The Open Road

...Today I saw something that should petrify Microsoft. I was visiting a large financial services company and couldn't help but notice Google Apps running throughout the floor as we strolled past. It turns out that the company is actively rolling out Google Apps because it figures the vast majority of its users have almost no need for full Microsoft Office functionality.

This was long the premise behind why enterprises would switch to OpenOffice, but I suspect that OpenOffice wasn't disruptive enough. It's not purely a question of license cost: It's also a question of training and deployment costs.

With Google Apps, the end-users are largely driving the change themselves. They want the change, because they're already using Google Apps (Gmail, Docs, Calendar) at home. Having these at the office is a welcome surprise, rather than an unpleasant surprise foisted on them by the IT department.

So, while the competition between Google and Microsoft might not be zero sum, Microsoft has a lot more to lose from the duel than Google does, which has seen Microsoft barely ripple the surface of its advertising hegemony despite a concerted effort to create waves. Google hasn't hurt Microsoft, either, but then, it hasn't really tried.

Yet.

The Wall Street Journal did an interesting study on how ethical a company has to be to yield increased sales. As it turns out, "not very."

The Journal defined "ethics" broadly as "socially responsible," and then set about trying to determine just how socially responsible consumers demand of a company before they'll take their business elsewhere, and at what point the value of social responsibility tapers off:

It seems that once companies hit a certain ethical threshold, consumers will reward them by paying higher prices for their products. Any ethical acts past that point might reinforce the company's image, but don't make people willing to pay more.

I found this intriguing, in large part because I think many software vendors try to do "just enough" in terms of open source to ride the open-source wave of hype, but try not to do any more than this. Perhaps this is a good strategy from a purely economics standpoint: There may be no shareholder benefits from being "pure" open source. Being pseudo-open source might do the trick.

That said, for me there are plenty of other reasons to invest deeply in open source, some pertaining to how it makes me feel about my job, but others about how efficiently it allows me to do that job.

It's unfortunate that Ubuntu's Mark Shuttleworth doesn't blog more often, because when he does, it's invariably insightful. As a case in point, Mark's post about the superiority of open source at hitting release dates is wonderful. He writes:

Most people would assume that precise release management would depend on having total control of all the moving parts - and hence only be possible in a proprietary setting. Microsoft writes (almost) every line of code in Windows, so you would think they would be able to set, and hit, a precise target date for delivery.

But in fact the reverse is true - free software distributions or OSV's can provide much better assurances with regard to delivery dates than proprietary OSV's, because we can focus on the critical role of component selection, integration, testing, patch management and distribution rather than the pieces which upstream projects are better able to handle - core component feature development.

Unfortunately, it may not be true. At least, not the extent that I'd wish it.

Boingboing is reporting that Microsoft is forcing OEMs into using artificially low hardware specifications. Even if you erroneously believe that OLPC is simply a matter of price tag, Microsoft's actions are puzzling, to say the least. Well, as long as you imagine that Microsoft is in it for the kids.

As Cory Doctorow notes:

Microsoft is trying to distort the market for cheap, tiny laptops by setting up artificial incentives to manufacturers to limit the power and capability of their lowest-cost units -- even if a vendor can figure out how to put more storage, a bigger screen, or a touchscreen into its machines, Microsoft doesn't want it there, and they'll punish any vendor that tries by refusing to license XP Home Edition on the same preferential terms that lower-spec machines get.

Why would Microsoft do this? More pertinently, why would OLPC sell out its ideals? IDG News Service suggests that Microsoft is trying to prevent cannibalization of its mainstream desktop market. That is an understandable goal, but not necessarily a laudable one given Microsoft's alleged intention to play fair with OLPC. I suspect something more is involved here.

If anyone out there persists in believing that Linux isn't ready for serious prime time, NYSE Euronext's dependence on Red Hat should finally lay that silly notion to rest. As announced, the New York Stock Exchange Euronext dumped its proprietary UNIX heritage (AIX, HP UX, Solaris) for the freedom, flexibility, and performance of Linux.

As NYSE Euronext's CIO noted:

With the combination of speed, cost, reliability, and functionality pushed to the limit, we have to out perform the competition in each category, and our competition is getting better all the time. Linux as an operating system has been the fastest growing with respect to these requirements, and we're not limited by what's in front of us. The quality of the Linux platform is greatly important to us and Red Hat Enterprise Linux has exceeded our expectations....

Red Hat is almost like water, it's pervasive within our architecture. Red Hat is extremely strategic and without it, most of our computers wouldn't be running.

Linux isn't a price tag. It's a strategic decision to go for superior performance, flexibility, value, and innovation. The NYSE Euronext could have spent its money anywhere, but didn't. It went with Red Hat Enterprise Linux. Linux is the new prime time.

UNIX...? Not so much.

I've commented on Oliver Alexy's research on open source's effects on stock prices before, but was gratified to see it featured in today's Wall Street Journal.

It turns out, as per Mr. Alexy's research, that open source can have a salubrious effect on one's stock price, but only if done right:

Companies saw their stock price rise if they met one crucial condition: explaining how they expected their open strategy to bring in short-term revenue. Companies that clearly communicated a short-term revenue model saw an average stock-price increase of 1.6 percent. Companies that didn't saw an average decline of 1.6 percent. This means companies can't rely on vague long-term assurances.

Ironically, this betrays a woefully naive view of open source by the market. Open source is a marathon, not a sprint. It's not a quick fix for any business.

In other words, the very thing that the companies most need to do (i.e., take a long-term view of open source's benefits for their businesses) is the thing most likely to punish them in the market. Who said markets are rational?

I just left a meeting with a large enterprise that dumped Microsoft Sharepoint for Alfresco for content management and collaboration. While that makes me smile, the thing that I loved hearing most from the vice president of IT was her general thoughts on open source, and why it's getting more play within this media company, including Alfresco, MySQL, Liferay, and more:

The culture here is about freedom and the ability to impact things ourselves. We're adopting more and more open source because we want to be in control of our own destiny....

In some cases, open source has meant higher implementation costs upfront but lower costs over the long run.

There is a resistance here to being framed into a long-term proprietary path: Closed APIs, closed standards, and closed source force us onto a vendor's licensing treadmill - we don't want that. We want flexibility and choice. We think about IT for the long run.

Music to my ears, and money in her pocket. I meet more and more IT people just like her, people that are tired of having vendors dictate their possibilities.

I and others have argued that it's critical to open source's future that licenses like the Affero GPL close the "ASP loophole" by requiring companies like Google to contribute back derivative works of open-source software that they distribute as a service, rather than as packaged software. Now Gordon Haff is suggesting that requiring Web 2.0 to Contribute 1.0 may cause more problems than it solves, and he could well be right.

The problem has nothing to do with whether Web 2.0 vendors like Google are required to contribute back. The problem is all the so-called Web 2.0 users:

Distribution in the GPLv2 and GPLv3 licenses draws (mostly) a hard-edged line. If you're an enterprise using software internally, anything goes. If you're using GPL code in software you're selling to the public--whether downloaded, on a CD, or in embedded firmware--you must make the relevant sources available. However, as more and more companies of every stripe make parts of their computing infrastructure available to their customers--think online banking, for example--where does it end? The boundaries become very fuzzy--which would inject lots of uncertainty into just about any use of open source in an enterprise environment.

This is a very, very good point. I'm not sure how to answer it.

The BBC is spot on in suggesting that Mozilla's Firefox is a gold mine waiting to happen, though it's unclear how Mozilla gets there from here. Could Firefox be one of the web's biggest beneficiaries as a platform? Absolutely. Does it want to be?

That's not so clear.

Firefox is dangerously dependent on Google for its income. But now, in the "awesome bar" [Scheduled to hit as part of Firefox's 3.0 GA release this June], it's got its own search engine which could, in theory, provide a very valuable stream of data about the browsing habits of hundreds of millions of internet users. Tristan Nitot claims that Firefox is approaching a 30% market share.

Mozilla isn't the sort of organization to profit from the private activities of its users, but what if we wanted to give up a bit of our privacy in order to glean additional benefits from our browsing experience? It could mean serious, new cash for Mozilla, which in turn would fuel the development of much more excellent open-source development.

I'm intrigued.

The problem with the future is that it's, well, the future. Most of make lousy prognosticators, despite our wealth (or poverty) of experience.

Such was the case with the music industry, which stared its digital future in the face and...blinked. The Guardian traces the arc of its unfortunate fall. The problem, as Charles Arthur writes, is that the future often comes far too soon for our liking:

All in all, there's a lot of hostility towards the record industry, but if you put yourself in the comfortable position of that record exec - which John Lanchester, at the London Review of Books in 2002 described as being "reluctant to move from this [CD sales] model in the same way, and for the same reason, a python is reluctant to move when it has swallowed a goat" - then you can understand why. Some technical change is overwhelming. You can be rude about the record industry for not reacting fast enough to downloads, but the fact is that that overwhelming change happened years before it expected.

I believe that Software as a Service and open source are doing much the same thing to the traditional software license model.