Free software grown organically on the Internet is starting to create intriguing commercial possibilities for resellers. Under the names "freeware" or "open source code", its developers freely distribute their source code, typically via the Internet. If a program strikes the Internet community as useful, it kicks off a ceaseless stream of improvements, modifications, bug fixes and ports. Since these are also in the public domain, the cycle rolls on, seemingly unstoppably. Freeware developers collect public domain enhancements from the user community and maintain the master copies.
Growing around the free core of open source code is a swelling number of commercial offerings. They range from support and maintenance to documentation and customisation, and they are starting to generate big dollars. It's this third-party commercial support that is opening channel opportunities.
International Data Corporation (IDC) predicts revenues from commercially supported freeware operating systems alone could reach $700 million this year. That's about one-sixth of the amount generated by Unix last year and strongly suggests freeware is reaching monetary critical mass.
It could also hint that the model of commercially supported freeware, with its accent on distributed development via the Internet, is a cheaper, more efficient way of producing high-quality software than traditional proprietary models a la Microsoft.
"It's legit. There's no question about it. This is one of the most interesting and compelling business models, and one that could emerge as a very serious competitor to Microsoft," said Dave Vellante, senior vice president of IDC.
Slice of heaven
If so, it may be the best thing since the invention of the tax haven for an end-user community fed up with buggy, over-priced and under-supported software.
Freeware formally appeared about 15 years ago with the GNU's Not Unix project, which aimed to create a free alternative for Unix. Corporate IT managers instinctively shuddered at the word "free", but the power of the model to produce the kind of software drooled over by users has become undeniable.
Consider these examples:
Linux - developed by Linus Torvalds at the University of Finland as a Unix-compatible operating system kernel, Linux generates the bulk of revenues in IDC's estimate. Commercially packaged at a fraction of the cost of Windows NT, its enthusiasts claim it has more functionality and is far more robust Apache - the most popular Web server software on the Internet, it runs upwards of 500,000 Web servers and commands 42 per cent of the market, compared with Microsoft's 14 per cent, according to a survey by UK consultancy Netcraft. Originally, Apache only existed for the Unix platform, but it was recently ported to Windows 95 and Windows NTGNU Emacs - part of the GNU suite, this is the world's most popular Unix text editor Sendmail - a freeware application that most systems administrators of proprietary Unix flavours download auto- matically because it is superior to anything that comes with commercial boxed products.
Netscape Communicator - Netscape has joined the freeware camp by distributing its browser source code free of charge. Enhancements contributed by the world's development community are bundled into improved versions of the freeware as well as into Netscape-supported and -branded browser products.
Cryptozilla - a full-strength encryption for Netscape created at Queensland's Distributed Software Technology Centre (DSTC). It provides the extra-strength encryption that US law forbids Netscape from exporting itself. As an example of the freeware model's incredibly fast reaction time, Cryptozilla was available within seven hours of Netscape releasing its source code.
SAMBA - a suite of programs originally created to allow Microsoft desktop applications to access Unix file and print servers. Written by Andrew Tridgell at the Australian National University, it is proving wildly popular. It makes Linux "smell and taste like an NT primary domain controller with all the capability of doing MS file and print services except it is faster, more efficient and more stable than NT", in the words of one user.
FreeBSD, PERL, Python, GNUPro, Pegasus - the list of popular freeware operating systems, scripting languages, tools and mail programs goes on.
Sneak a peek
Resellers squeezed by shrinking margins on their commercial code owe themselves a peek at freeware, according to Con Zymaris, managing director of Cybersource, based in Melbourne.
Cybersource is a Unix shop that services users of the pre-packaged Linux version put out by Red Hat. For about $100 RRP, Red Hat's set of three CD-ROMs includes more than 450 applications, including an operating system, Web server, several SQL database engines, tools and a full manual.
What does this mean for a reseller approached by a potential customer who wants a file server or Web server for their corporate WAN? The reseller can offer them Windows NT 4.0 for $1500 RRP or Red Hat Linux for $100 RRP. Linux provides the same functionality as NT, but is faster, more resource efficient and more reliable, according to Zymaris.
Best of all, from a reseller point of view, the customer may be eager to put some of the $1400 they've just saved back into support services that carry margins considerably more plump than those Windows NT packs.
Perhaps the question is not why resellers should look at freeware but whether they can afford not to. Red Hat estimates it will ship 40,000 copies of Linux all by itself this year. And it is only one of the major suppliers of pre-packed Linux.
Another is Caldera, headed by Ray Noorda, a pioneer of Novell NetWare and a man who knows a developing market when he sees one.
So reseller interest in open source code may boil down to the insurance policy of staking out a position in an expanding market.
What's the catch?
No matter if they download a raw version for free from the Internet or pay a small sum for a commercially packaged product, freeware customers can copy the source code and redistribute it without paying royalties or shareware fees.
Corporate Australia has long-standing prejudices against using freeware for mission-critical applications. Anything carrying the title "free" implies two things: first, that it is an amateur effort; second, that its developers can walk away from it without financial obligations to their customers. Those are not soothing thoughts for IS managers. Nor do they offer reassurance about consistency of support.
The rise and rise of the Internet has changed all those perceptions, according to exponents of the free software ideal. Recognising that the corporate sector is deeply sceptical of the term "free", developers at a recent summit agreed to help freeware's credibility by changing its name to "open source software". They defined open source software as free or commercial software whose source code has been made available so users can customise or extend it.
That differentiates it from so-called open software, such as the Java Development Kit which is free software; however, it is not open source software because developers must sign a very restrictive licence to use it and Sun owns the base-level Application Program Interfaces.
In terms of freeware's reliability, exponents of open source code point out that it already underpins many of the Internet's essential services, from Web servers to e-mail to the DNS system that supports Web addresses.
So any company that depends on the Internet is already relying on open source code for mission-critical computing.
The real strength of freeware is the immense resources freeware packages can draw on via the Internet. Popular systems such as Linux undergo massive, independent peer review, squashing bugs flat. They also enjoy ample technical support on the Web and from Usenet news groups. It could be argued that the well-established freeware packages have significantly better technical support than most proprietary packages can provide through help lines.
In terms of corporate adoption, small business is proving more flexible than its bigger cousin when it comes to adopting open source code packages, said Richard Keech, proprietor of Melbourne Linux reseller Rocket Micro Systems. "The largest companies tend to be more constrained by convention and less inclined to take risks. It is the small-to-medium sized businesses that want file and Web servers which are starting to order it," he said.
Another indication of a bright future in corporations may be the fledgling trend for the big software vendors to pay attention to freeware. Corel, for example, is porting WordPerfect to Linux - a move that wouldn't have occurred to it a year ago, according to Cybersource's Zymaris.
He views Corel's move as a sign that "there is very much an exponential growth in the acknowledgment that the open source group is putting out very stable code".