Technology eliminating customer waste (WSJ)

William Bulkeley has a fascinating column [Subscription required for an inane reason] in today's Wall Street Journal. The gist is that the Internet has enabled consumers to pay for what they want, rather than what various industries try to sell them. In Bulkeley's words:

Photo companies made customers pay for 24 shots in a roll of film to get a handful of good pictures. Music publishers made customers buy full CDs to get a single hit song. Encyclopedia publishers made parents spend thousands of dollars on multiple volumes when all they wanted was to help their kid do one homework paper. The business models required customers to pay for detritus [great word!] to get the good stuff.

Inevitably, their industry revenues are shrinking now that customers can use digital technology and the Internet to select only what they want.

Marketing 101 says success comes from selling things people want. But advanced marketing calls for companies to leverage the relationship to get the buyer to pony up for other products - or at least for extra product. When customers find a way to avoid buying the excess baggage, they change quickly.

Could the same phenomenon be hitting enterprise software? I think so. Open source is one more way that customers are choosing to buy what they need, rather than what a vendor needs to sell. Open source is very much a fulfillment of the positive force in Clayton Christensen's "innovator's dilemma":



Linux initially thrived in the embedded world in large part because of one aspect of this ability: remove the part of the kernel that you don't need to improve performance, enhance security, and shrink its size. SugarCRM thrives because, not in spite of, its more manageable, intuitive code base and UI. Simplicity is selling, and open source - that so-called complex phenomenon for developers by developers - is the king of simplicity. Good enough and cheap is beating bloated and expensive. (Some day, I assume open source may well become the same, but we're many years from that point, and we have built-in inhibitors like support fungibility to stave off or prevent that day.)

Simplicity of code (the better projects, anyway), and simplicity of business model. That's open source. Want to know one reason customers appreciate my company (Alfresco)? Because our pricing model fits on one line of a sheet of paper (one number, one symbol, and two words). Compare this to Documentum's, which runs on for volumes (and not solely because there are so many $X,000,000 attached to each price :-).

Today, open source companies basically sell support, however we may choose to package it. Is this what customers want? Or do they want to pay for software, too, just not as much as traditional vendors charge? I think it's an open question, and one that I'm looking forward to watching customers, not vendors, decide.

Canopy Group becomes a respectable citizen again

Remember Canopy Group? It's the venture firm that spent more money on lawsuits (against CA, IBM, Microsoft, and others) than investments, most famously with SCO Group's lawsuit against IBM.

Well, as Connect Magazine reports, Canopy is shedding its troubled past and is becoming a real venture capitalist again. It has rid itself of the taint of SCO shares, has dumped Ralph Yarro from his role as managing director, and is investing in real companies again. Canopy has brought on Ron Heinz as its managing director, which is a great move. Ron has zero venture capital experience, but is a proven operator, and will be a great addition to Canopy's traditional focus of helping to build entrepreneurs, not just equity positions.

connect: What are the primary differences between the Canopy of 2000-2001 vs. the Canopy of today?

R.H.: I think the underpinnings are the same and that’s to foster the growth of information technology companies in Utah. We are trying to be more communicative to the outside world and be more involved in the community. We are very hands-on in our approach to managing the portfolio.

Good luck, Ron. Nice to see Canopy again proving itself a credit to Ray Noorda, its founder, and not a shame to his name.

Where the VC dollars go (geographically)

From Paul Kedrosky:



Does this mean you should move to the Bay Area? Maybe. Plenty of open source companies have successfully grown outside the Valley (actually, the most successful ones - Red Hat, JBoss, MySQL), but it's certainly the case that there's more venture money in the Bay Area than anywhere else.

Of course, the primary VC complaint is having to get on a plane for board meetings, so maybe it's enough to do what Zend, MySQL, etc. have done: move management to the Bay Area. They may well be the only ones who can afford it. :-)

The 30 top IT trends for 2007 (CIO Insight)

CIO Insight is prognosticating about 2007's top IT trends. Some interesting nuggets in here, but you have to click through to the actual slides to get much from the list:

Strategy
1. Process improvement will be job No. 1
2. IT works on closing the sale
3. Companies make their Web sites more engaging
4. Customer service gets a tune-up
5. Companies put their mounds of data to work
6. Information governance gains momentum
7. CIOs strive to be strategic

Management
8. The division between IT and business will diminish
9. CIO compensation keeps climbing
10. IT organizations will keep growing
11. CIOs struggle to find business-savvy technologists
12. Outsourcing changes IT management
13. Outsourcing growth slows
14. Offshoring shifts from India
15. Companies invest in IT leadership
16. Demonstrating ROI will remain a struggle

Security and Risk
17. No abatement of IT security threats
18. Security concerns turn users away from Windows
19. Security morphs into risk management
20. Compliance achieves what government intended
21. Compliance spurs financial process improvement

Technology
22. The move to a new architecture marches on
23. Enterprise applications start losing their luster
24. Data quality demands attention
25. IT reluctantly embraces Web 2.0
26. IT innovation loses traction
27. Business process management services and software will frustrate users
28. For business intelligence, the best is yet to come
29. IT organizations start going green
30. Dissatisfaction with vendors is on the rise

Novell marketing patent FUD...to the land of anti-software patents?

Pam @ Groklaw is tracking Novell's marketing efforts around SUSE Linux, post the Microsoft pact. Novell's UK office has started blanketing the inboxes of its customers with patent FUD:

The patent cooperation agreement enables Microsoft and Novell to give customers assurance of protection against patent infringement claims. It gives customers confidence that the technologies they use and deploy in their environments are compliant with the two companies’ patents.

As part of this agreement, Microsoft will provide a covenant not to assert its patent rights against customers who have purchased SUSE Linux Enterprise Server or other covered products from Novell, and Novell will provide an identical covenant to customers who have a licensed version of Windows or other covered products from Microsoft.

It's sad to see how quickly Novell has shifted from talking up its contributions to Linux innovation to instead focus on the courtroom. Especially when, as IBM has said, few to no customers actually ask about or care about patents. Vendors care about patents. Customers care about solutions to their business problems. Patents are not a solution to anyone's problem.

Interestingly, Novell's UK marketing reveals a huge problem (well, there are many, but here's one): the UK doesn't recognize the validity of most software patents. It's therefore not clear just what benefit these UK customers are supposed to get from this "protection."

Of course, the other problem is that this tactic by Novell largely flies in the face of its commitment not to FUD Linux, generally, to help sell SUSE Linux, specifically. It was too much to expect Novell to not make hay with the patent pact, but it's disappointing how soon it has started.

I sat next to a Novell sales guy and his sales engineer at a Utah restaurant last Tuesday, and got to hear him pitch an IT guy (a CIO, I presume) on Novell's products and vision. To their credit, they didn't spend much time FUD'ing Linux. But that's because they hardly talked about Linux, which is one of Novell's biggest hurdles to overcome. They addressed Linux just long enough to say that SUSE Linux was the safe choice (and even boasted that Microsoft will be buying a minimum of 70,000 copies of SUSE Linux, as if that's a reference customer worth referencing, given the context), and spent the rest of the time on ZEN, Identity Management, GroupWise, etc. In short, all the legacy products that continue to bring in dollars at an ever-dwindling rate.

Novell: it's time to burn the boats. You have a potentially bright road ahead of you, but it begins with the flames of the road behind you.

Business model innovation: "You have to burn the boats"

Such was the wisdom of Hernan Cortez, and such is the requirement for any company hoping to reinvent itself as business models change under a company's feet, as highlighted in this excellent Steve Hamm piece from BusinessWeek. In other words, if you want to move forward, most will need to cut off any hope of retreating into comfortable, "safe" business models or product strategies that worked in the past.

It's a new world. Get over the old world.

Steve Hamm's article (co-written with William Symonds) walks through Eastman Kodak's struggles to adopt digital photography, despite being the company that invented it in the first place. Why has it been so hard for an innovator like Kodak to adapt to this brave new world? In part, because the spoils of conquest in the new world have not proved as fat as those in the past:

While blazing growth of camera sales has helped blunt the effects of Kodak's fast-fading film revenues, it hasn't replaced the rich profits of the film business. Even the best mass-market cameras yield slim profit margins. So, although Kodak's digital camera business was a roaring sales success, it turned out to be a crushing profit disappointment.

In part, the shift has been difficult because business model innovation is much harder than product innovation:

"Business model innovation is harder than product innovation. It's harder to visualize, and the scope is larger and much more complex. It includes everything the company does. Everything has to be changed," says Jay Desai, chief executive of management consultancy Institute of Global Competitiveness.

This is so because business model innovation is essentially a human problem. People don't like to change, particularly when the old ways have yielded so much success in the past. Kodak has fired 27,000 workers on the road to change, just as the Christian Science Monitor went through a 60% turnover in its IT staff to yield an open source savvy organization capable of innovating, and not just watching colored, blinking lights to make sure they keep blinking.

How do you manage the "people problem?" First, figure out where people stand:

Perez believes that in any organization, one-third of the staff will readily support a change, one-third can be convinced, and one-third will be unwilling to make the shift. He calls it The Rule of the Thirds.

If you're committed to change, you first have to rid yourself of those who will sandbag any efforts to move forward. When Novell first started moving to open source, it was a terribly tough slog, in part because more than one-third (it felt like 98%) were stuck in the NetWare past and could not grok open source. Any successful company will be shackled by its history. That's why it's important to "make painful breaks with the past," as Hamm says it. Or, as Cortez might say, "You have to burn the boats."

This may be accomplished through firing/hiring programs, by incubating new products/business models separate from established businesses, or in a range of other ways noted in the article. But one thing is clear: in business model innovation, the road forward starts by obliterating the road behind. You simply can't move forward by spending all your time fetishing the past. Just ask Lot's wife. :-)

This is why I have hope for companies like Sun. No company has responded more aggressively to the open source challenge. Sun has been open sourcing its software and hardware on the expectation that the shift will bear fruit. Time will tell, but by burning its boats, all it needs to worry about is the future. As it turns out, this is a great prescription for success.

Microsoft: The more that they say, the less rosy the patent deal looks

David Kaefer, the director of business development for intellectual property and licensing at Microsoft, is on the record as saying a rather curious thing:

We've been very clear from the outset, and the financial realities of the deal underscore this, that Novell's patents have value. One need only go back to the late 90s with Novell's leadership in the directory space to recognize the benefits of much of the research and development that they conducted at that time.

I'm sure this is true; at least, I'm sure it's true (in fact, I know so) that Novell's patent portfolio is significant. Not nearly as extensive as Microsoft's, but significant in its own right.

But let's assume David is telling the truth. If so, then Microsoft, not Novell, has the patent quandary, not open source. Or, at least, not Novell. Novell claims to be using its patent portfolio to protect open source ("We have stated our commitment to use our own software patents to protect open source technologies"), but really its policy is more self-serving. Understandable, but let's call a spade a spade.

Otherwise, if Novell cared about the community more than narrow self-interst, wouldn't it put those important patents under cover of the Open Invention Network so that they truly could protect open source?

Again, if Microsoft's patents are only worth $40M or so, and Novell's are worth $300M, then does anyone have anything to fear about Microsoft's patent rattling? If their value is comparatively worthless, why is anyone bothering to take them seriously (this assumes, of course, that someone is)?

And why, if Novell's patent portfolio is so significant, isn't Novell using those patents to defend open source as it has promised to do, rather than just its quarterly revenue target? Surely the company's potential market would be even bigger if it made the open source pie bigger, and not merely its current slice of it?

I'm with Mark Webbink on this one: it all just doesn't add up.

OpenOffice gets SharePoint functionality

Steven Vaughan-Nichols at eWeek is reporting that a Dutch firm has built an extension to OpenOffice, named O3Spaces, that:

...provid[es] users a single web-based team environment, with built-in search capabilities and an optional Java-based Desktop Assistant. Its search functionality is said to work across PDF, ODF, and Microsoft Office document formats.

Sounds interesting, and timely. Most just don't seem to realize that SharePoint is the future of Microsoft's lock-in.

Mark Webbink on Microsoft and appeasement

Mark Webbink, Red Hat's deputy general counsel and secretary, looks at the Microsoft/Novell agreement through a historic lens...

As a history buff, reading the Novell and Microsoft open letters this morning conjured up the image of British Prime Minister Neville Chamberlain standing in front of 10 Downing Street in 1938 and declaring: "My good friends this is the second time in our history that there has come back from Germany to Downing Street peace with honor. I believe it is peace in our time."

We all know how well that turned out.

...and discovers that all that glitters is not gold:

Microsoft's principal objective in this exercise was to get someone ostensibly from the free and open source software community to acknowledge the tacit validity of Microsoft's patent portfolio. And despite Hovsepian's protestations to the contrary, Microsoft has now obtained that in the form of Novell. But at what cost to Novell?...

Hovsepian later appeals to the free and open source community to forgive this action based on all of the other actions Novell has taken in fighting software patents, but for the most part his itemized list just doesn't hold together.

• We have stated our commitment to use our own software patents to protect open source technologies. But what they have really said is: "Novell will use its patent portfolio to protect itself against claims made against the Linux kernel or open source programs included in Novell's offerings, as dictated by the actions of others."


• We have spoken out against EU legislation that would liberalize the standards for granting software patents. But read what they have really said: "Novell has sought to use and will continue to use patents as a legitimate means of protecting Novell's software offerings. We believe that the current system in the European Union has served the industry, the individual Member States and Novell well, and generally promotes innovation and competition in the industry. And compare this passive statement to the actions taken by Sun Microsystems and Red Hat in actively working with the Foundation for a Free Information Infrastructure in fighting off the Computer Implemented Inventions directive.


• We offer indemnification to our Linux customers accused of intellectual property infringement. But read what they have really said: "Indemnification is offered for copyright infringement claims." This statement doesn't address any form of intellectual property other than copyright.


• We have teamed with the United States Patent and Trademark Office and other industry leaders to reduce the issuance of "bad patents" in the software area. But the lead sponsors for the peer review project underway between the USPTO and the New York Law School are IBM, Red Hat, GE, HP, and Microsoft. There is a significant difference between participation and commitment, just ask a pig about breakfast.


• In 2005, we co-founded Open Invention Network ("OIN"), "an intellectual property company that was formed to promote Linux by using patents to create a collaborative environment." Novell's substantial contributions to OIN were made to benefit not only ourselves, but also other Linux vendors, distributors and developers, and anyone else willing to commit not to assert their patents against Linux. Absolutely true. Novell was an active and dynamic participant in establishing OIN. And the fact that Novell has (or perhaps I should say had) such a strong patent portfolio and worked diligently to establish OIN only emphasizes my original point - the deal they entered can best be understood as appeasement.

Novell wants us to believe their position on open source and patents hasn't changed. I'm having a hard time buying that argument.

Again, I don't think Novell did this with any intent to hurt open source. They have much to gain and everything to lose if open source fails. But I wonder if Ron thought through the consequences of this action - not necessarily for Novell directly, but for the larger industry. Sometimes we don't really want the consequences of what we want.

CIOs speak out on Microsoft's alleged "balance sheet liability"

It's time we heard from the people that matter most in the great Microsoft/Novell debate:

Customers.

A few CIOs recently talked to ComputerWorld about their concerns with the Microsoft/Novell pact. Barry Strasnick who is an outspoken guy (and who, at CitiStreet, uses a lot of Red Hat Linux and JBoss), said:

Like many IT executives, I took great offense to Ballmer's comments. If Microsoft really thinks there is some code in Linux that violates their patents, they should publish those lines of codes immediately instead of just posturing in the press. [Fear, uncertainty and doubt] may have worked for IBM in the 1970s (some of us are old enough to have been around then), but not today.

There were some applications I had been thinking about moving to a Microsoft platform, but this has now totally alienated me from Microsoft.

Nice work, Microsoft. By trying to eke out an additional nickel (as if $20+ billion weren't enough), you're managing to annoy your customers.

Why don't you get back to the business of selling software?

It's official: open source databases cost (much) less

Forrester Research has discovered the obvious: open source databases are much cheaper than proprietary databases:

Noel Yuhanna, a senior analyst at Forrester covering database management systems, estimated that average savings on the total cost of ownership are about 50 per cent. The data is based on surveys and customer interviews.

Open source databases such as Enterprise DB, Ingres and MySQL do not carry licence fees, and management tools tend to be less expensive than for proprietary databases from Oracle, Microsoft and IBM.

Open source offerings especially outshine their proprietary competitors in low-end applications with databases of less than 200GB in size.

"Eighty per cent of the applications typically use only 30 per cent of the features found in commercial databases," Yuhanna told vnunet.com. "The open source databases deliver those features today."

Open Invention Network on Microsoft's patent FUD

For those who have forgotten, IBM, Novell (yes, the same Novell), Philips, Red Hat, Sony and NEC started the Open Invention Network in 2005 to pool patents to protect Linux and open source software. Since that time, OIN has purchased 100 patents with the purpose of making Faustian pacts like the Microsoft/Novell deal unnecessary.

Today, the OIN responded to the Microsoft/Novell deal as follows:

"We at OIN believe that the openness and collaborative culture of the Linux community is an engine for innovation. It is clear that there is significant value in Linux community members' intellectual property and patents....

"Unfortunately, embedded in Microsoft's recent endorsement of Linux are claims regarding customers' needing protection from patent attack. Those claims are baseless. In fact, there have been no patent suits against Linux. While patent disputes are not unheard of between and among software developers and distributors, they are almost always resolved between these commercial entities -- not by dragging in end-user customers. Isn't the real issue the fact that Microsoft is making such a threat against its own customers?

"OIN continues to support the Linux community's ability to collaborate and innovate. Through the accumulation of patents that may be used to shield the Linux environment, including users of Linux software, OIN has obviated the need for offers of protection from others.

"In less than a year, OIN has accumulated more than 100 strategic, worldwide patents and patent applications that span Web / Internet, e-commerce, mobile and communications technologies. These patents are available to all as part of the patent commons that OIN is creating around, and in support of Linux. We stand ready to leverage our IP portfolio to maintain the open patent environment OIN has helped create."

Was Novell just hedging its bets with OIN? Or with Microsoft? Doesn't the one (OIN) largely obviate the "need" for the latter?

The Microsoft/Novell deal seems like much ado about nothing. I've yet to hear customers ask about it (including when I was in the Linux Business Office at Novell), and I'm still waiting to see a lawsuit against Linux.

Novell gets the facts

(Sorry, Justin, I can't resist.)

Pam at Groklaw is reporting that Novell's response to Microsoft's Get the Facts campaign has mysteriously vanished. It used to be "Unbending the Truth: Things that Microsoft Hopes You Won't Notice." Well, no one will notice these-things-formerly-known-as-Truth now that the page has been changed to a whitewashed "Why SUSE Linux?"

Did ~$300M in payout help to change Novell's mind as to the facts?

Novell even had a page up talking through patents and why customers need not worry about Microsoft's patents. All gone. But Pam visits the Wayback Machine and resurrects Novell's past, and ends with this question:

So, here's the question I have for Novell: what happened to that promise to protect FOSS with its patent portfolio? Novell did say it. We relied upon it, and OIN is totally separate from the above promise. I mention that because some Novell guys have been saying that Novell never made any such promise or that the OIN patents fulfill the promise. Read the promise again. Novell clearly promised to use its patent portfolio, not OIN's, and Novell appears to have just bargained that patent portfolio away, giving Microsoft a clear path to now bring patent infringement claims against everyone else. Novell's character and honor is on the line. And we await your statement with interest.

Dickens' words in Great Expectations seem so fitting now:

It is a most miserable thing to feel ashamed of home.

Or of one's open source past. You can do better than this, Novell.

Microsoft and Novell issue letters to "the community"

In an attempt to clarify just what Microsoft and Novell were thinking on that fateful day when they kissed and made up, both companies today issued statements to "the community." I'm never sure just who this "community" is anymore, but I assume they're geared toward all those who felt a bit cheated by the November Patent Surprise.

It's a very large community, indeed.

Anyway, you can find Novell's letter here, and Microsoft's is here. Interestingly, Novell's letter was prominent on its home page - you couldn't miss it. Microsoft's? You could hardly find it. I guess this says something about the relative importance of said "community" to the respective companies.

Novell's message is earnest, if a bit laughable at times:

Our interest in signing this agreement was to secure interoperability and joint sales agreements, but Microsoft asked that we cooperate on patents as well, and so a patent cooperation agreement was included as a part of the deal. In this agreement, Novell and Microsoft each promise not to sue the other's customers for patent infringement. The intended effect of this agreement was to give our joint customers peace of mind that they have the full support of the other company for their IT activities. Novell has a significant patent portfolio, and in reflection of this fact, the agreement we signed shows the overwhelming balance of payments being from Microsoft to Novell.

Um, yes, as I've pointed out, Novell gets most of the money in the patent deal, but they must think people are idiots to buy that it's because their patent portfolio is more significant than Microsoft's. About the only way that argument even gains the slightest bit of credibility is if somehow Microsoft purchased perpetual rights to Novell's Office-related patents.

As for agreeing not to sue each other's customers over patent infringement, this is truly noble of them. But I would have thought they'd gain the most from suing each other over patent infringement, not their customers. There isn't much money in suing customers. Not unless you're a patent troll.

As for Microsoft's message, it was FUD-as-usual:

Microsoft and Novell have agreed to disagree on whether certain open source offerings infringe Microsoft patents and whether certain Microsoft offerings infringe Novell patents. The agreement between our two companies puts in place a workable solution for customers for these issues, without requiring an agreement between our two companies on infringement.

In short, yes, Linux is chock-full of our IP, but we agree not to sue any of Novell's customers, but can't wait to sue everyone else (which would be just about everyone on the planet, including Novell's customers, since most enterprises will have different Linux distributions running internally).

Just what does anyone get from this covenant not to sue? Not much. The same customers who run SUSE Linux also run Red Hat, Ubuntu, Debian, etc. Of course, it's these same customers that will drop-kick Microsoft the minute it starts to sue the planet, just as the world shelved SCO when it started suing customers. So, please, Microsoft, the very best thing you could do for Linux and open source is to start asserting your "rights." I can't wait.

I respect that Novell means well by this agreement. It hasn't done well, but it means well. Microsoft? Not so much.

What Vista means for Microsoft, the industry (Jason Maynard analysis)

Windows Vista is set to start hitting shelves on November 30, which means it's an apt time to work through the implications for Microsoft and the larger industry. Historically speaking, a new Windows release has been good for both, and it Jason Maynard of CSFB thinks this trend will continue. Interestingly, however, Jason doesn't think the release will be a dramatic market mover, but will have positive, but incremental, effects.

Jason writes:

1. Why Buy? The Vista strategy is to offer multiple versions of the product for different customer segments. Functionality for business users is designed to provide higher levels of data protection, improve application compatibility, and a new imaging format. New consumer features include an enhanced user interface, better search, security, and a number of digital entertainment elements.
   
   
2. What Does History Tell Us? In its past 4 OS upgrades (95, 98, ME, XP) the one constant has been above seasonal growth in the quarter of introduction. On average, Windows upgrades have driven 205 bps of above seasonal growth when released, but mixed results beyond that. However, none of the 4 OS launches were as segmented or launched in C1Q, providing less clarity this time around. [See below for historical data.]
   
   
   
   
3. Impact on MSFT. We believe the launch of Vista is an evolutionary product offering, not a revolutionary change like Windows 95. Microsoft has largely offered expectations that assume no major change to PC unit growth and fairly modest ASP assumptions.
   
   
4. Impact on PCs. Vista will require greater than advertised systems configurations, which should benefit ASPs and hardware upgrades. As a result, while overall shipments may not deliver substantial above seasonal growth, mix should improve, thereby driving improvements in both top-line growth and margins. Specifically, we expect PC unit and revenue growth to improve to 10.4% and 2.4% in 2007 vs 9.8% and -2.0% in 2006, respectively.

   At the companyÂ’s Financial Analyst Day in July 2006, Microsoft stated that one of the goals for Vista is to induce a shift to premium SKUs. Management has guided the premium SKU mix to 52%-54%. These estimates could eventually prove to be conservative given demand for the new UI in the Home Premium version. For 2007, we expect over 90% of consumer PCs to incorporate the Vista OS. However, we expect only 60% of corporate PC sales in 2007 to include Vista. Additionally within our 10% unit growth estimate for 2007, we expect consumer PC unit growth to accelerate to 16% in 2007 (from 13% in 2006), with corporate unit growth slowing to 7% from 8% in 2006. Although the consumer growth is improving, we would note that at only approximately 1/3rd of total units, it has a minimal impact on overall unit growth relative to the corporate segment. We do not expect the launch of Office 2007 to have much of an effect of driving PC growth or a transition to Vista; customers who are currently on the XP release do not need to upgrade to Vista to run Office 2007. In fact, we expect that most users will wait to upgrade to Office 2007 after a hardware refresh and OS refresh to Vista.
   
   While the recent trend in the PC market has clearly been to lower-end PCs, we would expect Vista PC to thwart some of the recent industry pricing trends because of its richer configurations. As shown [below], PC pricing declines eased following the release of Windows 98 and XP. While some of this can be attributed to an increasing mix of higher ASP notebook PCs, we believe it is primarily due to the aforementioned richer incremental system requirements. .

   
   
   
5. Conclusion. While it is our expectation that Vista will have somewhat positive implications for the market, we believe the overwhelming sentiment today is for little to no impact on the PC industry, thereby setting a low bar for Vista to cross. Vista may not translate into a significant change in the P&L for Microsoft, but if the PC industry can manage to experience accelerating unit growth (albeit small) and a slowdown in ASP erosion, then the ramifications for OEMs and supply chain are much more pronounced given the PCÂ’s broach reach within the tech industry.

My question, however, is how much happier a Christmas it would be for everyone if everyone simply bought Macs? I know mine would be much happier if people would pass the plate and buy the Asay Family a new 24" iMac. :-)

Universal sues News Corp. over MySpace

It was bound to happen (and will almost certainly continue to happen to Google/YouTube, as well): News Corp. is being sued over copyright infringement stemming from its MySpace property. Universal, the plaintiff, challenges that MySpace

..."encourages, facilitates and participates in the unauthorized reproduction, adaptation, distribution and public performance," according to the suit.

Universal contends that much of the media posted by users of MySpace is not user-generated at all, but actually music and videos stolen from copyright owners.

Of course it is. In fact, I suspect that much of the "user-generated content" that inflates Web 2.0's worth comes from the stodgy, conservative world of traditional IP. Heck, if you've got to steal from someone, you might as well steal from the Old World - it has all the cash! :-)

As I've argued before (in fact, as far back as 2003), the music and movie industries don't have an IP problem. They have a payment problem, just as software companies do. A real problem would be if no one wanted their wares. They don't have that problem.

Instead, both entertainment and software industries are grappling with new ways to monetize tremendous interest in their products. In short, people don't mind paying, but prefer not to pay according to the old model.

I suggested ASP-type models back in 2003, and it still seems like sound advice for many software vendors. But it's not a panacea. I'm not sure what would be. That's part of the fun in the software industry right now - the models are in flux, opening up massive opportunities (and the chance to topple incumbent vendors).

Yahoo! high in fat (ty peanut butter)

Brad Garlinghouse, a Yahoo! SVP, is up-in-arms about the state of Yahoo!'s business, sending out a "Peanut Butter Manifesto" as reported in today's WSJ and as covered by ZDNet. The four-page memo has been circulated within Yahoo! over the past few weeks and is getting executive interest. Among its other points:

• Yahoo! lacks cohesion and focus.

  We want to do everything and be everything to everyone. We've known this for years, talk about it incessantly, but do nothing to fundamentally address it. We are scared to be left out. We are reactive instead of charting an unwavering course. We are separated into silos that far too frequently don't talk to each other. And when we do talk, it isn't to collaborate on a clearly focused strategy, but rather to argue and fight about ownership, strategies and tactics. Our inclination and proclivity to repeatedly hire leaders from outside the company results in disparate visions of what winning looks like, rather than a leadership team rallying around a single cohesive strategy.

  I know and have worked for several companies like this, and it's my number one concern wherever I work. Companies must do at least one thing well, and do it incessantly. This is why Google, despite its overall abysmal record on innovation, is a money machine: it does search (and associated advertising) incredibly well. It's why Microsoft continues to be an important company, despite its lame track record online and with most everything that isn't Office or Windows (and, frankly, it's why its FUD machine revs into full gear whenever a threat to these two businesses is perceived on the horizon).
  
  This need for focus is even more acute for startups. Startups lack the cash cushion to be able to make lots of bets. They need to make a few, highly correlated bets, and stick with them.
  
  
• Yahoo!, as an organization, lacks accountability and single-point-of-failure ownership.
  
  
• Yahoo! lacks deciveness.

  We are repeatedly stymied by challenging and hairy decisions. We are held hostage by our analysis paralysis.

To fix these problems, Garlinghouse suggests a 15-20% headcount reduction, the sale of non-core businesses, and a reorganized reporting structure that streamlines accountability. Funny enough, these are some of the things that I wanted at Novell before I left (though a 50% headcount reduction might have been nearer the mark to help force a focus on the company's future - Linux - and reduce its dependency on legacy businesses). But they are important for any business. Focus, focus, focus....

Microsoft/Novell pact in violation of...the future?

Roger Parloff of Fortune has been talking with Eben Moglen, and has this:

The potentially historic Microsoft-Novell pact announced last week, whereby Microsoft would grant patent peace to users of Novell's Suse Linux software in exchange for royalty payments paid by Novell to Microsoft, will be dead by mid-March, promises Eben Moglen, the general counsel of the Free Software Foundation (FSF). The FSF controls the license that governs the distribution of Linux and many other key forms of free and open-source software.

The license, known as the GNU General Public License (GPL), had already been in the process of revision. In an interview with me this morning, Moglen promised that the foundation will now make "further changes" to the GPL that will make crystal clear that the Novell-Microsoft pact, or any similar pact, will violate it.

"It will surely violate GPL version 3," said Moglen, referring to the forthcoming version. Version 3 had been expected to be in place no later than March 15, 2007, though Moglen said he was uncertain whether the new circumstances would affect that schedule. "GPL version 3 will be adjusted so the effect of the current deal is that Microsoft will by giving away access to the very patents Microsoft is trying to assert."

While Eben wasn't offering any new views on whether the pact violates GPLv2, he's working to make sure it will violate v3. That said, any changes made to v3 will have no retroactive impact on Linux, unless the copyright owners opt to change their licenses from v2 to v3. I'm not sure that will be happening en masse....

Stay tuned.

Microsoft claims Linux contains its IP

So sue, Microsoft. Sue.

Said Ballmer, as noted by Matthew Aslett:

We've had an issue, a problem that we've had to confront, which is because of the way the GPL works, and because open-source Linux does not come from a company - Linux comes from the community - the fact that that product uses our patented intellectual property is a problem for our shareholders.

And we agreed on a, we call it an IP bridge, essentially an arrangement under which they pay us some money for the right to tell the customer that anybody who uses SUSE Linux is appropriately covered. There will be no patent issues. They've appropriately compensated Microsoft for our intellectual property, which is important to us. In a sense you could say anybody who has got Linux in their data center today sort of has an undisclosed balance sheet liability, because it's not just Microsoft patents.

If there is any truth to this, Microsoft, do us all a favor and just sue.

Everything can be stolen, apparently

If you haven't been following the brouhaha over at Second Life, walk on over. To save you the stroll, Second Life is a virtual, online world where people build avatars, have meetings, farm, smoke (at least, in the European Second Life :-), etc. Basically, they do online what people do in real life. Must be a bit dull....

Even IBM is getting into the act, with its CEO strutting the virtual world (two of him, actually - a conservative Sam and a wild-and-crazy Sam), team meetings being held there on remote islands, etc.

So, what's the problem (besides the obvious need for people to get a real life, no pun intended)? Well, it seems that a CopyBot has taken over and is stealing all the virtual stuff people have been creating. Nick Carr has been covering the mess, and is taking a not-so-silent glee at it all.

For my part, I can understand the concern Second Lifers have: there is a real, tangible market in these virtual goods. Stealing online goods is causing pain in real-world wallets. But it's a problem that I can't see a Second Life revolt solving. What happens when avatars start stealing each other's stuff? Or playing each other's music (without permission)? Or writing free software and giving it away to lobotomize others' businesses?

Second Life will start to look much more like First Life (or whatever we call the real world). Laws will be passed. Avatars will be thrown in jail. And Sam's Second Life will increasingly look like his First Life.

Just what is Oracle indemnifying, anyway

I had a few minutes to burn today, so I did what I'm sure you were doing: I read the Oracle Enterprise Linux Services Agreement. It's funny what you find when you start digging around in the legalese that governs the Big Announcement that Oracle made. It makes "Unbreakable Linux" look, well, a little flimsy.

First off, what do you think Oracle is covering with its BIG Linux announcement? Not much:

"Covered programs" is defined as the set of software products (limited to the kernel package) for which you have ordered Enterprise Linux support services, including any related program documentation and patches and bug fixes acquired through Enterprise Linux Support Services. [Emphasis mine.]

Hmmm...last time I checked, Red Hat Enterprise Linux is a wee bit more than the kernel. In fact, it includes 1,000+ individual packages [PDF], of which the Linux kernel is only one. If Oracle is only providing indemnification for the Linux kernel, it clearly is not providing indemnification for Red Hat Enterprise Linux, whatever Larry's fetish with Red Hat.

In fact, Red Hat Enterprise Linux contains nearly 2 million files of which only about 17,000 are related to the kernel. I was an English major, so my Math ability is not so great, but a little subtraction yields roughly 1,983,000 files in RHEL that Oracle will not be indemnifying.

Lest you start spluttering that at least its indemnification is unlimited, you might want to try reading the license. If you just listen to Oracle's PR (in the form of its Oracle Unbreakable Linux FAQ), this is what you hear:

The indemnification is not in any way limited to the amount of money a customer has paid Oracle.

Apparently, Oracle's legal department missed the memo on this one. If you read Section J of the agreement (Limitation of Liability), you'll note that while Oracle offers unlimited indemnification for consequential damages related to an infringement claim (and that only for the one package, the Linux kernel), it caps all other damages at the amount you pay to Oracle:

EXCEPT WITH RESPECT TO THE EXCLUSIVE INFRINGEMENT INDEMNIFICATION ABOVE [which only relates to the kernel], NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES, OR ANY LOSS OF PROFITS, REVENUE, DATA, OR DATA USE. ORACLE'S MAXIMUM LIABILITY FOR ANY DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT OR YOUR ORDER, WHETHER IN CONTRACT OR TORT, OR OTHERWISE, SHALL BE LIMITED TO THE AMOUNT OF THE FEES YOU PAID ORACLE UNDER THIS AGREEMENT, AND IF SUCH DAMAGES RESULT FROM DEFICIENT SERVICES, SUCH LIABILITY SHALL BE LIMITED TO THE FEES YOU PAID ORACLE FOR THE DEFICIENT SERVICES GIVING RISE TO THE LIABILITY. [Emphasis mine.]

I don't think there's much to worry about around indemnification of RHEL (whatever Microsoft may think), but it's interesting just how weak Oracle's indemnity really is.

I have no problem with Oracle providing real support and real indemnification. That's just competition. But I have a strong aversion to duplicitous, deceitful posturing to hurt a competitor without engaging it on your own merits. Oracle does a lot of things really well - why not compete with Red Hat on those terms, rather than on Oracle's ability to FUD?

Unisys adds Alfresco to its open source arsenal

Unisys, which was the first large system integrator to build out an open source practice, has expanded its open source arsenal to include Alfresco, the open source alternative for Enterprise Content Management. From the press release:

The agreement enables Unisys to offer a team of Alfresco-certified consultants who can migrate, implement and deploy content and records management solutions based on open source software. Adding this team and capability rounds out an impressive Unisys worldwide set of ECM resources and solutions built around best-in-class ECM software products and providers.

The alliance also singularly positions Unisys, with its services-led solutions approach, to deliver highly scalable and available Alfresco implementations based on new open source or hybrid stacks. Unisys will also help clients develop new software applications embedding Alfresco as the content repository.

"Alfresco is now seen as the only open source ECM alternative for the Global 1000 and governments in an estimated $3.9-billion worldwide market that is moving away from high-priced legacy vendors," said John Powell, CEO, Alfresco Software Inc. "Because of its expertise in delivering services-based open source solutions, Unisys is an ideal partner for these major implementations where Alfresco's modern, standards-based, highly scalable architecture is being deployed widely for mission-critical applications."

This partnership adds to Unisys' expertise with MySQL and JBoss.

Microsoft really, really wants Red Hat to play its game

As Peter Galli reports, Microsoft doesn't want to dance with Novell alone. It wants Red Hat and others to join in.

But Hilf acknowledged that it is an awkward situation having Microsoft's customers who use Novell's SUSE Linux covered by the covenant not to sue, while those Windows users running Red Hat Linux are not.

This is all the more significant given that Red Hat is the leading Linux vendor in the United States in terms of market share, meaning that the majority of Microsoft's customers who are also using the open-source operating system are running Red Hat Linux.

"It's a tough, awkward situation, and if those customers ask us for some kind of patent indemnification, we'll look at this. If they ask us to do something, we'll certainly look at all the options, but the preferred course of action would be for us to strike a similar deal with Red Hat," he said.

I'm sure they would. In fact, as I've noted before (as has Pam at Grokaw), and as Red Hat was first to point out, Microsoft's patent candy is heavily laced with consequences that open source software should shun.

Microsoft has 3.2 bazillion patents. It makes lots of money selling the rights to these in the form of Office, Windows, etc. It doesn't need to earn a nickel more through veiled threats and innovation surcharges on software it does not own, has no rights to, and would do well to embrace. If I'm wrong, and if there are real patent infringement issues in Linux and other open source projects, then I would like to personally invite Microsoft to champion its rights by suing the entire planet.

Customers. Competitors. Partners.

Please exercise those alleged rights of yours, Microsoft. Not in shifty "partnering" sorts of ways. But in court. We'll see how long it takes for your customers to boot you out. I suspect the judge's verdict will be somewhat immaterial at that point.

Which is the point behind all of this, isn't it?

The more you charge, the bigger it gets

I was intrigued to hear Brady's thoughts on the O'Reilly Media's impressions on the Web 2.0 Conference. One, in particular, caught my attention:

Commercial penetration is chasing users away: It was noted that MySpace's traffic was down from the previous month. We're wondering if this is a sign of users running away from monetization. Will there be a continuous migration of users away from properties as they try to capitalize on their success?

I found it interesting because monetization has had the exact opposite effect on open source. The more commercial interests have crowded in, the bigger the customer interest and associated market.

Both the Internet and open source started out as "free" phenomena. As time has passed, open source has gravitated toward direct monetization models, whereas the web has increasingly relied on indirect monetization models (e.g., advertising). The reason seems clear: the nature of the customer. Commercial open source software has generally directed at enterprises that expect to pay for software. Not so the web.

Or is that true? Isn't the web used by people that have long paid for books, magazines, newspapers, music, etc.?

Some would argue that it's the sheer ease of access that demands the $0.00 price on the web. But isn't this also true of open source software? Still, people seem willing to pay for support/service around the free bits that Linus Torvalds writes, but not for an insightful article in The New York Times by Thomas Friedman.

I don't get it. Your thoughts?


(This post was written while listening to The Flaming Lips' "Ego Tripping at the Gates of Hell." Could that be my problem? :-)

Email for the world we already live in

The best way to usher in a new world is often to coexist well with the old world.

This is one reason that Centeris is an interesting company, allowing enterprises to move to Linux without giving up the handholding of Microsoft's server management interface.

It's also one reason I like PostPath so much. PostPath promises a revolution in corporate messaging, but it assumes the world as it is (140 million Exchange mailboxes), not the ideal world (Linux messaging everywhere). PostPath offers true drop-in compatibility with Exchange, such that an enterprise can scale out its Exchange infrastructure with...PostPath (at a fraction of the cost (both acquisition and TCO), up to 20X better performance, and significantly easier administration).

What's not to love?

PostPath recently got even better, adding its Remote Office Edition. I stopped by PostPath for a demo today, and was impressed by what I saw. Here's what it's all about (in Duncan's words):

Historically, customers with remote offices have found themselves on the horns of a dilemma with Exchange. Deploy remotely (distributed), and you drive administration and management costs, as well tending to end up with an unreliable service since it is hard to maintain Exchange consistently and effectively in remote offices. Deploy at a NOC (centrally) [Network Operation Center], and you drive up bandwidth costs and reduce the quality of the user experience with high latency.

PostPath Remote Office Edition solves this problem:

• Enables deployment of low-maintenance server at a remote office
  
• High performance enables low-cost hardware + storage
  
• Replicates the remote server back to the NOC using standard Linux - DRBD
  
• IT manages the replicate copy at the NOC - even does backup there
  
• Can turn on high-availability (HA) at the NOC if desired
  
• With HA, if remote office hardware fails, failover takes less than one minute
  
• WAN bandwidth costs minimized by local service for remote users
  
• Remote users get a high performance, high reliability solution (i.e., they're happy)
  
• Administration is simple and centralized (i.e., IT is happy)

In short, PostPath offers real high availability that is functionally better than what Microsoft Exchange offers, and at a dramatically lower cost. Very cool, Duncan. Now I just want it under a different license. ;-)

Open source's big chill?

Talking with a fellow open sourceror today, he raised an interesting, disturbing prospect:

What if Oracle's and Microsoft's recent actions are not about competing with the present, but rather about competing with the future?

By this I mean that perhaps both are attempts to choke investment into open source. As in The Terminator movies, perhaps it's a way to kill the future before it happens (by going "back in time" to squash a movement that is already well underway.)

When was the last time you found a startup building its product on Oracle? (If you know of some, please let them know that they're wasting one heck of a lot of money.) Those sexy Web 2.0 companies? Most are built on LAMP, not .Net or other Microsoft technologies.

Venture capitalists have been channeling a huge amount of capital into open source startups (well over $1 billion at my last count). Microsoft and Oracle both have a huge stake in making sure venture investment in open source dies. As soon as possible.

If I'm Oracle, spending billions to acquire every application that isn't written by Microsoft, I've got to be concerned that my goal of taking Microsoft head on is being side-tracked by "those pesky, meddling [open source] kids" (to quote Scooby Doo that are undercutting me on price while offering better performance (in an increasing range of applications) and flexibility.

If I'm Microsoft, seeing the world increasingly built on open source, I've got to be concerned that my role as God Platform may be withering on the vine. Co-opting open source is one option, but taxing it under threat of patent infringement is even better, and more consistent with its fiduciary duty to shareholders.

I know great people at both companies and I know they're sincere in wanting to compete with open source on business and technology merits. But billions of dollars are riding on squelching out open source's voice. It's just business. Not good for customers, but then, BigCo proprietary software long ago stopped serving customers well. There simply is no conscionable reason to charge so much for so little value.

Red Hat Enterprise JBoss on its way?

Matthew Aslett notes that Red Hat is planning to release the next version of JBoss in the same way it does its Linux products: Fedora and Red Hat Enterprise Linux.

Speaking at the UBS Global Communications and Technology Conference, Red Hat's EVP and CFO, Charlie Peters, said the company is working on a plan to create a Fedora-style community development version of JBoss as well as a subscription-only RHEL-style package.

"One of the things that we're trying to address is the development model, to come up with something similar to the RHEL/Fedora model," he told the conference. "At the moment we're still working on that model for JBoss, it's not a model that they had before," he added.

A change in the package model is part of the company's plans to convert the 11 million free JBoss users to subscription customers, Peters added. "We have an installed user base today that are natural customers when they get to the point of needing to have better support," he said.

This is a smart move and, in my opinion, continues to demonstrate the superiority of Red Hat's model over other open source models in the industry (though, perhaps, the model doesn't fit as well for "non-complicated" applications, as Red Hat's Brian Stevens has suggested).

It's a great way to give developers what they want - cutting edge, free (as in cost and freedom) technology - and to give enterprises what they want - painless way to adopt that great technology.

More from Machiavelli

I'm refreshing my familiarity with Niccolo this morning (having spent a lot of time in The Prince during my Masters degree), and came across this comment:

...[T]here is nothing more difficult to execute, nor more dubious of success, nor more dangerous to administer than to introduce a new order to things; for he who introduces it has all those who profit from the old order as his enemies; and he has only lukewarm allies in all those who might profit from the new. This lukewarmness partly stems from fear of their adversaries, who have the law on their side, and partly from the skepticism of men, who do not truly believe in new things unless they have personal experience in them.

Does this scream Red Hat's (and all open source vendors') predicament? It seems highly appropriate.

And if we swap the words "disease" for "cure" in the quotation below, it seems perfect for what is happening with open source, generally:

...[W]hat physicians say about disease is applicable here: that at the beginning a disease is easy to cure but difficult to diagnose; but as time passes, not having been treated or recognized at the outset, it becomes easy to diagnose but difficult to cure. The same thing occurs in affairs of state; for by recognizing from afar the diseases that are spreading in the state (which is a gift given only to a prudent ruler), they can be cured quickly; but when they are not recognized and are left to grow to the extent that everyone recognizes them, there is no longer any cure.

One person's disease (i.e., proprietary vendors and open source) is another person's cure (i.e., enterprises adopting open source).

Machiavelli and open sourcing Java

IBM has been beating Sun up in the press for years about not opening up Java. Now that Sun has - and in the most open way possible - IBM is complaining.

Why?

Because, as Dana correctly notes, Sun just kicked IBM in the shins while simultaneously blessing customers and developers. It's the great strength of the GPL: a way to benefit your customers while kicking your competitors in the teeth. Capitalism at its best, as I've written before.

IBM likes Apache-style licensing because it allows them absolute flexibility to take without giving back. I'm not suggesting that IBM never contributes anything back - Xen, Linux, and other projects are ample testimony against such a position. It's just my perception that IBM prefers Apache in large part because it has more leeway to use open source on its own terms.

Now it gets to use open source Java on Sun's terms or, rather, on the development community's preferred terms: the GPL. This is a bold, welcome move by Sun, and effectively prevents IBM or any other Sun competitor from hijacking Java. It's the community's way or no way. Nice.

Or as Machiavelli once wrote:

Besides what has been said, people are fickle by nature; and it is a simple to convince them of something but difficult to hold them in that conviction; and, therefore, affairs should be managed in such a way that when they no longer believe, they can be made to believe by force.

Apache-style licensing relies on best intentions. The GPL relies on force. There's room for both, but Sun made the right decision in GPL'ing Java.

The experience problem

Over the past few weeks/months, I've been working on hiring on hiring out the next wave of Alfresco's leaders. In the process, I've had to grapple with the choice that all open source companies must face: experience or aptitude? (As for whether to hire a talented jerk or ignorant potential, I've already answered that one.)

It's a question I started asking even before I joined the company.

With most companies, a startup's goal is to please customers and to hire senior people that can help please more customers. This formula breaks down a little, however, with open source, where the senior talent may actually not have a clue as to how to please customers. Or, rather, they go about it in a way that is inimical to the open source growth model. In other words, they hire too high (titles) and too wide (bodies) too fast, which puts a massive burden on open source's organic growth model.

Is the answer to hire neophytes?

Sort of.

First off, as I've written before anyone joining an open source company from the proprietary world is going to need a period of assimilation. That time should be spent in the trenches. Open source really is different, and requires a different growth mentality. You figure that out in the trenches, not the officers' tent.

Second, I do believe, on average, that it's easier to learn open source de novo than ex post facto (meaning, after the fact of decades of experience in proprietary software). One of JBoss' greatest achievements was to hire green sales people once it started hiring sales people at all - people fresh from school that didn't yet know how sales are "supposed" to be done. They learned open source as the right way, and matured accordingly. In like manner, I would argue I have the best inside sales, technical sales (solutions engineers), and business development people on the planet - all are "growing up" in open source.

Third, if you can't find them young in industry experience, you can still find them humble in open source. Take a look at Red Hat. I believe Matthew is onto something in his management hires.

Charlie Peters? CFO of Burlington Industries (they make coats), and before that CFO of a large electric company.

Joanne Rohde? She was at UBS. They buy lots of software. They don't sell any.

Others at Red Hat like Tim Yeaton, of course, have more traditional enterprise software/hardware backgrounds. But those that cut against the grain are instructive and interesting. They are very experienced, but not directly in open source, which allows them to know much without knowing it all. I would assume it makes them teachable but competent. That's what an open source executive should be like.

All this being said, it's not the case that experience in traditional software counts for nothing. But the more I work with open source companies, the more I believe that it's somewhat rare to find senior executives from the proprietary world "crossing the chasm" successfully to the open source world. Some, like Dave Dargo and Marten Mickos, seem like they were made for the metamorphosis. Others seem like they're not really comfortable with the evolution, preferring to impose the 7 Habits of Highly Successful Single-celled Amoeba on an all those new-fangled open source bipeds. Not a pretty sight.

Open sourcing OSBC

I'm in the middle of working through the agenda for the upcoming Open Source Business Conference, and wanted to solicit outside input.

OSBC has made great strides for its 2007 show, if for no other reason than I'm actually listening to what other people want on the agenda. :-) OSBC's Advisory Board includes: Larry Augustin, Zack Urlocker (VP of Marketing, MySQL), Bill Hilf (General Manager, Platform Strategy, Microsoft), Mark Radcliffe (Partner, DLA Piper Rudnick Gray Cary, LLP), Tim Golden (SVP, Linux Engineering, Bank of America), Andrew Aitken (President, Olliance Group), and Robin Vasan (General Partner, Mayfield).

The board has been very active in shaping the conference, making it into a much more CIO-friendly event than in years past.

You'll see this emphasis in the preliminary (very) draft below of the conference. Some of the sessions are confirmed (with speakers), but most are not. If you disagree with some of the sessions, or want to recommend people to speak on the topics included, please let me know. Keep in mind, however, that virtually no session will be approved that doesn't include someone from the IT buying community.

Btw, the Products and Services track is new for this year. We'll be showcasing the hottest startups there (in addition to our staple "Startup Showcase") with 15-20 minute demos. We'll also be highlighting leading open source products and services (i.e., system integrators) from more established vendors on this track.

Anyway, here's what we have so far:




We're also adding a session on how the big, proprietary vendors are impacting open source. The recent moves by Oracle and Microsoft are just two ways that open source will be affected - sometimes positively, and sometimes negatively - for customers and open source competitors.

Any suggestions?

Zimbra goes ... offline

As announced at Web 2.0 last week (and as noted here by the O'Reilly Radar), Zimbra has added offline capability to its open source email offering. This has been a long time coming for the Web 2.0 world, and is a great move forward by Zimbra.

Anything you do on the Zimbra system while offline is stored in the cache, and then synched up when you're back online. Simple, necessary, and effective.

Red Hat Enterprise Linux 5: Interview w/ Scott Crenshaw

I was fortunate to do a Q&A session today with Scott Crenshaw, Senior Director of Product Management and Marketing for the Red Hat Enterprise Linux product. We talked about a range of things related to the early 2007 release of RHEL 5: product features, competition with Oracle and Novell, and other things.

We spent the most time, however, talking about Red Hat's views on and plans for virtualization and how Red Hat gets product to market.

On the latter topic, I was most impressed with something Scott told me when I asked how the Oracle announcement had affected Red Hat:

This will sound trite, because every vendor says it, but Red Hat is focused on customers, not competitors. Oracle's announcement shook things up around here for a day or so, and then we got back to work.

This focus on the customer permeates everything we do. For example, RHEL 5 was designed by customers, for customers. The customers decided on the right virtualization approach. They decided on the other features, as well. Red Hat ships it, but customers build the roadmap.

It would sound trite but for the fact that I've worked with (or against) Red Hat for six years now. Its focus on the customer can at times be frustrating (like if you're trying to get them to speak at your conference... :-), but it's a tangible, driving force within the company. I honestly have not experienced the same level of intensity on customer issues than I have with any other company.

It is the reason, for example, that Red Hat has yet to ship its GA release of the Xen virtualization server. As Scott noted,

The Red Hat model is first built around product requirements, then quality requirements, and then the schedule. We don't ship anything until it's stable, secure, and high performance.

With this in mind, I asked Scott to comment on RHEL 5 generally. His response (keep in mind that I was typing as fast as I could, but may not get his comments exactly right. Any errors are my own.):

Red Hat is providing the future of how enterprises consume software, starting with virtualization. Virtualization is at the heart of this vision, which is why the main driver for RHEL 5 is virtualization. Vendors talk about server consolidation as a benefit of virtualization, and that's true. It is. But Red Hat believes virtualization's most important benefits are availability and flexibility. Open source virtualization democratizes IT, allowing enterprises to better utilize spare capacity, already inherent in their systems, to provide increased availability to applications under resource crunches.

All fine and good (btw, Red Hat gives other benefits on its site), but why open source virtualization? Scott's reply:

Most of the use cases that make virtualization worthwhile are too expensive with proprietary software. Wall Street CIOs tell us that at $6,000 - $9,000/server, as is the case with VMware, the economics don't work for virtualization. All you can do at that point is consolidate servers to replace multiple machines with one big, expensive machine.

Open source virtualization makes the economics of virtualization work, but also gives the enterprise access to a rich development ecosystem, as with the Linux ecosystem.

I wanted to know more about the pricing for Red Hat and virtualization, and pushed a little harder. Scott informed me that it's important to recognize that memory, I/O, and processor capacity mitigate against people running thousands of instances of an OS on a machine. They technically can do it, but not practically. With this as context, he indicated that the RHEL 5 comes with virtualization and a certain number of guest instances included for free. It sounds like RHEL 5 customers will get enough included in the base price to get up and running, and will pay for more advanced implementations.

Consistent with Red Hat's emphasis on value, however, Red Hat's focus is not on price, but on customer experience. For that reason, Scott said that

the RHEL Virtualization Platform goes far beyond providing the giblets. The intent is to give users an out of the box experience with virtualization with the primary use cases ready to go out of the box. For example, the platform comes witha fully integrated storage solution (because the ability to move between machines, if you don't have storage persistence, doesn't do you much good). Customers can choose to roll their own or to take RHAT's prefab'd, integrated virtualization.

With all this as context, I asked Scott to talk about a few of Red Hat's competitors, starting with

Novell

Novell's approach is to provide technology components as early as available, because they want to appear to be the innovators. Red Hat does the same thing through Fedora. With our RHEL product, however, our concern is with providing a rock solid platform. The early Xen code base had performance, stability, and security weaknesses, so RHAT chose to wait. RHAT's schedule is driven by quality concerns. We won't ship something until we believe it will deliver real customer value.

Microsoft

No idea. Microsoft's virtualization is just a press release at this point.

VMware

Red Hat works closely with VMware to provide support and software to our mutual customers. But RHAT believes strongly in the open source innovation model and feels storngly that model will win over time. Closed source can't compete with the open source innovation machine, nor its cost.

And then, in a roundabout way, I asked about Oracle. I asked if Red Hat invested engineers in the Xen project in the same way it does with the Linux kernel. He responded:

Red Hat has 30-40 of its best engineers working on the Xen project, helping to drive its innovation. The original Xen team did a great job creating the foundation of the project. Red Hat and others (IBM, Intel, etc.) then came together to help push Xen to the next level. Memory management, scheduler, IO, changes in the OS to support virtualization, etc.: Red Hat has been instrumental in all of these fundamental changes.

And Oracle? How many developers does Oracle have working on the Xen project?

Oracle has approximately zero developers on Xen.

For this reason, (as well as others noted by Paul Cormier), it's very, very hard to out-support and outperform Red Hat on its own turf, much less with a muddied mixed source message.) It will be very hard for Oracle (or anyone else) to support software that it doesn't play an active role in developing.

Anyway, that's the meat of the discussion Scott and I had. In addition to virtualization, of course, there will be a range of other innovations in RHEL 5, among them:

• SELinux MLS support (EAL4+/LSPP)
  
• SELinux Troubleshooter - Greatly simplifies administration
  
• Network storage ( Autofs, CacheFS / NFS persistent local cache, iSCSI )
  
• Integrated directory & security
  
• Desktop (GNOME, X.Org 7.1, Laptop)
  
• Stateless Linux (Desktop/Server/ Virtualized )
  
• New Driver Model (better support for 3rd party drivers)
  
• Enhanced development tools (SystemTap, Frysk)
  
• Enhanced large SMP support (big kernel lock removal, etc.)
  
• Multi-Core beyond Dual
  
• Single Node GFS
  
• Kexec / Kdump ( replacing Diskdump and Netdump)
  
• Installer improvements
  
• RHN support for virtualization
  
• Broad range of new HW support
  
• IPv6 support and conformance enhancements
  
• IPSEC enhancements
  
• I/O-AT – Intel's network accelerators
  
• Improved ACPI support, suspend to disk
  
• Block device data encryption support
  
• Root device MPIO support
  
• Dynamically switchable per-queue I/O schedulers
  
• Enhanced pipe buffering (circular buffers)
  
• IPv4/IPv6 fragmentation offload & optimized buffer management
  
• Integrated multi-media support
  
• Smart card login - with PKI/Kerberos authentication
  
• Enhanced plug and play hardware support (cameras, etc)
  
• Enhanced graphics using AIGLX/Compiz (e.g. fading, transparency, etc)
  
• Network Manager - automatic network configuration
  
• Samba - improved Microsoft Active Directory integration
  
• Audit - powerful new search/reporting tools; unique real time interface

Looks like a good time to be buying Linux.

Microsoft's covenant not to sue "worse than useless" ?

Matthew Aslett has been talking with Bradley Kuhn at the Software Freedom Law Center, and has some important things to say:

Kuhn’s letter to the FOSS development community continues:"A careful examination of Microsoft's Patent Pledge for Non-Compensated Developers reveals that it has little value. The patent covenant only applies to software that you develop at home and keep for yourself; the promises don't extend to others when you distribute. You cannot pass the rights to your downstream recipients, even to the maintainers of larger projects on which your contribution is built."

We already pointed out that while the romantic image is of Linux being created by many individual developers working for the common good, the vast majority of Linux development is done by developers paid or sponsored by Linux-friendly vendors.

Not only is the offer of limited scope, it is also not to be relied upon, according to Kuhn. “Microsoft has explicitly reserved the right to change its terms at any time in the future. A developer relying on the pledge could wake up any day to find it revoked,” he writes.

All the glitters is not gold, in other words.

I'm glad that Novell is now on the record stating that it won't use patent FUD to sell SLES. Microsoft, however, is less affirmative:

“If people want to have patent peace and interoperability, they’ll look at Novell’s SUSE Linux,” he said. “If they make other choices, they have all of the compliance and intellectual property issues associated with that.”

These sort of comments might be good for Microsoft and are bad for open source, but where do they leave Novell? Is it a willing or unwilling participant in the FUD-spreading?

I think it's going to be very hard for Novell to keep from using the patent-safety stick with its customers. If its fortunes start to turn (and there are signs that this is the case), then it will be easy to avoid doing so. But if it's struggling...all bets are off.

The GPL doesn't violate antitrust law (Duh)

The verdict is in: The GPL, by driving license costs to zero, is not a violation of US antitrust (e.g., price fixing) law.

Whew! I was worried for a minute there.

The most exciting thing about this decision [PDF] is that Frank Easterbrook, whose opinions I read all through law school, thundered down from Sinai on it. Here's my favorite line:

Nor does it help to call the GPL “price fixing.” Although it sets a price of zero, agreements to set maximum prices usually assist consumers and therefore are evaluated under the Rule of Reason. See State Oil Co. v. Khan, 522 U.S. 3 (1997). Intellectual property can be used without being used up; the marginal cost of an additional user is zero (costs of media and paper to one side), so once a piece of intellectual property exists the efficient price of an extra copy is zero, for that is where price equals marginal cost. Copyright and patent laws give authors a right to charge more, so that they can recover their fixed costs (and thus promote innovation), but they do not require authors to charge more. No more does antitrust law require higher prices. Linux and other open-source projects have been able to cover their fixed costs through donations of time; as long as that remains true, it would reduce efficiency and consumers’ welfare to force the authors to levy a charge on each new user.

For those unfamiliar with the case, Wallace whined that he couldn't make any money competing with IBM, Red Hat, and Novell because the GPL set the price for Linux too low ($0.00).

Besides a weak understanding of the law, Wallace is unfortunately mired in the proprietary past. His economic reasoning actually resembles that of the proprietary software vendors today. They may actually be dumbfounded by Easterbrook's reasoning. :-)

But let me state it clearly for the record: open source does not mean you have a divine right to profit margins or revenues. It's about freedom. The ability to make money from it is something you have to earn.

Web 2.0 looking for lock-in

Just when you thought it was safe to go back into the water...This from TechWeb.

Or, rather, from Marc Canter, CEO of Broadband Mechanics, who opined:

The challenge we have in the Web 2.0 world is to invent new kinds of lock-in.

And I thought it was all about user-generated "goodness." :-)

Actually, Tim O'Reilly has already shelved the idealism of Web 2.0, as Nick comments, and whenever Tim moves on there will always be a herd of shallow MBAs in hot pursuit to monetize his ideas. Or, at least, the surface of his ideas.

I'm glad that Google is leading the way in opening up data, crushing the "data as lock-in" strategy that many Web 2.0 companies have come to embrace.

Now we just need to maintain the same commitment to openness in open source.

Java to go GPL

OSDir (and others) is reporting that Java is prepared to go GPL in the very near future, starting with the mobile and standard editions. This is welcome news, Sun, and a continued testament that Sun is one of the few BigCo's that really gets open source.

Google opens up your data

In the biggest news to come out of the Web 2.0 Conference, Eric Schmidt, Google's CEO, made a huge announcement:

Making it simple for users to walk away from a Google service with which they are unhappy keeps the company honest and on its toes, and Google competitors should embrace this data portability principle, Eric Schmidt said at the Web 2.0 Conference in San Francisco.

"If you look at the historical large company behavior, they ultimately do things to protect their business practices or monopoly or what have you, against the choice of the users," he said. "The more we can, for example, let users move their data around, never trap the data of an end user, let them move it if they don't like us, the better."

This is welcome, welcome news. I've been a harsh critic of Google in the past (though less because of its data lock-in and more because of its open source policies), but this move has neutralized much of my criticism.

The lock-in of data is my strongest complaint about Microsoft's SharePoint product (regardless of whether they ever figure out what SharePoint 2007 actually does). It is, plain and simple, the future of enterprise lock-in. It's free to use the base version, free to let SharePoint suck in your content, free to let these manacled repositories mushroom throughout one's organization...but very unfree (in terms of both cost and its proprietary nature) to migrate that content out of those repositories. Easy in, difficult out.

Google is now pushing the agenda on what office productivity applications/services look like. I'm glad to see that they are also now pushing a healthy agenda on who should own the content these services create and consume:

You

Great work, Google.

Patent bullying in the name of...

In all the furor over the attempted dogpile on Red Hat, IBM's over-the-top lawsuit against Amazon has gone largely unnoticed. Didn't hear the news? Well, IBM is basically suing Amazon for even thinking the word "Internet." It appears that IBM has patents on such things as web-based advertising, website navigation, and other things that every website on the planet uses without IBM collecting a dime.

In short, IBM, as David Berlind writes, could be attempt to collar the web. A tax for using the Internet. Paid to Big Blue. Amazing, the cheekiness of it all.

Especially how IBM dresses up this outrageous silliness:

“These are high-quality patents and important IBM intellectual property that are core to Amazon.com’s business,” said Ed Barbini, IBM spokesperson. “In fact, Amazon.com has built its business model on these patents."

As have, it would seem, every other web company in this galaxy. If IBM were to win this lawsuit (and, let's face it, it will settle long before we get to that point), IBM could put a toll on the Internet.

And I thought Microsoft was wrong to tax open source innovation. IBM's attempt to steal the web is even more audacious. (And yes, I do mean "steal," regardless of when IBM filed those patents. There is a point where lawyers have to give way to common sense. For IBM, that day was long, long ago. Suing Amazon now, even if IBM really has tried to reach a peaceful agreement since 2002, as it claims, is far too late.)

The sad irony in all this is that I'm sure IBM's lawyers are probably ordering all of their legal texts to bone up for the lawsuit...through Amazon.com.

Details of the Microsoft/Novell deal

Novell filed an 8K form with the SEC yesterday. It gives the details of the Microsoft/Novell deal and is an interesting read (as SEC filings go :-).

The highlights:

1. The maximum net payment Novell can receive would be $308M. (In total, Microsoft will pay Novell $348M and Novell will pay Microsoft at least $40M.)
   
   
2. The deal consists of two parts: business collaboration and patents. As Jason Maynard of CSFB notes, "The business collaboration consists of a $240M upfront payment from Microsoft to Novell for SUSE Linux Enterprise Server subscription certificates. In addition, Microsoft will spend a total of $60M over the five-year contract period for marketing Linux and Windows virtualized solutions, as well as $34M over the five-year period for a dedicated Microsoft sales force focused on marketing the joint solution."
   
   
3. On the patent cooperation side, Microsoft will pay Novell $108M upfront, and Novell will pay Microsoft at least $40M over the next five years. That $40M could grow if sales of Novell's Open Platform Solutions and Open Enterprise Server products do particularly well. In other words, $40M is the floor - no ceiling.

Of particular interest in all this is Microsoft's covenant not to sue Novell's customers. This puts Novell versions of Mono, OpenOffice, Linux, etc. in safe territory from a patent perspective. But I'm with Red Hat on this one: no one should be held hostage over IP rights. If Microsoft has such rights against Linux/etc., let them exercise them. Sue the open source world. Let's get it out.

Microsoft wouldn't do this, of course, because IP weapons are almost always more effective when they're merely threats. The actuality is almost always an anticlimax. IP claims are generally not as strong as believed.

In some ways, I'd welcome a big IP fight. Let IBM, Microsoft, Oracle, etc. start suing open source (and each other) with abandon. It would last for about a week until their customers commanded them to grow up, and then the IP portfolios would be put back in storage, where they belong.

Again, customers are open source's only true friends. Given enough customers using open source, no patent portfolio on the planet is going to stop it. The customers won't let it. Customers, not over-eager litigant vendors, decide.

Anyway, after talking with Jason tonight and exchanging emails with Bill, I appreciate (a little) the difficulty Microsoft was under on this deal. I don't agree with the patent-hugging and such, but I can at least see why Microsoft used a proxy to interact with the community. It chose the wrong proxy, but it's true that extending an olive branch to the Linux kernel community, OpenOffice community, etc., might not have gone very far....

Still, if those are the communities that allegedly have IP problems, shouldn't they be the ones Microsoft works with, no matter how difficult it is?

News flash: Banks don't like open source at all

Or so thinks Bart Narter, a senior analyst at Celent, as this Bank Technology News article states:

"Beyond the business risk is the regulatory risk of going with open source," says Celent senior analyst Bart Narter, noting how no North American banks have ventured into open source territory for core system operations. A bank could cope if the Web channel servers went down, but customers could still conduct transactions with ATMs and branches. An open source core meltdown would get a major FDIC spanking. "You're not going to see it supporting the absolute core functionality of the bank," says Narter.

I've got news for you, Bart. It's already happening. Every day. At nearly every big bank. Heard of MuleSource? They're providing core infrastructure for several major US banks' core system operations. Not because it's open source, per se, but because it's actually better.

At Alfresco, we get the same thing:

Each hour, an international retail bank routes its faxed and Web-based trade confirmation and transaction orders-workflow comprising 25,000 data factors-through its new enterprise content management system. Another non-U.S. firm, this one a global investment bank, uses the same solution for trafficking all content from its Web portal.

That an ECM solution manages disparately sourced data for storage, day-to-day operations, CRM analytics and regulatory compliance isn't noteworthy, except this ECM system from UK-based software firm Alfresco is built on open source technology. A bank entrusting open source for enterprise document functions, which normally falls to products from full-shop proprietary vendors, is the head-turner.

The banks, which were not disclosed by Alfresco, are examples of institutions that increasingly are drawn to open source solutions for front-end and middleware IT functions. Instead of paying for seat licenses of a commercial ECM product, these firms get Alfresco's product free and pay only for support services and development assistance under a dual licensing model. "A lot of the people we have engaged with have said [they] are actively seeking open source solutions and view this as a priority," says John Powell, Alfresco president and CEO. Alfresco is not displacing any banks' Documentum or Vignette systems, Powell concedes, "but we compete with them in the project [level]...[t]hese are projects where the economics of open source make it a lot more compelling."

Project-level today, company-wide tomorrow (this is already happening).

In some cases banks are using open source because of decreased regulatory risks through open source. In others, it's just because they want to modify the source code. In others, it just happens to be the best thing money can buy.

But make no mistake: it is being used for core systems within banks.

A bigot by any other name...

I had a funny experience this morning. Within the space of an hour I was accused of being a biased open source bigot hopelessly prejudiced against Microsoft and then, separately, of being an ardent Microsoft lover and an enemy to freedom.

I've also been called (again, often in the same day) an anti-Red Hat guy and a pro-Red Hat guy, and an anti-Novell guy and a pro-Novell.

So, which am I?

I am, of course, none of these but may well be all of them. It depends on the day and on what the news is. I agree with Emerson that "a foolish consistency is the hobgoblin of little minds." Circumstances change. Principle should endure, but are expressed in very different ways depending on the circumstances.

So, I'm normally quite favorable toward Microsoft's efforts to engage with the open source community, just as I'm normally supportive of Novell's efforts to build its open source business. But this last bit of news was neither good for open source nor for Novell. It certainly was no olive branch from Microsoft, except maybe to pummel the open source community with. So, I beat up on Microsoft and Novell for the move.

And will continue to be "inconsistent" when the companies I cover are inconsistent...which will be always. Because they're (collections of) human(s), too.

Novell: We Surrender (Forbes)

Dan Lyons (Forbes) has a sometimes funny, sometimes sad piece on Novell's Faustian pact with Microsoft. Here's a choice bit:

Think about this: Novell now has signed as its biggest reseller a company that wants nothing more than to kill its product.

Microsoft has done this many times before, so often that Redmond has a name for the technique: embrace, extend and exterminate. And yet people keep doing these deals. Usually, it's weak, struggling, desperate companies with declining market share and little hope of turning things around. In other words, just like Novell.

On Thursday night, I asked Jeff Jaffe, Novell's chief technology officer, if he could think of a company that had partnered with Microsoft and done really well as a result. Which Microsoft alliance, I asked him, would he cite as the model that he'd like to emulate?

His response: "I think this partnership is breaking new ground."

Um, right. Unfortunately, the new ground they're breaking is probably Novell's gravesite.

Novell, you had (and have) other options. Siding up with Microsoft is not the way to promote your open source vision. Never accept a kiss from a dementor.... ;-)

O'Reilly: Books as a proxy for 'What's hot'

Tim has written another insightful piece on where technology is going, based on the technology books people are buying.

With this in mind, take a look at the tree map for programming languages. (Keep in mind, as Tim notes, that "the size of a square indicates the relative size of the category, and its color indicates the rate of change. A category that is bright green is up significantly. One that is bright red is heading strongly in the other direction.")



What are the takeaways?

• Ruby has continued to grow apace, although its 255% growth rate is off last quarter's torrid 687% increase! Interestingly, PHP also picked up some steam, up 11% vs. last quarter's 6% YoY increase. Python's 27% YoY gain, up from last quarter's 6% gain, shows even more strength. In short, while Ruby has become the language of choice for many web startups, PHP and Python are both far from out of the game....
  
  
• The decline of Java book sales has accelerated, while C# books have continued their steady increase. When you aggregate books on both C# ".Net Languages" (books that cover both C# and VB.Net), the C# book market is now about 12% larger than Java. (Of course, some of those .Net Languages book purchasers could be buying them for their coverage of VB.)

All of which makes me wonder if Java is dead, or if it's merely Java book-buying, because I continue to see strong growth in the open source Java market (Alfresco, MuleSource, etc.). Not sure, but demand has never been stronger....

What about databases? Well, MySQL continues to rise...



...but Microsoft's SQL Server rose even more/faster. With that in mind, and with the "Microsoft really needed to partner with Novell because it just can't compete with open source any more!" thought in mind, let's look at operating systems:



In other words, Microsoft isn't reeling from its competition with Linux and open source. Open source, in my experience, is still eating into Everything But Microsoft (EBM). Microsoft's day will come, but not yet.

What I've learned from open source

These past two weeks have been fascinating. Frustrating, but fascinating. Frustrating, because people have seemingly been duped by Oracle's and Microsoft's supposedly good intentions (these people have short memories). But fascinating as I watch open source come center stage in the software industry.

I've learned a great deal since I first got involved with open source in 1998. Lessons about sales, about trying to hide a poor product behind open source distribution (far too many vendors continue to do this...), about "pure" support models and their viability, among other things.

But one lesson stands out above them all, and was first related to me by a good friend at Red Hat:

Customers are open source's only true friends.

A bit forlorn? Well, it might have seemed so before, until Red Hat's top partner, Oracle, stabbed it in the back. Or until its top Linux competitor - and ally in the open source fight - Novell, sold its integrity to Microsoft.

If Red Hat can't count on its partners to...partner, or its competitors to...compete, then on whom can it count?

Its customers. The companies that continue to rate it #1 in value.

If you're an open source vendor, you need to understand that Red Hat isn't alone in this. Your customers are the only ones who truly appreciate the value you can bring through open source. You may want to rely on a big, proprietary sugar daddy to help you get to market. By all means, do so. But if these past two weeks teach us anything, it's that it's critical to hedge our bets.

Open source vendors are a clear and present danger to all proprietary software companies. Open source vendors have no long-term friends among this Proprietary Bloc. Because, at the end of the day, open source's lower prices and greater access are a direct threat to the license revenues and maintenance streams of the Proprietary Bloc.

Again, this is not to say that open source companies shouldn't partner with proprietary vendors. Of course they should, as this will often lead to greater customer value. But they shouldn't do so with a Pollyanna hope that the proprietary vendor is going to love them for demonstrating that software can be delivered with higher quality, lower prices, and a tighter alignment of vendor/customer interests through open source than it ever was with a bloated, customer-unfriendly license model.

Focus on the customer. Partners and competitors will come and go. Open source customers will stay true. Their businesses depend on it.

Novell helps Microsoft to tax customers

Novell got duped. It didn't mean to - after all, it's been struggling financially for a decade now, and getting some help from a partner, even a dubious one like Microsoft, probably felt like a risk worth taking.

I just hope the rest of the industry will stand firm.

Red Hat has publicly stated that this Microsoft/Novell deal imposes an "innovation tax" on the industry. I doubt few understand what they're getting at. As I work through the public statements on the deal, I'm coming to understand it more and more, and I'm worried. It's not enough to put Goldman Sachs on stage to "prove" the pact is a good deal - anyone know of a bigger investment banking customer than Microsoft for Goldman? Nope. Me, neither. Microsoft would have to get a real customer that isn't shackled to its nipple to give its "customer testimonials" more credibility.

Let's be clear about what this pact requires, as Pam at Groklaw notes: Novell to pay royalties to Microsoft in exchange for a covenant on Microsoft's part not to sue Novell. Translation? "Give me your lunch money or I'll beat the crap out of you."

Novell should be ashamed of itself for playing along with this. No doubt its own salespeople will go out into the market, competing with Red Hat with the words, "We're the only ones who can provide "safe Linux." Could Microsoft hope for anything better? One of Linux's top two vendors scaring the 80% of the market that has long chosen not to buy from it.

Microsoft learned some time ago that suing "the community" was a bad idea. So it proxied the community through Novell. Ballmer says as much:

...I think of Novell as a proxy for the customers. Novell works with the open source community, and so we needed to have a way to work with Novell that was respectful of the community, but nobody represents the community. On the other hand, our customers were clearly saying, we want somebody to represent us in the use that we will make of Linux. And the customers weren't picky, they said, find somebody who is in this game who really wants to get after it. And so, as I said, we got after that with [Novell].

Novell, a proxy for the open source community? Novell, the company that has been shuttering every open source project it has started, Linux excepted? Surely Mr. Ballmer could have found a better proxy, one that most of his customers (80%) already buy from: Red Hat. The smart money says that Microsoft offered this Faustian pact to Red Hat, and Red Hat told them, "Don't let the door hit you on the way out."

Why? Again, it comes down to what is truly best for customers: choice without the innovation tax. Ballmer says:

if you want to use Linux, let's make sure that you get a version of Linux that respects our intellectual property.

Think about that. Now let me spin it a little:

If you want to use anything besides Microsoft, let me at least make sure that you pay Microsoft, all the same, through hush money royalty agreements.

Farfetched? Reread Ballmer's statement.

I'm willing to bet that Microsoft will be hitting the road with this Novell pact, urging other open source companies to sign up to pay for the right to not be sued. They had to have someone desperate enough to cave in the first time to make sure the next few go down more easily. Don't be fooled.

Pam isn't. She writes:

I gather Microsoft no longer thinks Linux is a cancer or communism. Now it just wants a patent royalty from it. Wasn't that kinda SCO's dream at first? A kind of royalty on every box sold, every server shipped? Blech. And this "patent promise" is only for SUSE, so that tells the discerning observer that Microsoft will likely be suing others. As for Novell, if history means anything, it will end up Microsoft roadkill. It's so funny to me that nobody ever remembers what comes *after* the Embrace.

Poor Novell. You're like Fontine in Les Miserables, forced to sell yourself by indigent circumstances. You should have tried open source, instead. Some rather like it. Like, for instance, those of us who live in

The Independent Republic of Open Source

Open source venture investments down

I found this news from Sandhill.com to be fascinating. Open source investments have tapered off lately, as Jonathan Klein writes:

Investments in Open Source were cool in Q2. While the number of Open Source projects continues to grow (at last count there were over 129,000 projects on SourceForge4), only seven companies commercializing Open Source projects were included in the study. Has Open Source played itself out as a viable category for venture investing? The early successes in Open Source were in categories like operating systems and application servers that reached millions or even tens of millions of potential users. However, the number of categories with that broad of a potential user base is small. It is questionable whether commercializing an Open Source project is a winning business model in categories that appeal to only hundreds of thousands or even just tens of thousands of users. Low volume multiplied by low price is not a recipe for success.

I disagree with his reasoning, but not with his number: seven companies. That's peanuts.

I wonder if VCs are looking around and saying, "Open source CRM? Been done. Open source ERP? Been done." And so on, figuring that each category could only support one vendor. I hope that's not the case, because it shows wrong-headed thinking about open source (i.e., it implies that it's a commodifying force, rather than an innovative and disruptive force). If VCs think the market needs a mass of social networking sites (40% of consumer investments fit this bill in Q2), surely we need more than one open source ECM (or CRM, ERP, SCM, etc.) vendor.

We're at the beginning of open source's rise, not the end. The time to invest is now.

The forking game (LinuxInsider)

Interesting perspective from LinuxInsider on Oracle's move to supplant Red Hat's support. The verdict? Capitalism is alive and well in open source, as Mark de Visser says:

This is a hostile takeover in the open source world, and that is bound to happen again. What we're learning here is that the rules of capitalism apply as much to the open source world as they do to the rest of the world.

The question for every open source company going forward should be: how can I avoid being forked?

My personal vote? The GPL.

No, the GPL isn't as helpful in the case of a community-driven project like Linux. But if you own the IP, it forces the would-be hijacker to make money from support, and only support, and only for one's "Community" product. Oracle couldn't do to most commercial open source companies what it did to Red Hat, because most open source companies own the source code they open up. They can then control what an Oracle can do with the production version of the software.

In short, when you sign a commercial contract with an open source vendor that owns their IP, you may be signing away your right to fork. Not a problem for well-intentioned customers, but a real problem for would-be competitors.

Are you assimilated?

Jimi Hendrix once asked, "Are you experienced?" The new song, however, is "Are you assimilated?"

Assimilated into what? The Borg, of course. :-)

What is The Borg? It's the ever closing world of the large, proprietary ecosystems. Such ecosystems deliver a lot of value - greater integration between components, improved (theoretically) ease of use, etc. Microsoft has been the master of this, and Oracle is mounting the most formidable challenge to Microsoft (perhaps one reason for the Linux announcement, and clearly a reason for its announced acquisition of Stellent, an Enterprise Content Management vendor).

It's apparently not a new thing, either. The Biblical prophet Isaiah said...

Woe unto them that join house to house that lay field to field till there be no place that they may be placed alone in the midst of the earth. (Isaiah 5:8)

Was he seeing Ballmer or Ellison? :-)

One thing is interesting in this Borg-y of consolidation is that people seem to believe that open source offers the antidote or, at least, an alternative, to the Borg. I don't know that it does, but I'm surprised by the number of customers, prospects, partners, competitors, etc. who tell me that the trend toward the Borg is largely unstoppable...except for open source companies. That there's risk in buying from a little vendor...unless it's an open source vendor. Etc.

I truly hear this daily, and I don't know why they say it or even if it's true.

It's why Marten Mickos can say

We will be part of a larger company, but it will be called MySQL.

in response to inquiries from Oracle as to whether MySQL was for sale (It's not).

It's why Red Hat continues to beat to the tune of its own drummer (a tune that customers apparently like quite a lot).

On that topic, don't you hope they stick it out? I've heard a lot of people sneering at Red Hat's supposed "comeuppance" at Oracle's and now Microsoft's hands. I don't understand why. Don't we want an Independent Republic of Open Source to compete with the Borg Bloc? I don't care if it's Red Hat, or MySQL, or whomever that assumes the "hub" role in the open source ecosystem, but someone should, and now.

I'm with Ionesco in his classic play Rhinoceros, one of my all-time favorite plays and a must read for any open sourceror. When everyone else starts turning into rhinoceroses (you'd have to read it), the protagonist ultimately declares:

Je ne capitule pas!

Translation? I won't capitulate.

Me, neither.

Microsoft and Novell: Much ado about...

I was in meetings and flights all day, but when I got off my last flight of the day, there were scads of emails waiting for me on my phone.

"I hope you haven't sold all your Novell stock!"

"We have GOT to talk about this!"

and

"Red Hat is screwed now!"

I figured the Red Sea had parted to allow Ron Hovsepian and Steve Ballmer to pass, holding hands and singing kumbayah.

Nope.

What I learned, once I got to my computer, was that Novell and Microsoft have agreed to do what the market has already been forcing them to do: interoperate and not sue each other. Am I missing something? Oh, yes. "Sales support." I'm not yet sure what that means, but I guarantee it doesn't mean doing anything to promote Linux, as Ballmer said:

"If you want something, I'm still going to tell you [to buy] Windows, Windows, Windows."

He has a fiduciary duty to sell Windows, Windows, Windows, and to partner with whatever companies he thinks will help him sell more...Windows and with those that help him kill...Linux. Which camp does Novell fit into? Not sure, but I don't think it's in Novell's shareholder interest to help Microsoft with either goal. This isn't about helping Linux (SUSE Linux or otherwise), but rather about killing the only real threat to Microsoft's dominance in the operating system market:

Red Hat.

On the technical integration, it's fairly focused, as reported by ComputerWorld:

Microsoft and Novell plan to work together on three key areas of technical collaboration: virtualization, Web services management and the Open Document Framework spec. Specifically, the companies will build technology that will allow customers that want to run Windows on top of IT environments that primarily run Linux and vice versa.

Sounds rosy...kind of like when Microsoft made BIG NEWS about its truce with Sun. Anyone remember much coming out of that? Me, neither.

The most interesting thing about the news is all that was left unsaid, namely:

• Microsoft clearly does not view Novell as a threat. You don't link up with those that threaten to crush your business, not unless customers are demanding it. Given the relative market shares of Red Hat and Novell, it's a near certainty that if Linux and Windows integration is desirable (and it is, and customers are asking for it), then the most desirable partner for Microsoft (from a customer standpoint) would be Red Hat. Which brings me to...
  
  
• Red Hat is clearly doing just fine without Microsoft. People like Rob Enderle are foolishly calling this the end of Red Hat's road. Red Hat is at the top of its game, and has massive market share. Will the Oracle move and Microsoft's buddying up with Novell cause some pain for the company? Sure. But the real news is why Oracle and Microsoft felt the need to act in the first place.
  
  Why did Oracle choose to dump on Red Hat? Because Red Hat is a perceived threat. Why? Because Red Hat is dominating the Linux market. In related fashion, Microsoft is partnering with Novell because it gives them a way to show good faith to customers without actually impacting its business negatively. Does anyone really think Microsoft would do anything to jeopardize its Windows business? Of course not.
  
  So, when you hear Ballmer say this:

  "We want those customers who are coming to Windows and Linux to chose the Novell SUSE product line, and we are going to put our marketing behind that."

  and you're a would-be customer of Linux, is your decision really going to be driven by what Ballmer wants you to do? Am I the only one that feels his seal of approval for a technology he'd dearly love to kill is clearly disingenuous and designed to support a weaker competitor in the hopes that both Novell and Red Hat will die?
  
  
• Microsoft wasn't going to sue Novell, anyway. A little remarked, but still true fact is that Novell has long held patents that go to the heart of Microsoft's Office business. Whatever saber rattling Microsoft might do about Linux, it knows that Novell has a great "counter argument." This announcement was little more than public acknowledgment of an uneasy truce. And it's a truce that helps Red Hat as much as it does Novell...
  
  
• The patent protection applies to Red Hat, whatever Ballmer might say. Specifically, he said:

  "Novell is acting as a proxy for its customers, and only its customers. If they (businesses) want patent peace and interoperability, then they'll have to look to Suse Linux."

  Given that most of the code in SUSE Linux is (gasp!) exactly the same as in Red Hat Enterprise Linux, it's hard to see what lawsuit Microsoft could launch against Red Hat (or Ubuntu, or Debian, or....) that wouldn't land on Novell's SUSE Linux, as well. So they won't. It's a clever gimmick, but only that.
  
  And if Microsoft tried to restrict its patent protection to SUSE Linux it would run afoul of Section 7 of the GPL, for the reasons above and below...
  
  
• The patent protection may violate the GPL on another count. First, as Eben Moglen argues

  If you make an agreement which requires you to pay a royalty to anybody for the right to distribute GPL software, you may not distribute it under the GPL. Section 7 of the GPL requires that you have, and pass along to everybody, the right to distribute software freely and without additional permission.

  Oops. Guess Novell's and Microsoft's lawyers didn't catch that one.

Clearly, this news will help Novell...for a few months. But every time partners have tried to prop up Novell (like IBM's investment a few years back), the market has voted Red Hat. Steve Ballmer's vote is not going to stem Red Hat's rise.

What would? Well, maybe if Novell would stop hedging its open source bet with "mixed source" and go full throttle. I understand the need to support its legacy products, but if Novell can't wean itself from its legacy, that's all it will ever be. Legacy. The green screen of software companies.

I left Novell precisely because the company refused to play hardball with Red Hat. Its mixed source message sends mixed signals, and has long given Red Hat free rein to woo customers and dominate the market. A Faustian bargain with Microsoft isn't the way to revive Novell's chances. It needs to lead, not follow, and certainly not follow the monopolist it fought for so long.

Novell has been doing great things in the data center, and has a solid and growing cadre of name-brand companies buying into SUSE Linux. This is the message it needs to be trumpeting. It needs to be pushing, not shelving, innovative open source projects like Hula and iFolder. Instead, it keeps retreating into its proprietary, legacy past under the guise of "mixed source" and interoperability.

You can do better than this, Ron. You need to lead the market.

The open source legal elite

I probably shouldn't use that title, because my intent is to convey those attorneys that are most active in open source, and not necessarily those that are best (though the two often go together, and I happen to know the attorneys listed here and each is excellent).

I'm sure I'll miss someone, but get asked all the time for attorney recommendations. Based on the track records and volume of open source work these attorneys do, I always feel comfortable suggesting them.

So, with that caveat, here we go:

• Mark Radcliffe, DLA Piper Rudnick Gray & Cary LLP. Mark is on the OSI board, and also advises Zimbra, SugarCRM, JasperSoft, Jitterbit, rSmart, Hyperic, Compiere, Funambol, Clovis Solutions, Univa, Krugle, Socialtext, Sun (he helped with their open sourcing of Solaris), and others. Mark is the one I went to when I thought about starting a business a year or two ago.
  
  
• Heather Meeker, Greenberg Traurig, LLP. Representative clients include Alfresco (yes, we work with Heather and love her), Mozilla, Google, Open Source Applications Foundation, VA Software, MontaVista, and others.
  
  
• Jason Wacha, MontaVista Software. Unfortunately, Jason is already general counsel of a company, so you can't retain him. But he's one of the smartest open source attorneys on our planet.
  
  
• Bryan Sims, Squire, Sanders & Dempsey, LLP. Bryan would be in the Open Source Legal Superhero hall of fame on one achievement alone: he was a key driver in Red Hat's brilliant licensing model. He's been busy since he left Red Hat, but, again, that one achievement was massive.

Of the bunch, Mark and Heather are the most active open source attorneys (of which I'm aware). Some up-and-comers include:

• Ira Heffan, Goodwin Procter LLP. Representative clients include JBoss (on the Red Hat acquisition), Black Duck Software, Optaros, and Pentaho, among others. I first met Ira back in my law school days - Ira wrote the first law review article on open source licensing, back when no one in the legal world had even heard of open source. His paper was the basis for my own thesis paper at Stanford (which passed muster with my advisor, Larry Lessig, so it must have been OK...thanks to Ira's work).
  
  
• John Brockland, Cooley Godward LLP. Representative clients include Chumby Industries, Creative Commons, Funambol, MontaVista Software, and Specifix.
  
  
• Lynn Engel, Summit Law Group. (Seattle) I list Lynn as an "up-and-comer," despite her extensive experience in open source (representing my old company, Lineo, as well as Real Networks and others), because she doesn't make open source her focus. But she knows it cold, anyway.
  
  
• Jason Haislmaier, Holmes Roberts & Owen, LLP.

I'm also aware of good work done by Mark Koehn (Shaw Pittman), Tony Pierce (Akin Gump), and others. I'm sorry if I left a deserving name off the list. If so, please comment as to who is missing, and why they should be on the list.

Btw, I didn't include people like Larry Rosen, Eben Moglen, etc. who obviously know open source cold. I tried to confine the list to people at law firms that are available to retain, and I know Eben doesn't fit that bill. Not sure about Larry, though he is at his own firm....

What the heck is Sharepoint 2007? (John Newton)

Normally, companies are keen to tell you what their products do, who should buy them, etc. Not, apparently, Microsoft.

John Newton, a colleague of mine, has been watching Sharepoint for years, and so has been looking forward to Microsoft's upcoming release of Sharepoint 2007. The problem, as he notes, is that he's not sure exactly what he's waiting for. Microsoft's not telling.

You look on the Microsoft web site and it is a very confused picture. You are not told what Sharepoint is; you are told what Sharepoint does. You are told that Sharepoint "improves organizational effectiveness". You are told that you can "turn information into results". Perhaps more informative is that Microsoft(r) Sharepoint Office Server 2007 is "one unified suite of enterprise-scale applications that satisfies diverse business critical needs". Hmmm, more informative, but not necessarily clearer.

Sharepoint is first and foremost an exercise by Microsoft to extend their monopoly of Office. [Asay note: I've written similar things before.] Sharepoint is part of the Office group....

Sharepoint is also a platform, but good luck determining what that platform is aimed at based upon Microsoft's web site. If you follow their demo, you probably think that Sharepoint is a CRM system. However, the demo gives you probably the clearest picture yet of what that platform is. At the end of the demo, you get a circular diagram that lists: Collaboration, Portal, Search, Content Management, Business Process Management and Business Intelligence, surrounding a platform core circle. This is to illustrate the very confusing distinction of Microsoft Office Sharepoint Server (MOSS 2007) from the operating system level of Windows Sharepoint Services 3.0. Obviously a Microsoft turf war in the making.

So, it's...a Thneed! You know, that product from Seuss' The Lorax that is...

...a Fine-Something-That-All-People-Need. It's a shirt. It's a sock. It's a glove. It's a hat. But it has other uses. Yes, far beyond that.

It's intriguing to me to talk with large enterprises where Sharepoint is running. That includes most companies, because Sharepoint grows like a weed. Its baseline version is free and comes with Windows Server 2003. It's relatively easy to set up for a small workgroup and allows you to do...not much, but you can share documents through a lightweight portal.

The Sharepoint Portal product, however, is a more robust solution, but only allows that same lightweight collaboration across an enterprise. It's very difficult to program and is a great way to ensure Microsoft owns a customer's content forever. Or close thereto.

All of which doesn't really tell you what Sharepoint 2007 does. I don't know. No one does, and Microsoft isn't telling. I'm sure they'll be happy to tell you once you pay. You see, that's how proprietary software works: pay first, struggle with it later. :-)