Open-source upheaval

Open-source upheaval

"I don't use the word 'evil,'" says Mike Evans -- though he acknowledges that some of his customers do see proprietary commercial software vendors that way.

As vice president of corporate development for leading Linux vendor Red Hat, Evans patrols the front lines of one of the most important conflicts in computing today.

On one side, along with Red Hat, are companies such as Alfresco, MySQL, and SugarCRM -- all leaders in the nascent business of open source. On the other side are the Microsofts, the Oracles, and the SAPs -- the old guard of proprietary enterprise software.

IT purchasing managers, frustrated by ever-escalating licensing fees, often paint the proprietary vendors as the villains in this saga. Some even hope that open source will be the David that stops these software Goliaths in their tracks: no more vendor lock-in, no more license fees, no more closed code.

Could it really happen? Could the proprietary software model disappear in our lifetime? And more importantly, what would that really mean for customers? Open source has already had an irrevocable impact on the software industry. If that trend continues to its ultimate, it could mean the annihilation of the software market as we know it.

But such an outcome is hardly likely. According to Evans, it's a mistake to paint the open source debate in such Tolkienesque terms.

"The majority of Red Hat people do not wake up in the morning saying, 'how do I hurt Microsoft,' or 'how do I hurt Oracle,' or whoever it is," he says. "They look at how they can make a better piece of technology for the market and for their customers."

While an all-out cataclysm in the software industry is unlikely, change is inevitable. The software market is a very different place today than it was 10 years ago. Over the next decade, it will continue to evolve in unexpected ways, tugged this way and that by open source and proprietary interests. And, as in previous software eras, customers will be forced to adapt.

Giving it away

How did we get to where we are today? The popular misconception is that open source has become popular due mainly to its low cost. T.H. Wood, a principal with Bintex, a technology consulting and systems integration group, is unequivocal on this point: "The majority of our customers are not choosing open source based purely on expense," he says.

Yet no one denies that cost, or rather the lack of it, has revved up the engine of software distribution. Free downloads now proliferate even among proprietary vendors. It's hard to imagine how any market could remain stable when producers give their products away for free. Yet practically every software vendor now does it, open source or not.

"I don't think you would see IBM, Oracle, and Microsoft offering free 'express' versions of their [database] products if it weren't for the popularity of MySQL, for example," says Zack Urlocker, executive vice president of products for MySQL.

Giving away software might seem like a poor business decision, but it's a good way to reach certain key demographics -- notably, education. Students who become familiar with a free version of a commercial software package are more likely to use the full version later in their professional careers.

That brings up an important concern that some customers have about open source. Free downloads of proprietary software are usually restricted in some way, be it through licensing terms or removal of certain features. For this reason, they have seen only limited use in enterprise settings. Open source vendors, on the other hand, routinely give away full-featured versions of their software. You can download and use all of the programs that make up Red Hat Enterprise Linux, for example, whether you pay Red Hat for a support contract or not.

What kind of foundation for a business is that? As customers, can we really put our faith in software companies built on such shaky financial footing?

Red Hat's Evans admits that there will always be people who don't want to pay for software; not every download of Linux guarantees Red Hat a sale. Proprietary vendors face this problem, as well. But Evans cautions us not to assume that everyone who uses open source software without paying for a support contract is a freeloader. He says that users who don't need professional support are generally highly technically capable and often end up contributing to Red Hat's product in other ways, either directly or through the broader open source community.

"They either in some cases will send bug reports, or in some cases they will actually contribute potential fixes. That's the beauty of the participatory community model," says Evans.

This participation highlights the real game-changing effect of open source. Giving away software is not new, nor has the greatest impact of open source been financial. But thanks to the community process, the relationship between software producers and end-users has been transformed -- to a degree that has forced proprietary vendors to rethink the way they engage customers.

Flex time

Evans might eschew the word "evil" to describe closed source vendors, but he does rely on another, mildly pejorative term. "I use the word 'protectionist,'" he says. "It doesn't mean someone's a criminal if they're a protectionist. They're trying to protect what they've built up, what they've done, and what they do."

But the protectionism practiced by closed source software vendors comes at a cost to the customer, according to Evans. Vendor lock-in, lack of interoperability, and the inability to make modifications to a software product -- even to fix security flaws -- all limit the value of the product to the customer.

"Customers are using open source to rebalance the relationship with vendors," explains MySQL's Urlocker. "Open source helps mitigate platform lock-in, for example."

Bintex's Wood agrees, adding that in his consultancy, open source has become the norm, rather than the exception.

"There is no question that 100 percent of our software deployments involves open source, even though the end product may not always be," he says. "Five years ago, it was often the case that our clients would say, 'open what?' Now, it is rare that we work with a client that has no knowledge of, or desire to work with, open source."

For Wood, open source's popularity boils down to one clear advantage. "It's about flexibility," he explains. "Even though the market will always demand some degree of closed source software, when there's an option to employ open source, we take it. Having toolset and application source code available lets us provide highly customized, cost-effective solutions."

Of course, few IT shops are forgoing proprietary software completely. Pure open source environments remain a rarity.

"Instead, I would say that closed source software is augmenting our open source deployments," Wood says. "For example, using commercial business intelligence tools against MySQL, or running Oracle on Linux -- open and closed source products complementing each other, and enhancing the value of both."

This is the reality of enterprise IT today, and it's a situation with which the traditional, proprietary software industry has yet to fully come to terms.

Valuable commodities

One of the most disruptive effects of open source is its tendency to commoditize certain categories of software. For example, the Web server market is dominated by the open source Apache, and small database installations are increasingly the purview of open source databases. What commercial company would bother to compete with these offerings when their feature sets are so rich and standardized?

Rather than seeing commoditization as a threat, however, Wood suggests that it could be an opportunity. "[Commoditization] could be a great thing for customers as software vendors, both open and closed, start to compete more on quality and support than pure features and cost," he says.

The Linux market has always taken this approach. When Linus Torvalds first released his code on the Web, installing Linux meant downloading and assembling the code yourself. It was only when third parties began packaging the Linux kernel along with other software into complete "distributions" that Linux became accessible to a broader audience.

Each distribution was based on the same fundamental code, but each offered slightly different performance tweaks and internal configurations. Friendly competition encouraged the distributions' maintainers to continually strive to improve their products.

Eventually, some of those distributions became so polished -- and so popular -- that they began charging customers money. At first, they tried selling the distributions in retail boxes, but that model didn't reach the core audience. Eventually, the distributions that catered to enterprise customers focused their business around support and maintenance. In other words, customer service became king.

"Five years ago, when we started doing subscriptions, it was considered different," says Red Hat's Evans. Today, Red Hat's subscription-based support agreement is considered one of the model examples of how a company can build a successful business around open source.

"Once you get past features, software is about support," says Wood. "You could pay $1,000 a year for the software and receive support for free, or get the software for free and pay $1,000 a year for support. From the customer point of view, I would argue that the latter is always the better bet. When you need support, you may actually get what you paid for."

Of course, proprietary vendors have always offered support contracts. But with their high overheads, they have to charge a lot more to offer the same level of service as a lean open source company.

Evolution or extinction

Such challenges lead some to insist that proprietary software is destined to go the way of the dodo.

"There will likely always be proprietary software companies, but over the next 10 years, I would expect them to become the exception and not the norm," says Dave Rosenberg, CEO and co-founder of open source ESB vendor MuleSource. "The rise of open source has barely started."

Others reject predictions of drastic change in the software industry. "Open source software will be expected and required by a large percentage of the marketplace," Evans says. "But there will also still be a significant portion of people who will not know, or care, if the software or application or Web site they use is open source or not."

True enough. But there's no escaping the fact that the software industry is in a time of enormous transition. Open source isn't the only challenge facing proprietary software. Although the market for Web-based software as a service (SaaS) is at an even earlier stage than commercial open source, it could potentially prove just as disruptive when the technology fully matures. For established players, the challenges are coming from all sides.

"When Japanese carmakers came upon a better formula for value in the 1970s and '80s -- more cost-effective production, higher quality, lower pricing -- many of the same protectionist behaviors that are seen today [in the software industry] kicked in," says Evans. Customers reacted. And in some respects, the American manufacturers have never fully recovered.

Today's proprietary software companies can't afford to make the same mistakes. New business models have already made their mark on the software industry, and the changes are here to stay. The days when vendors could get by on vendor lock-in, lack of interoperability, and other protectionist tactics are drawing to a close. The call for a new relationship between customers and software makers is loud and clear, and the industry has no choice but to respond and adapt.

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