job candidate(s), the questions you want asked, and they overnight a webcam to the candidate. The candidate then conducts the interview and the results are streamed to you (and anyone else in your company you choose), on-demand at any time. Cost? $149 for US candidates and $199 for international.

Talking with Ryan, it occurred to me what a great tool this would be for me in my own hiring. First, because through video or point-and-click multiple choice questions (or written), I can gauge a candidate's domain knowledge. Second, and more importantly for me, I can "meet" the person. I've found that generally know within the first 30 seconds of talking to someone whether they'd be a good fit culturally with Alfresco, and whether it's worth escalating their candidacy to interview with a wider group within the company. HireVue allows me to get a wider read (by involving others in the company) on the candidate from the beginning.

Of course, I would still want to meet the candidate in person. But if I can vet 5-6 people through HireVue, and then only meet 1-2 in person, that saves me a lot of time and the cost of flying them in (or me out) to meet them. Given how distributed open source companies tend to be (That's right: we don't all live in Silicon Valley :-), having a way to get pseudo-tangible introductions to people that look good on paper is a great thing.

All of which makes HireVue perfect for open source. In terms of coding, if the developer is prolific in open source communities, you'll be able to get a good read on their competency. But you still have to hire a person, and not just their code output, and the people-fit question is best resolved by meeting the candidate.

For non-engineering positions, this is a great way to screen candidates. The system is live once they push "Go." So, if they don't know the answer to "What do you think are the ideal forums in which to market our product?" or "What would your hiring plan look like for the inside sales team?", they're not going to be able to Google an answer. It's just like a real interview: the questions can't be ducked.

I'm going to give it a try. Thanks for inviting me to lunch, Ryan. I know you weren't even planning to talk about HireVue, but I'm glad we did.

Open source and RFP time sinks

If you're an open source vendor, you already know this. If you're an aspiring or new vendor, let me save you some time:

Don't bother with RFPs. Bother even less with RFIs.

RFIs (Request for Information) and RFPs (Request for Proposal) are, of course, the bread-and-butter of typical enterprise sales forces. Pipelines are built with them. Castles in the sky are built on them. Etc.

In the open source world (at least for young open source companies), if the prospect hasn't downloaded, installed, and evaluated your software, you can't afford to submit a 35-page response to a would-be customer's questions. You have better things to do. Like write software.

You've got to save on sales and marketing costs. In open source "sales teams," we tend to have 1-2 people involved in any given deal: inside sales and a sales engineer. In the proprietary world, you've got a small army of sales engineers, inside sales, direct sales, contracts specialists, lawyers, etc. etc. etc. So, in the open source world, you can't afford to spend time with 10% probabilities - you need to work with prospects that are 30-40%+. These are people that have downloaded and tried your software.

Every open source company goes through initial euphoria at participating in a massive RFI/RFP. The good ones quickly realize these aren't worth the time, at least not in the first 1-3 years of a company's existence (and maybe not ever). Products never sell themselves, completely, but if you're not relying on the product to get you at least 30% of the way there, you're spending too much on sales.

Linux: A tale of two vendors (InfoWorld)

This came from InfoWorld.

Take a look at the following two stock charts for Novell and Red Hat:



They tell a similar tale and, at the same time, a widely divergent tale. A few things are striking. One, both Novell and Red Hat rise and fall together. In other words, both have been hit by the same industry pressures. Two, Red Hat, has risen much higher when it rises. When Linux is hot, it's hottest at Red Hat.

This is, in part, the cause of Novell's 17% stock price drop today - Novell doesn't have the luxury of doing "well enough." It did much worse than it did last year, this time. Red Hat has done much better. Novell must compete with the market leader, and the market leader (Red Hat) is doing extremely well. It's not enough to plod along in a vacuum.

Why the disparity between the two companies?

I think it's a question of focus. Red Hat does one thing: Linux. And it has one business model: open source.

Novell, for its part, is a bit scattered. It has both proprietary and open source products. This requires it to have both proprietary and open source software business models. The company touts this as a benefit: it's not.

Focus wins in the market.

Yes, Novell has the complication that it has a lot of money at stake in those old, proprietary products. But yes, its management is getting paid to resolve that complication, not prolong it. Novell has excellent engineers. It has great employees. What it needs is hard decisions made at the top about what it's going to be: a leading open source company or a proprietary software vendor. A Linux vendor or an email or systems management or identity management or...company. It can't be all things to all people. Maybe Microsoft can pull it off, but Novell can't. Most can't.

Here's what I'd recommend:

1. Align its licensing/business model first. It's easier to change the licensing of one's products (really, even though it involves lawyers :-) than it is to change the products themselves. Even so, it's still a big step. I'd therefore recommend an interim step: The products Novell OEMs, the partners it links up with, etc. As much as possible, these should be open source. Novell's MarketStart program is a good example of steps in the right direction. Red Hat can declare itself THE open source Linux vendor today - Novell needs to be able to fight fire with fire. Fighting fire with "mixed source" isn't working.
   
   
2. Align its products second. Novell should sell off half (or more) of its products. Anything that doesn't make direct, material sense to its Linux business. No, most of what Novell does today has no significant bearing on Linux. Really.

These are my suggestions. Obviously, I'm not privy to the inside information that governs Novell's day-to-day strategic decisions. But I can say that FOCUS should govern every decision the company makes and, to date, it hasn't.