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Business Models and Open Source Licenses in 2019: Can we all get along?
- 1. Business Models and Open Source Licenses in 2019: Can we all get along? Stephen Walli, Principal Program Manager, Microsoft @stephenrwalli Jeffrey Borek, WW Program Director, Open Tech, IBM @jeffborek Stephen.Walli@microsoft.com jborek@us.ibm.com
- 2. Is there an Open Source Business Model? You are either CONSUMING or PRODUCING open source licensed projects
- 3. Is there an Open Source Business Model? If you are CONSUMING project components then Orders of Magnitude of Value Capture It’s all about Engineering Economics Software Process is needed to protect customer stability Build vs Buy vs Borrow + Share
- 4. Is there an Open Source Business Model? Congratulations … you’re Red Hat
- 5. Is there an Open Source Business Model? If you are PRODUCING then the software is either Core Value Proposition to Customers Complement Value Add to Core Value Proposition Context (Software Exhaust)
- 6. Is there an Open Source Business Model? Congratulations … you’re a Software Business
- 7. Is there an Open Source Business Model?
- 8. Is there an Open Source Business Model? Building a project community in context spaces: • Validates the approach to a problem • Demonstrates expertise that can be used in recruitment • Improves the quality of recruitment candidates • Demonstrates committed values to collaboration amongst developers that further recruitment goals • Captures innovation from outside sources
- 9. Is there an Open Source Business Model? Building a project community in complement value-add spaces: • Creates stickiness/inertia for the core value. • Creates experts, advocates, and evangelists around the technology • Hardens the complements with new configurations and contributions • Captures direct value to the complements (indirectly to the core) • Is possibly disruptive to competitors
- 10. Is there an Open Source Business Model? But – publishing your core value proposition under an open source license: • Makes potential partners into competitors • Allows savvy IT consumers to avoid becoming customers • Creates confusion for the sales and marketing team
- 11. Is there an Open Source Business Model?
- 12. Is there an Open Source Business Model?
- 13. Is there an Open Source Business Model? If you invest in building community around the project that sits on your core value proposition: • You create tension when competitors and partners and advanced IT users contribute value they want in your core value proposition. • The power of innovation capture in community around a complement becomes the problem of innovation dilution in your core value proposition. • You accelerate the creation of a community of early adopting users that aren’t interested in paying for your software, instead of creating early adopting customers that understood your product solution sufficiently to give you money.
- 14. Is there an Open Source Business Model? Projects are not Products
- 15. Is there an Open Source Business Model? Projects are interesting buckets of technology developed collaboratively by like-minded engineers
- 16. Is there an Open Source Business Model? Projects are interesting buckets of technology developed collaboratively by like-minded engineers Products solve customer problems and money is exchanged for perceived value
- 17. Is there an Open Source Business Model? Projects have communities Communities have time and no money
- 18. Is there an Open Source Business Model? Projects have communities Communities have time and no money Products have customers Customers have money and no time
- 19. Is there an Open Source Business Model? Parking your identity brand on any open source project you own, instead of the product/solution your customers buy, creates confusion for your messaging to customers
- 20. Is there an Open Source Business Model? Open Source Software is about Engineering Economics
- 21. Is there an Open Source Business Model? Collaboratively-Developed Liberally- Licensed Software is about Engineering Economics
- 22. 1950 1960 1970 200019901980 2010 Code sharing At Princeton IAS in late 1940s IBM “SHARE” Conf & Library Begins 1953 DECUS Conf & Library Begins 1962 MIT Project Athena Begins 1983 1BSD Released 1977 AT&T Shares First UNIX tapes early- 70s Free Software Foundation Launches 1985 2nd DoJ vs IBM begins “Software Bundling is Anti-competitive” 1969 IBM response is to unbundle HW, SW, & services pricing 1st DoJ vs IBM Consent Decree “Hardware Bundling is Anti-competitive” 1956 Open Source Definition 1998 USENIX Begins 1975 Linus Releases Linux 1991 Apache httpd Released 1995 Apache Software Foundation 1999 OSDL Forms 2000 OSDL Re-forms as Linux Foundation 2007 U.S. Congress Adds Computer Software to Copyright Law 1980 GCC 1987 emacs 1975 Is there an Open Source Business Model? We’ve collaborated on software since we’ve written software Writing good software is hard work
- 23. Is there an Open Source Business Model? Open Source Definition After ~20 years of experimentation Creates the broadest surface area for engineers collaborating Served us well for 20 more years
- 24. Is there an Open Source Business Model? How will you broaden the collaboration?
- 25. Is there an Open Source Business Model? How will you broaden the collaboration? Don’t tell me how we’re supposed to make your world better Tell me how you want to make our world collectively better
- 26. Is there an Open Source Business Model? Open Source Software is about developers collaborating Go build great software businesses
- 27. Is there an Open Source Business Model? Open Source Software is about developers collaborating Go build great software businesses There is NO Open Source Business Model…
- 29. Is there an Open Source Business Model? Alternatively… There IS an open source business model
- 30. Is there an Open Source Business Model? Collaboratively-Developed Liberally-Licensed Software is about evolving Business Models
- 31. OS became “official” over 2 decades ago The segment of collaboratively-developed liberally-licensed software labeled “open source” is over 20 years old https://opensource.org/node/924
- 32. Is that when “open source” actually began? The segment of collaboratively-developed liberally- licensed software labeled “open source” is 20 years old When did the first release of a enterprise-grade “open source” operating system get released, and by who? https://opensource.org/node/924
- 33. Open software for business has been around longer The segment of collaboratively-developed liberally- licensed software labeled “open source” is 20 years old When did the first release of a enterprise-grade “open source” operating system get released, and by who? SHARE released its own operating system – what we would today refer to as an OS distribution, the SHARE Operating System (SOS) – for IBM 709 hardware in 1959 https://en.wikipedia.org/wiki/SHARE_(computing) https://opensource.org/node/924
- 34. How long has business made money with SW? When did the revenue-generating Software Industry come into existence?
- 35. Was it about four decades ago? When did the revenue-generating Software Industry come into existence? Was it when Bill Gates wrote the famous “An Open Letter to Hobbyists” email back in 1976? https://www.newyorker.com/magazine/1994/01/10/e-mail-from-bill
- 36. Actually it was about five decades ago When did the revenue-generating Software Industry come into existence? Was it when Bill Gates wrote the famous “An Open Letter to Hobbyists” email back in 1976? IBM announced that it would “unbundle” its software and hardware, June 1969 http://archive.computerhistory.org/resources/access/text/2014/06/102712825/102712825-05-01-acc.pdf https://www.newyorker.com/magazine/1994/01/10/e-mail-from-bill
- 37. OS business models have evolved over time… Dual Licensing Licensors can distribute software to licensees under a proprietary model as well as an open source model Advertising Partnerships Development costs are offset by logo placement and/or advertising revenue Support and Service Offers software for free and charges enterprise users for technical support services, facilitates certifications Open Core Primarily involves offering a "core" or feature-limited version of a software product as free and open-source software, while offering "commercial" versions or add-ons as proprietary software
- 38. Open Source Business Model in the era of Cloud Open source software delivered as a service Instead of attempting to sell open source software as a standalone entity, it is coupled with a platform and the two are sold together Advantages: Clear path to monetization – Its been difficult to get developers and end-users to pay for software they can download for free. But when coupled with a platform, its understood that it comes at a cost Alignment of customer and vendor needs – By combining the benefit of both code and platform, sufficient value is created to satisfy both byer and seller Flexibility of operational choice – Developers can still download and run the open source code should business needs require
- 39. The OS business model has never been easy! Building a viable business around 'real' open source is as dicey as it's ever been https://www.infoworld.com/article/3032647/open-source-tools/face-it-theres-no-money-in-open-source.html
- 40. However Open Source is clearly winning Building a viable business around 'real' open source is as dicey as it's ever been Open source is winning in the data center as the emerging ”standard” for most of the cloud infrastructure components https://www.infoworld.com/article/3032647/open-source-tools/face-it-theres-no-money-in-open-source.html
- 41. Could Cloud kill the OS business model? Building a viable business around 'real' open source is as dicey as it's ever been Open source is winning in the data center as the emerging “standard” for most of the cloud infrastructure components To what extent do big cloud providers owe a debt to open source, and how can that debt be sustained? https://www.infoworld.com/article/3032647/open-source-tools/face-it-theres-no-money-in-open-source.html https://www.geekwire.com/2018/might-time-big-cloud-share-wealth-open-source-startups/
- 42. “Recent OS license innovations” react to Cloud Startups look to evolve open source software licenses to improve their chances in the marketplace Balancing the availability of code that characterizes open source with the need to monetize the software to continue its development “Fair Source License”– Allows everyone to see the source code and makes the software free to use for a limited number of users in your organization. (March 2016) “Business Source License" – Usage above a specified level requires a vendor license until the Change Date, at which point all usage becomes free. (August 2016) “Community License” – Customers are asked to follow an “honor system.” In registering to use the software, they are agreeing to abide by the CCL. (January 2017) “Commons Clause” – Applies a narrow, minimal-form commercial restriction on top of an existing open source license to transition the project to a source-availability licensing scheme. (May 2018) “Server Side Public License” – Mongo DB creates new license that builds on the spirit of the AGPL, but makes explicit the conditions for providing the software as a service. (October 2018)
- 43. Microsoft surprises industry, acquires open source repository ” Microsoft Buys GitHub for $7.5 Billion, Moving to Grow in Coding’s New Era” • https://www.nytimes.com/2018/06/04/technology/microsoft-github-cloud- computing.html?rref=collection%2Fsectioncollection%2Ftechnology&action=click&conten tCollection=technology®ion=rank&module=package&version=highlights&contentPlac ement=2&pgtype=sectionfront “Everyone complaining about Microsoft buying GitHub needs to offer a better solution” • https://arstechnica.com/gadgets/2018/06/everyone-complaining-about-microsoft- buying-github-needs-to-offer-a-better-solution/ “So Pigs Do Fly: Microsoft Acquires GitHub” • https://redmonk.com/sogrady/2018/06/04/so-pigs-do-fly-microsoft-acquires-github/ Key Issues: • Over 28M developers use the service to collaborate on more than 85M projects. • Many enterprise companies (49% of the Fortune 100) maintain and collaborate on projects on GH. Massive developer dataset. • Microsoft pledges to maintain GitHub as developer and vendor neutral.
- 44. IBM surprises industry, acquires open source company ” IBM to Buy Red Hat, the Top Linux Distributor, for $34 Billion” • https://www.nytimes.com/2018/10/28/business/ibm-red-hat-cloud-computing.html “IBM to buy Red Hat for $34B in cash and debt, taking a bigger leap into hybrid cloud” • https://techcrunch.com/2018/10/28/ibm-to-buy-red-hat-for-34b-in-cash-and-debt-taking- a-bigger-leap-into-hybrid- cloud/?guccounter=1&guce_referrer_us=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guc e_referrer_cs=K-3QnmcIV7F3qlI2hPgOUQ “Big Blue Puts on a Red Hat: IBM Acquires Red Hat” • https://redmonk.com/sogrady/2018/10/30/ibm-red-hat/ Key Issues: • Over 78% of enterprises use open source, 65% of companies are starting to contribute to open source projects. • Many enterprise companies (90% of the Fortune 500) use Red Hat products. Massive mindshare with open source developers. • IBM pledges to maintain Red Hat as independent and vendor neutral.
- 45. Is there an Open Source Business Model? Open Source Definition After ~20 years of experimentation Creates the broadest surface area for engineers collaborating Served us well for 20 more years How will you broaden the collaboration? Don’t tell me how we’re supposed to make your world better Tell me how you want to make our world collectively better However, open source software was created well before Cloud was conceived How might the OSD be different had they been able to foresee that massive compute consolidation could lead to a future where a small handful of platforms would be able to disproportionately benefit from open source software?
- 46. Is there an Open Source Business Model? So YES, there are open source business models They just keep changing constantly!
- 47. Is there an Open Source Business Model? YES or NO? Q & A