April 16, 2007
how well does open source currently meet the needs of shareholders and ceo’s?
[“Science Project”: part of the Microsoft Blue Monster Series. Backstory from Steve and Kris etc.]
This cartoon was an attempt by me to sum up the answer to a very simple question: If Open Source software is free, then why bother spending money on Microsoft Partner stuff?
I already know what Microsoft’s detractors will say: “There’s no reason whatsoever. $40 billion per year is totally wasted.”
This, however is not a very satisfying answer, simply because it doesn’t quite ring true. Otherwise there’d be a lot more famous Open Source billionaires out there, being written up in Forbes Magazine or wherever. And Bill Gates would’ve been ousted years ago.
I know very little about software, so my hunch is that the reason Microsoft is able to make money, is simply that running a large business with 2000 people on the payroll requires very different ways of going about it, than just hacking together something in your garage. Open Source may be free [at least at first], but how well does it scale? How well does Open Source currently meet the needs of shareholders and CEOs?
You tell me. Anybody who has more insight than me [pro or anti Microsoft, I don’t care], please feel free to leave a comment, Thanks.
[Comment– Darcy Moen:]“Hugh, the question you need to answer is: Does software drive business development, or does need drive software development?”
Darcy, I think that is a question we all have yet to answer fully. I don’t think anybody has cracked it 100% yet.
The way you framed your comment [read it in its entirety below] implies that the gap that separates what you aspire to do, and what you are actually doing with software is minimal. Even knowing what little I know about how IT works in the REAL world, I am not entirely convinced.
The “Microsoft vs Open Source” question doesn’t interest me so much. The question, “What/How does Microsoft have to do/change if it wishes to survive the next thirty years” interests me greatly. And not just Microsoft, either…
[UPDATE:] “Why are the open source business people not ultra-rich yet?” Serious food for thought.
[UPDATED:] JP Rangaswami. “10 Reasons For Enterprise To Use Open Source.”
[UPDATE:] Seth Godin. “It’s not often that I disagree with Hugh, but this time, I do…”
[UPDATE:] Rick Segal. “Shareholders, CEOs, and (for the most part) Investors are generally clueless when it comes to the beginnings of your great idea. You take the tools (whatever they are), your vision, and your passion into the game. You create a solution and see if the dogs eat it. You don’t worry about pleasing anyone, just fix the problem. If it was worth fixing, if the product/service you offer has value/meaning to people, you are there. Your shareholders and your investors will be happy after your customers are.”
[Comment– James:] If Microsoft views me as a customer, then why do they go out of their way to get me the tools needed to drive sales on their behalf? Why am I always getting reminders about the free services they provide? I have yet to be approached by Microsoft to purchase software/products. Not once. Other companies flood me with product offerings that they want me to buy. Microsoft doesn’t. They give me what I need to drive sales, which ultimately some ends in MS’s coffers, but also puts some in mine as well. I’ve come out ahead in my Partnership with Microsoft to this point, I wouldn’t say I’m a customer based on that. Customers end up on the negative side of the money equation, not ahead.
[AFTERTHOUGHT:] I am sad to report that Microsoft’s Steve Clayton has gone on vacation this week, so we won’t be having his wonderful contributions in the comments section for a while. But I’m hoping other MS folk and Partners will join in the discussion in his absence etc.]
[Bonus Link:] “10 things they didn’t tell you about blogging.” Fabulous.
You are phrasing the potential answer incorrectly. Don’t look for billionaires. The earliest valuable open source software has been core infrastructure software, such as the Gnu C compiler suite. The beneficiaries were:
a) The software developers who did not have to pay $500/person for a compiler suite,
b) The hardware sellers, who did not need to develop a custom compiler for their new chip
Another example is Sendmail/Postfix/et al. The beneficiaries are all the companies that use the Internet for email. The core DNS software is another example that benefits everyone.
Most of the easy examples of benefits are from what could be called a “pre-negotiated teaming agreement” among the software users to share development and support costs for software that they all want to use. Their benefit is that they pay only the software cost, not the extra billions needed to create those billionaires. The developers are usually just ordinary salaried employees of teaming companies.
“The developers are usually just ordinary salaried employees of teaming companies”
Sounds like those guys could use getting themselves a better agent
I think it largely depends on who the target market is for the particular bit of software. Most of the major open source projects (things like sendmail, linux, apache, etc) were designed by geeks for geeks. They are highly configurable and very often extremely stable.
The closer you get to non-geeks though the harder it has been for open source software to match up primarily because of the extra amount of time that is required to make an application not just functional but also intuitive and accessible to people outside of the geekerati. Fortunately that is all changing now that a.) developer tools for environments like OS X make it much easier to develop beautiful applications, b.) designers are playing a more active role in open source projects.
Ultimately though there is something else at play here. The people who love Microsoft (or any large vendor for that matter) use the tools and rarely if ever exceed the limits of what the tool was designed for. When they do they tend to find workarounds and move on. People that dislike vendors like Microsoft often were initially users of the vendors’ tools and move past what the tool was designed for and realize that the tool makes it damn near impossible to do something beyond what it was designed for. Finally they go look for something else and sometimes they find it (and it may be open source) or they may end up building it themselves (if they are so inclined) and realize that it is somewhat useful and so they open source it (or release it as a product).
One point though — open source doesn’t necessary equate to “hacking together something in your garage”. There are many open source projects in the world that are well engineered, probably much more so than their vendor counterparts in at least a few cases. When you do everything in the open it becomes very easy to separate the good from the bad.
I think your insight rings true. Startups like Linux as they begin because there are no apparent up-front cash advances for the technology and their tolerance for a little extra fuss to save the money is much higher. But as you point out… as the company matures, business accountabilities reign. As soon as someone in the company is responsible for payroll, support, reliability, attracting/keeping new talent, their decision criteria changes and business concerns eat up the cost savings. I liken it to college student vs. parent mentality. WHen you’re a college student and can live on pizza, beer, caffeine and adrenaline, you’ll stay up until 3am or whatever it takes to make stuff happen. Then, you have kids (accountabilities) and you find youself spending your (now larger) disposable income to offset time (which you have less of) to make stuff happen more easily and more surely.
The beneficiaries are whomever has that lower tolerance for risk and time investment.
Commenting under my personal account today.
Apache — runs 2/3 of the world’s websites — along with mySQL/PHP. Heck — it runs Arrington’s place!
Are you implying that Microsoft runs large companies on its technology?
Who says Open Source has to be about billionaires? It’s more likely to be found in smaller companies. Microsoft’s target market.
RJH: I’m a MS developer (well, I work with MS tools). I’ve never paid for a compiler (neither has the company I work for) — so that argument is kinda invalid. (we are an MS gold partner, so we get enough MSDN licenses for all developers)
the CPU one is, tho — however, the chip company still needs to write a backend for GCC, and have someone with mad GCC skillz inhouse. But atleast it’s possible.
SOME opensource scales really well. Some doesn’t. Linux is always taken as the shining example, however 99% of those on the core kernel team are PAID to be there. It’s just they are paid by IBM, Sun and a load of others.
Why spend money on MS stuff? Most ‘cos it’s REALLY good. Everyone whacks exchange, but it’s highly integrated, and usually works really well. Most of the problems with it are a result of the incompetance of the maintenance, not the software itself.
I think it would take a large number of 10,000’s of dollars — or a lot more if you take into account the development — to setup an equivilent open source system — if one was available. Sure you can do email and maybe calendering, but what about the other stuff — webmail, mobile, push email to mobiles, shared groups stuff, integration with PABX, etc etc. It’s a massive product. And thats only ONE of their products. The amount of stuff you have to ADD to linux to get near the funtions of 2003 server is crazy — if they are even available.
Personally, I dont like Vista much — and I dont like XP much either (I run 2003 server on my laptop, tho I do develop server-side software). I looked at linux, however it was just so.…. hard to get everything working. So I went and got a mac. With linux — and my experience with most other open source — I’ve had to work quite hard to get it to work. With MS software (and macos too), I dont — which is fine, ‘cos I wanna do stuff, not maintain my laptop all the time.
righto.
Dennis, is the context of your question whether Microsoft’s web technologies run in large companies or just MS technologies in general?
Funny, perception is sometimes that MS targets smaller companies, but really, target market is “scale”. Definitely in Large Enterprise and Fortune X00. Want some data on that?
Nic, good point on the “paid to scale” comment. Whether it’s paid out of the box or paid by the hour, someone pays, right?
have you ever worked with embedded stuff? Some of your comments on GCC parallel the discussions on BSP (Board support packages) for embedded space. It’s hard to get support for all platforms and they’re hard to manage.
I think it’s interesting to compare — not sure how the story ends.
Hello there. I’m a software developer who really digs open source software, and your question has left me thinking… And while I can’t offer an answer or some useful insight now, I can point you to this blog post I have stumbled upon just now, titled 10 reasons for enterprises to use opensource. It doesn’t answer the question, but at least might be an interesting reading.
p.d.: besides being a developer, I am also a big fan of gapingvoid.com. your posts are always interesting and the cartoons are just freaking cool. keep up the good work!
I remember reading the Cathedral and the Bazaar — a sort of manifesto of the open source movement(http://en.wikipedia.org/wiki/The_Cathedral_and_the_Bazaar) back in the late 1990s thinking — this is phenomenal. Here is an alternative way of doing stuff (business is only a sub-section of that). It is a networked model, still evolving, that satisfies a lot more than shareholders. It satisfies those involved in it, i.e. the developers in open source projects. In fact, the whole thing springs from their satisfaction and ‘their needs being met’. And that is something very few companies (and no corporations) can create and sustain.
Perhaps the MS Partner stuff is a pale imitation of the open source way of doing things (not in creation of products but in distribution). Btw, MS is involved in many open source projects themselves.
Just like throughout history there have been many fundamentally different ways of organising the society and government, there may be many fundamentally varied business models. E.g. there used to be kings, now mostly irrelevant. Who’s to say that the same fate won’t befall CEOs? Hopefully, it won’t take a bloody revolution to get there…
But I digress.
Kris — Hugh wan’t asking about that kind of data point.
But I should have been clearer. Depending on how you define what technology runs a business (applications/DB), scale (I think complexity + numbers) and which geography you’re in (US, EU. Asia-Pac, BRIC etc) then M$ is a no. 4 player — depending again on which numbers you choose to measure by.
Hugh didn’t say web though I mentioned certain technologies and that’s certainly where the action is right now.
Just remember that JP Rangaswami blogged about 10 reasons for enterprise to use open source recently. And he is a man who ought to know.
I’ve been a fan of Hugh’s work for quite some time. But when I listen carefully lately, I can hear the sound of Gapingvoid jumping over a very large Redmond shark, with a Koolaide chaser. It’s very intoxicating to think one might get a piece of MSFT action, because the action is very large, and even a small fraction of it could make you a Paul Allen or a Charles Simonyi. Heady stuff, indeed.
There was some discussion earlier about being a “Microsoft partner”. Based on over 30 years in the computing business, I can tell you what “partner” really means in Microsoftian. It’s a synonym for “food”.
One really good reason to avoid open source is the Microsoft/Novell deal.
Essentially the open source fanatics attempted to have SUSE and mono (open source .net) and Miguel Icaza excommunicated for making a deal with the devil (Microsoft). The hate that poured out was incredible.
I would NEVER trust that kind of fanaticism in my datacenter.
What would happen to a business if it bet the company on the wrong distro — one that suddenly was hated by the faithful for doing something wrong.
A 2nd really good reason is that open source is essentially a dishonest proxy war against Microsoft funded by IBM and others.
Hey Maggie, fair enough, and thanks for the kind words, notwithstanding.
Yeah, I got a lot of “shark jumping” comments both when I started the English Cut project, and the Stormhoek project. It goes with the territory. And yes, it isn’t risk-free, either.
But that’s what keeps it interesting…
Hugh — away on vacation but found an internet terminal while passing through Doha. The terminal was running XP on a ThinkPad
Not sure if we’re debating the right question here and it seems the old MS vs open source chestnut is the hot topic for people. As I think Adriana said, Microsoft is involved in open source projects. check out http://port25.technet.com/
I think the more interesting conversation in light of microsoft partners was technology companies and their profitability selling open source vs. commercial software. I gotta go run and catch a flight but I liked some of JP’s list — if I were setting up a business to sell tech would I go with commercial or open source as my offering? I have a bias so i’m not the right guy to answer but keen to see the discussion evolve
ehhh, being a Microsoft Partner myself, I can safely say I’m not treated as food. Whenever I have questions, it’s only a phone call or e-mail away and I get the information I need to make an informed decision. Employees, like Steve Clayton, are going out of their way to make personal connections, leading me to believe there’s a growing air of change in the way Microsoft will be conducting it’s affairs (at least in regards to their Partners).
I can guarantee you that I have gotten more from Microsoft than they have asked of me. Microsoft has gotten $300 of my earnings so far, which went to the purchase of an Action Pack, worth considerably more than $300. I’ve gotten hours upon hours of free training, virtual servers/desktops online for hands on training, etc. which allowed me to pass the 70 – 282 Exam to qualify as a Small Business Specialist. That alone has netted me several clients that were in negotiations with other service consultants.
They may have had that mentality awhile ago, I can’t say, but the picture you paint is definitely different than how they treat their Partners now.(at least in my experiences) If I sign up for a webinar, I get a phone call a week before, and the day before the webinar to remind me. This is something I don’t pay them a dime for, and they still take the time to give me a friendly reminder. That shows concern for the partnership imho.
If you’re question really is “how does Open Source meet the needs of shareholders and CEOs” I would have to tell you I have no idea. And like most “open source people” I really don’t care. Open Source solves a lot of problems, and even if it’s not better at it then Microsoft (although I firmly believe it is) it is certainly a hell of a lot more enjoyable. The freedom, the openness, the global exchange of ideas and solutions is such a breath of fresh air compared to the stale controlled environment of the MS-world.
But if your real question is “how come MS still makes money?” I would have to say it’s just fear an inertia on the part of it’s clients. The MS-way stands to Open Source as traditional media stands to blogging.
Hugh, I have to agree with you, you don’t know much about software.
Are you aware that your GapingVoid blog is driven by PHP (an open source pre-hypertext parsing language) and MySQL (another open source project, database system)?
It’s okay if you don’t know the ins and outs of software, you have a lot of company, as many of CEO’s and Shareholders know little about software either.
Hugh, did you install Moveabletype (the software that drives the Gapingvoid blog) yourself? Or did you have someone do it for you? I suspect you had people for that. Most CEO’s and Corporations have people for that too, they are called geeks or IT departments. They invest or pay people to do the geek thing for them so they don’t HAVE to learn much about software. They can stick to more lofty things like production, marketing, accounting, P&L, competing for and developing their business.
There are two ways to invest in technology to leverage your business:
1) you can license the use of proprietary software and invest time (and sometimes money) learning how to use it.
2) you can download, install, configure opensource software and invest time (and sometimes money) learning how to use it.
The big difference is: when your business or business model does not fit into the pretty little boxes software designers of proprietary software, you and your business are held captive to the systems provided to you, and you may wait for change or your software provider to adapt to your needs (if that ever happens). With opensource software, I can hire geeks to CHANGE sourcecode, or expand curent software functions to fit my business’ needs. When I have a need, I am free to change or modify the systems my business is based upon. I can’t do that with Microsoft CRM, Word, Excel, or Vista. I’m sorry Microsoft, I prefer to move my business at the speed of my needs, not yours, and as such, your systems will not restrain or restrict my companies’ progress (and ultimately my bottom line).
Hugh, the question you need to answer is:
Does software drive business development, or does need drive software development?
@ James.
I’ve worked for Microsoft since 2000 and for the 5 years before that I ran a small partner. In those days I felt lower than food. Since I’ve been with Microsoft I’ve heard a lot of people who are trying to change that, but since I don’t work in that area, I don’t know if that is working. It sounds like it is. I keep telling people that Microsoft today is not the Microsoft of the late 90s. Some People (Maggie) don’t beleive that we can change.
How well does provoking two opposing interest groups promote a conversation across the blogosphere?
The strength of Open Source lies in its innovation around the outdated licensing model. That’s where OS delivers — plenty — to CEOs and shareholders.
“If Open Source software is free, then why bother spending money on Microsoft Partner stuff?”
Simple. The cost of the software license isn’t the end of the story.
Let’s take two sets of people out of the picture. The feeble IT manager who thinks “No one gets fired from buying from the big player”. And the “Anyone but Microsoft” Biggot. Neither actually makes a decision.
If you’re talking about the comparison of two sets of desktop software how much more can people do with X Vs Y ? In business, over the 3 year life most people work, someone has to be less than 1% more productive to pay for cost of the Microsoft software. (If you’re a lawyer billing at £200 per hour it’s a LOT less than 1%). In the home Apple sell at a premium because — they argue — they can do things better / more nicely. You could ask Apple customers why they pay more than Windows ones — their answer would be “because it’s worth it”. If you ask Windows customers “Why not linux” — the answer is basically the saving isn’t worth it.
For deployment, infrastucture and servers you look at support, solution availabilty (partners etc) ease (cost) of maintaining it and the people who do go with Microsoft conclude that overall story is better with Microsoft. And the people who don’t figure the story is better with Linux, Old-school Unix, or (yikes) mainframes.
There’s a lot that Microsoft does right to support their direct customers, but despite their best efforts I think the channel lets the smaller customers down sometimes. Your question is quite a good one, as it acknowledges that open source software is not about saving costs (“free as in beer”) it’s about retaining the freedom to modify the software to suit your purposes. This will ultimately provide a more viable infrastructure.
Now, since open source isn’t really an “industry” or a single company it’s apparent that (at the moment) it isn’t as focused on meeting the customer’s needs out at the sharp end as businesses are. Nevertheless if you look at the way the Apache web server provides the infrastructure for a huge number of service providers as well as large private companies I think that the way forward has been mapped out.
This is what has been making Microsoft nervous (starting with the evidence of the infamous Halloween papers, and more recently leading to their focus on “software as a service”). They have a duty to provide a return to their stockholders, and yet they mis-perceive open source as “the enemy”. Their real enemy is their own size, which has led to an inability to be as fleet of foot as smaller competitors, or to innovate as quickly as, say, Google.
Remember when IBM had 75% of the world computer market? They are still a significant business, but they no longer dominate the whole industry. Microsoft have saturated their market, and must adjust to being the first IBM of the twenty-first century. Open source will continue to develop and will meet the needs of its user base better as time goes by. It needs the involvement of a larger section of the community before it meets their needs. So, to answer your question: “It will”.
@James O’Neill
I’ve heard how MS used to be, I don’t doubt that at all. I know that in today’s Microsoft, as far as the small business is concerned, they make me feel like I’m a valued member.
It’s the little things, like the phone calls regarding training or the newsletters of partner only promotions, or giveaways for being part of the first 100 to act on filling out feedback forms on how Microsoft is meeting the needs of the Small Business. Requests for feedback is a major indication they are working on changing their ways and it’s a good feeling they are asking “me” how I view them.
I got a phone call at 8am on Friday by an honest to god live person informing me of a new product that was being released for testing and wanted to know if I’d be interested in having a CD shipped to my house. Things like that make you feel valued.
Anyway, I think I’m off-topic here (don’t shoot me!) so I’ll close this with Microsoft is doing a great job in involving it’s Partners.
As for the OS thing, I’m too set in my ways at my age to want to fool with Linux, etc. I played with it several years back and just found it to be too much hassle to be worth the little bit of cash I was saving. That extra expense was well worth the full head of hair I still have on my head. The clients I serve are end-users and small businesses that don’t need specialized applications, so I’ll be sticking with Microsoft for filling their needs as I’m very comfortable with the products and can serve their needs better and faster. If I come across a client that needs something special that MS can’t provide, I’ll pass them on to my good friend who specializes in Open Source solutions. He does the same for me, so it’s a good synergy.
This should be closer to home… Tablet PC. So long XP/Vista, hello Linux