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O'Reilly Ends Software Development
An unnamed reader writes: "Looks like O'Reilly and Associates have killed off their software development division because it wasn't a strategic fit with their other efforts. Tim O'Reilly writes 'We will continue to sell and support our primary software products, WebSite and WebBoard, as we look for new homes for them.' While these were both Windows-only products, they are fairly well respected in the industry, and it's a shame to see something like this shut down to be aligned with their 'strategy,' despite Tim's own admission that the projects were profitable."
It's about time that a lot of companies in and around the open source/free software community started to realise that at the end of the day they are there to make money rather than generate kudos. There's no reason for small companies to suddenly start expanding in directions totally unrelated to their core product - it just spreads them thinly and weakens them financially.
O'Reilly are first and foremost a book company, and they're a damn good one. This is where their efforts should lie, and it looks as though they've realised that. Although it may have been a profitable venture, it's still a distraction for a small company looking to get bigger.
Just look at VA for the perfect example of this. They're a hardware company that specialises in preinstalled Linux solutions. But rather than stick with doing this, building up a client base and slowly consolidating and expanding they've gone on a veritable orgy of purchases which seem to make very little sense in terms of their bottom line. And now they're in trouble... suprise, suprise.
Companies need to stick with what they're good at until they're stable enough to expand. As nice as having kudos may be, you can't use them to buy food for the kids.
The real Paul Vallee is slashdot userid 2192, and, what do you mean it's not cool to point out your low userid?
The software side of the house was making "first sale" dollars (nowhere near as lucrative) off of a webserver that directly competed with the LAMP model: it ran on Windows, competed directly with Apache, didn't talk directly to mySQL, and supported ColdFusion/Java/ASP much more readily than Perl. In other words, it was basically the same thing as Ford selling a car that takes Chrysler parts: they'd get the up-front money, but all of the follow-on dollars were just-as-to-more likely to go to their competitors than themselves.
So, this makes very good sense from a business perspective. In Tim's own words, "it's not a strong strategic fit with our other efforts." I'm actually surprised that it didn't happen a couple years ago, for instance when the Eagle book came out.
MOO;IANAL.
MOO;IANAL.
There used to be a picture linked here.
Obviously, the route to go would be open source. But according this morning's WebSite mailing list, this might be a problem. It seems that the software is still copyrighted by the original author.
So apparently the only way this could go OS would be if the original author agreed to it. And, according to the most recent WS mailing list at least, this is yet to be determined. (The common wisdom at this point that, yes, if WS goes OS then the author will forgo future profits.)
It's a shame. IIRC correctly, the original version of WebSite came bubdled with Cold Fusion 1.0. Now, I know there are a lot of CF detractors out there (spare me, I've heard all the anti-CF stories) it was -- in the early days of the web -- a killer combo -- WS and CF.
1. The project has costs and expenses directly related to it - materials that are consumed, salaries, promos and what not. The difference between the revenues and these costs is what you call "profit."
2. The project also has a level of "working capital" attached to it - accounts receivable that must be financed, inventory on hand that also must be financed and facilities that could otherwise be sold. While the value of these is not included in "profit," it's certainly worth evaluating. I would imagine that this reason (the working capital intensiveness of a software buisness) is why they cut the division.
For a more mathematical approach, here's how I'd go about evaluating the buisness.
Cash flow from software buisness= sales + benefit to other departments - COGS - R&D - !(Working Capital * WACC)!.
I imagine the working capital, while not included in a "profitiability" analysis, pushed the "cash benefit" of the job negative. There's a lot of back-office involved in actually selling physical software product - something they don't do anymore.
It also cuts an entire distribution channel for them, and allows them to focus on the core buisness - the more time the S&M department focuses on software retailers, the less time they can deal with bookstores. There's that auxilary benefit.
I'm the best IRC client ever.
Sad to see that division go, but as long as they keep on cranking out the good books, I am behind them 100%.
Although one wonders if they will be coming out with "Downsizing in a Nutshell" any time soon...
You say you want a revolution....
And obviously Tim O'Reilly feels that he, and his company, should concentrate on just what it is they do best, producing the finest and most respected line of computer related learning tools in the world.
That, in fact, is the primary difference between running your OWN business and running the *stockholder's* business.
For my part I'd rather run my own neighborhood business than be CEO of a fortune 500 company. THAT used to be the American dream. It's a damn shame that it ever became otherwise.
KFG