Economic Slump hits Open Source

adamjone writes: "C|NET and Yahoo! are running a story about the hit that open source software is taking during this economic slump. Open source development is a hobby for me, not my full-time job. I find that I have more time to work on my project during times when my full-time job is slow, or we don't have enough work. Is open source truly being driven by those who make it their full-time occupation? If so, is there a happy medium for keeping bread on the table and still working within the open source community?" At least Microsoft is doing well.

Comments

Economic slump?

[alen]

It can't be. Has any open source company ever turned an actuall profit? GAAP or pro forma? Truth is it's like any other new business. 95% of the new companies will close their doors within the first three years and the survivors will probably survive for a while because they have good management and a real business model.

Re:Economic slump?

[ChaosDiscordSimple]

Has any open source company ever turned an actuall profit?

Sleepycat Software (makes of Berkeley DB) has maintained a profitable business based on open source since 1996. Cygnus Support (gcc, gdb) was profitable from its founding in 1989 through being purchased by Red Hat. Aladdin Systems (Ghostscript) made enough money for the author to retire.

Re:Economic slump?

[Bruce Perens]

Only people who refuse to Open Source their own applications pay a license fee. So, this, and also Namesys (Reiserfs) finance Open Source by charging proprietary software vendors. It works.

Bruce

Re:Economic slump?

[cduffy]

Develop open source, sell closed source.

What's wrong with that?

(Btw, I work for MontaVista Software, an open source company. I'm not sure I'm free to discuss our financial situation, but suffice to say we're going through this "slump" just fine).

Re:Economic slump?

[tim_maroney]

Michael Tiemann: Well, as a matter of fact, we were profitable, increasingly profitable, every single year until we attracted so much attention that people wanted to invest money in Cygnus. That happened in 1997.

Red Hat S-1A Filing, January 28, 2000 (search under "3. BUSINESS COMBINATION (CONTINUED)") says that Red Hat lost $1.5M in fiscal 1996, $2.9M in fiscal 1997, $5.7M in fiscal 1998, and $6.4M in the nine months before it was acquired.

Sleepycat employs under twenty people, as does ACT. Peter Deutsch is one person, and may well be discussing a modest retirement in Wisconsin, which is dirt cheap.

So that's less than forty people, none of whom have had the payoff of a second-tier engineer in a moderately successful IPO.

Tim

Re:Economic slump?

[tim_maroney]

I work for MontaVista Software, an open source company. I'm not sure I'm free to discuss our financial situation, but suffice to say we're going through this "slump" just fine.

Really? It looks to me like your growth has stopped -- there's only one job opening for the whole company. Your end of 2000 announcement discussed ten-time revenue growth (from what? it's your first full year), and growth from twelve people to 160, but it was conspicuously quiet on the question of profit. Meanwhile, at that resource load, you're probably burning through the $30 million in investment fairly quickly, though by my back of the envelope it shouldn't be all gone yet.

Don't get me wrong -- you may have good prospects in the future, but it does not appear to me that you are now a profitable company, and the dearth of new job openings is a disturbing bellwether for future growth potential. If you're doing "fine" now, that may only mean that you haven't yet spent all your investor capital.

Tim

Re:Economic slump?

[tim_maroney]

That's good. Like I said, you may have good prospects. I just think it's a little early in your corporate history for the company to start getting cited as a success story. Sustained profitability is the measure of business success, and you're not yet there. But I hope you do become a success story, and it sounds like you have a pretty good shot at it.

Tim

Economics of Open Source

[under_score]

There are two fundamentally different approaches to Open Source: capitalistic and communal. In the capitalistic approach, people and companies attempt to earn money by using open source software. The "traditional" model has been to sell value-added services while providing the open source software for free or minimal price. In the capitalistic approach, of course an economic slowdown will be reflected in the open source business sector - just like almost any other sector. On the other side represented by the communal approach, participating in open source projects provides intangible or non-monetary benefits. There is the traditional "itch" factor: you work on an open source project to scratch an itch. There is also the motivation of gaining community recognition. These aspects will not be slowed by an economic slowdown. In fact, they might become even more important: there is not as much cash moving around so a more barter-oriented approach is viable. Corporations not actually involved in developing open source may start to turn more to open source as a solution to their financial constraints. I know that the company I work for does so. They may not directly contribute to the code base, but they certainly are taking advantage of it and therefore increasing the legitimacy of open source. Again, this process is accellerated by an economic slowdown.

Re:Economics of Open Source

[onion2k]

Much as we'd all like the communal aspect to be unaffected it simply isn't true. Anyone who works for a company making their co-workers redundant will tell you that they have less and less time to devote to an outside project. In simplest terms, we have less free time.

Of course, those working on OSS project who are made redundant will have much much more.. perhaps it'll balance out.

Re:Economics of Open Source

[4of12]

here are two fundamentally different approaches to Open Source: capitalistic and communal. In the capitalistic approach, people and companies attempt to earn money by using open source software.

Quite so.

The capitalistic bent on open source is most successful in the use of open source as a lower cost alternative to proprietary software, much of which benefits from various lock-in aspects to increase its price.

It seems like attempts to make money by producing open source software as a sole line of business are fundamentally difficult. The markup is constrained by the costs of making CDs and internet connections, which are constantly improving (this bodes well for the long term future of open source software distribution).

Such companies and ventures are inexorably moved into a position where they sell their expertise as a service to those who wish to use open source solutions in ways that are technically beyond what their organization can muster internally in terms of people resources.

The communist bent is almost what I would call artistic in the sense that open source programmers almost feel compelled to produce a magnum opus. If others recognize their efforts, so much the better. If they get a lot of money for their effort, great. But, like artists in other sectors such as painting, sculpture, poetry, music, acting, and mathematics, most programmers of open source software are not going to become as famous as for their work as Linus Torvalds or Richard Stallman have for theirs.

I think many, if not most, open source projects are worked upon by people pursuing something that interests them, which may or may not bear directly on their main occupation or business. Like many musicians or actors, they have a "day job" to pay the bills.

It will be very interesting to see how increased usage of open source software in the corporate world feeds back into development. The existing base foundation is considerable, a very attractive framework on which to build a high quality and low cost software solution to many a difficult business problem. How many of the ranks of corporate IT citizens catch the fever to contribute further to building the community's assetts will be interesting to see. That "fever", to produce something useful, is what will drive the success of open source software to ever greater levels.

Re:Economics of Open Source

[Bouncings]

All true, but there is some convergence of the two, not just in Open Source, but in general. Many Open Source projects were started both because someone wanted to write the program, and they thought there was economic benefit. TheKompany.com is an example of that. (No, not all their products are Open Source anymore.).

In truth, it goes beyond Open Source. GE exists because Thomas Eddison had an itch to make a light bulb. An Internet-company example, Yahoo, exists because some students wanted a directory of web sites.

The question is, would Eddison have made the light bulb if there was no economic benefit? Maybe, maybe not. Will - say - Larry Wall still be working on Perl even if O'Rielly fires him? Probably, and that's common among free software programmers. It's the willingness to work for the software alone that shows us who the true geeks are. :) Maybe Ed would have made the light bulb anyway, I think we probably would have!

Re:Economics of Open Source

[Eccles]

Anyone who works for a company making their co-workers redundant will tell you that they have less and less time to devote to an outside project.

Wasn't one of the features of the dot-com boom that techies were working absurd hours in the hopes of stock option millions? Then again, I never worked those hours, and I suspect many not-coms didn't also; perhaps it's the pressure at not-coms that has changed.

Re:Economics of Open Source

[Bobzibub]

Much cooperation exists within capitalisim, and it is primarily within the confines of a company. The amount of cooperation vis competition or size of the companies in an economy is determined by the transaction costs companies face. (Coase, R., 1937, The Nature of the Firm......Everyone cites him. I will too!)

AOL-Time-Warner & Microsoft grow larger because their transaction costs shrink. We in the Open Source Movement cooperate, our transaction costs are very small (I can code, upload it to freshmeat and you can add/customize/whatever to it for nearly $0.00.)

In essense the Open Source movement is quite similar to a large corporate conglomerate. We are large, international in scope, we cooperate with each other, but we for the most part sell products at cost-- which is free. We are also in competition with other companies despite not being profit motivated.

The companies mentioned in the article can be thought of as "partnerships" with the OS conglomerate (sorry, "Movement.") Their OS partner is being dumped due to our negligable margins, but the Open Source Movement is still strong. We code for free and as you say, we'll always have customers because we undercut our competition.

We're *not* that different than the AOL's, in an economic sense. We're definately "corner solution," however.

Re:Economics of Open Source

[mosch]

And there's another one that you've managed to ignore completely, despite it's huge presence.

Companies that pay employees to debug and add features to open source software, because they don't feel the need to reinvent the wheel just because they want two features that aren't in the original program.

Re:Economics of Open Source

[MrResistor]

There is also the motivation of gaining community recognition.

More than just community recognition, also professional recognition.

Until about 2 years ago I was strictly a hardware guy. I got into electronics when I was in highschool, and I focused on electronics my first 3 semesters of college, figuring I could get a tech job and use that to pay for my engineering degree. Yeah, right! Everywhere I went I got the same responses: "We're looking for someone with at least 5 years of experience in our highly specialized field" and "It doesn't matter what you know because we do things differently here". Don't ask me what they meant by "different", I could never get a straight answer about that. Almost 10 years later I still haven't run into any hardware that doesn't obey the basic laws of electronics.

Anyway, the real problem was not so much idiot managers who believed their hardware is fundamentaly different from anyone elses, as how to get experience if you can't get a job. It didn't matter that I spent a large portion of my spare time fixing stereos and VCRs and trying to turn my old 8088 into a digital sampler, I hadn't proved myself in a professional capacity.

I think Open Source gives programmers a way to demonstrate their skills in a verifiable way. You can say, "Look, here is a package that people actually use, and here are my contributions to it." That can be invaluable to someone trying to get a foot in the door, something that is going to get increasingly more difficult in the current economy.

Re:Economics of Open Source

[wytcld]

There are two fundamentally different approaches to Open Source: capitalistic and communal.

Are the capitalistic and communal fundamentally different, or aspects of a common creature? Consider our current 'capitalist' president. How did he get there? By being a part of three groups - the Yale-Harvard axis, the Texas-oil axis, and the Connecticut old-money WASP contingent - which look out for their communal interests. Those with wealth and power in our society generally get there by being communal with some significant group of their counterparts. It's how the capital is accumulated to allow for capitalism in the first place.

So the question for those of us in the computer trades is whether we can achieve a quality of communalism among ourselves that will make us a true center of economic and political power. In the 90s we were getting there, centered largely on new West Coast elites. Wall Street was threatened by this, so it blew it into a bubble in order to (1) take East Coast profits on it and (2) make it go away.

If we quit being communalist now we're being penny wise and pound foolish. Do we want real power down the line, or do we want to be the sadder sort of "honest tradesmen" who have to rent their basic tools before they go out to the jobsite?

Remember, capitalism isn't about being some mean-ass son-of-a-hound to all and sundry, capitalism is about accumulating capital. Tools are a form of capital, productive of future earnings. Sharing capital within your communal group is the proven method by which Bush gained shares in several oil companies and a baseball team. And it's why he will be so good at paying back his friends - these values run deep enough in his character that his friends were comfortable sharing their monetary piles with his campaign.

The bottom line is that computers can do tremendously productive work. Those who can make the computers do that work can always get a cut of it. We individually have more capital if our tools are better - and the more we can share this capital as a group, the more politically and economically powerful we become.

In the old European empires knowledge of trade routes was capital, to be merged with the monetary capital of those who'd - largely out of pursuing the communal interests of their class - collected and preserved it. In the new empires knowledge of computer routing is capital....

Re:Economics of Open Source

[Arandir]

On the other side represented by the communal approach, participating in open source projects provides intangible or non-monetary benefits.

So how do I put Turkey on the table this Thursday using only intangible or non-monetary benefits? If there's nothing to sell then nobody will be giving you money in exchange for it. You might as well take up RMS on his advice and be a waiter and write code on weekends.

Open Source makes an awesome avocation, but I see very few people making a successful vocation out of it. Certainly some do, but they are the exceptions.

Re:Economics of Open Source

[scoove]

maybe my objectivist inclinations are showing, but i really don't like the classification of open source into capitalist and communal.

In fact, what you describe as capitalist (giving software away for cheap/free by making money on the service) is what the market would refer to as pure-play. ALL you do is open source with its revenue hook, be it support, packaging, advertising, whatever. (Pure play open source is counterintuitive by definition because you really can't have a pure play that has a price of $0 - something else has to be the focus).

The alternate model, as long as we're looking at open source as something more than a hobby (my bias, but the article discussed doesn't address hobby programming), is open source as complimentary technology to a business that achieves its revenue from another focus, e.g. manufacturing, telecom, etc.

Like I mentioned, there is a problem classifying any open source effort as pure play. Technically Redhat and other 'pure plays' are actually service businesses with open source as the complimentary technology - and service or support may or may not be the right focus for them.

So shouldn't our discussion focus on what primary focuses work well with open source as a complimentary technology - apparently service/support doesn't work well all the time. Advertising seems to work none of the time (my bias). Since open source = $0 at the cash register for the code itself, there /has/ to be something else to pay the bills.

Understand that for many of us, open source is intelligence we share with other smaller companies to fight the evil incumbants in our industry. Like Afghani expelling Soviet occupation, we'll share weapons, intelligence, whatever to beat them out. It's a competitive advantage.

If we're wise, we'll be happy with our own territories when we've succeeded, since it is unlikely we'll be able to defeat each other without weakening our home turf.

And open source even has a value for the big boys. Release open source that destroys a competitor's pure play proprietary software focus (e.g. StarOffice or other hardware vendors trying to knife Microsoft attempts). Release open source that creates a demand for your product (e.g. AT&T research doing VNC, which chews up a lot more bandwidth and requires faster links). Release open source that makes your technology more usable.

*scoove*

Re:Economics of Open Source

[sheldon]

Actually you are onto something that I've been thinking about for quite a few years.

I agree that success is a communal thing. You succeed a lot by who you know and how to leverage that. If you've ever worked in a financial firm, you'd see an interesting phenomena amongst stock analysts, researchers, etc. They are all family members, friends, or they know someone that knows someone. It is very communal, obviously.

However, I don't agree with the conspiracy theory. I do think Wall Street is threatened by a technologist communal society, but not in the way you think. They're threatened by it because it may mean IT staff can demand salaries comparable to other areas.

I don't believe that Wall Street sabotaged anything. The Bubble existed not because of Wall Street but because of a bunch of schmucks looking for get rich quick. They weren't financial geniuses, they weren't geeks, they were schmucks. If you were paying attention, all the top financial people in the country were warning about the bubble. Greenspan, Buffet, etc. Even Ballmer warned against it.

You don't get rich off a bubble, or over inflating stock values. That happened when the schmucks tried to take over the knowledge of the geeks and get rich quick. Doesn't happen, won't happen. It takes long hard work, like Microsoft, like Dell, etc.

But still, I like your idea. I like the idea of making sure that people in IT further the communal society by looking out for one another.

But I don't see it happening. There seems to be this tendency of geeks to cut each other down. I guess I look at people like Richard Stallman as a prime example of this. When people left the MIT AI lab to take their ideas and capitalize on them, what did he do? He worked to sabotage them and what they were doing. The whole FSF is based largely in part on sabotaging the ability of some geeks in this world to capitalize on their knowledge.

Anyway, I think you have come to an interesting conclusion. I like that, and I think it should be a goal of ours. But one of the keys to success really is not sabotaging others or believing in conspiracy theories, but learning how to work with them to get what you want.

If you were smart, you could have used those schmucks with the internet bubble to your own gain. Unfortunately I wasn't smart enough. :)

That's the secret behind successful companies like Microsoft. It's not an evil empire, it's not a conspiracy. Their goal is to partner up with people in order to attain what they want. If both sides get what they want, it's called a successful business relationship.

we don't need no stinking money

[Frothy Walrus]

the economic slump is hitting the entire country. of course the techies are getting the worst of it, what with the dot-com mass hallucination having ended. but singling out the Open Source movement seems a bit unfair, if not irrelevant:

we wrote free software before the companies were organized; we'll keep writing it even as they're about to close shop.

Don't blame the economy and walk away

[rmadmin]

Don't blame the economy and walk away. The economy ha been shit before. And Sept 11th really sucked. But god damnit, don't think that just cuz times are tough people are gonna give up. My mom worked for a company for 24 years, made it up to production supervisor of the entire plant. Two months ago her possition was eliminated. Sure.. lets blame it on the economy when theirs 2 guys that have been at the plant for 2 years, both are making 80K a year, and don't know a god damned thing about the company. My point being. I think alot of companies out there are doing stupid shit they dont' _have_ to do, they wanted to do it. And this gives them a good excuse to do it while its still wrong.

I can see it...

[Junta]

At least open source in the Linux realm. During the economic boon, many businesses had so much money and resources, they could afford to effectively throw money away on open source, in the hopes that eventually it would provide opportunities to combat MS. But now the companies that are left are more wary of expenditures. As much as I hate to say it, commercial contributions contributed a great deal to open source, and now that is mostly gone.
Also, some companies that gave employees a lot of free paid time have gone under, giving a lot of people a lot less time to work on their hobby projects, since they had to find a job at a more demanding, efficient place (my personal experience).
Direct commercial support is withdrawing, and inadvertant support by companies that were slack is dwindling. Fortunately, there is still momentum and Linux is thankfully more well-known now, so things won't stop, but they won't go nearly so quickly as they have the past couple of years.

Linux, for example

[k98sven]

..started during the early nineties, during which Finland was in it's deepest depression since the '30s. Didn't stop Linus. And it won't stop scores of other hobby OSS developers either.

However, less corperate funding may retard development, but hey: in a recession everything else slows down too.

Re:Linux, for example

[infinite8s]

Linus was also in university at the time, and we all know that university students have lots of time on their hands, and also not having to worry about the current economic climate.

Open-source is parasitic

[Eloquence]

Currently, open source is used by many people who never give anything back, although they would be able to financially support development. The reason for this is not that people are malicious or exploitative, but simply that it's not convenient enough. Some sites have small "donate" buttons, but these give little feedback (a la Penny Arcade, only more detailed) and do not allow subscriptions or feature requests. The best implementation I've seen so far is Freenet, except that people only donate when they have a reason to visit the frontpage, which is not updated very frequently.

A sophisticated donation/subscription/feature request system which automatically suppports several payment methods should really be part of a collaborative development site like SourceForge. For using Amazon's Honor-System, which is very feature-poor, 15% of any donation go to Amazon. This would be an adequate level for something like SourceForge, and here people would gladly pay the 15% because they would know that they support important infrastructure. I really can't understand why SourceForge isn't trying anything of the sort, but I haven't noticed much innovation in their business strategy anyway.

Of course, in the long term, I'd love to see a standardized electronic payment client (with a Qt or GTK interface) which supports subscription management bundled with all Linux distributions. Then you could easily pay with a single click in your browser.

Re:Open-source is parasitic

[Eloquence]

No, what I mean is really a system for regular donations without (many) additional privileges. Subscribers could get some benefits, like free e-mail support or access to the wishlist.

Another area where subscriptions can be useful is in a Street Performer Protocol like context, e.g. Transgaming, where the code is GPL'd when a sufficient number of subscribers is reached.

Re:Open-source is parasitic

[zulux]

Even the parasites give back:

A parasitic open-source user gives back to the community though the network effect. One more Linux user, no matter how parasitic, is on less user of proprietary software with proprietary protocols - and that person will help persuade others to join.

Re:Open-source is parasitic

[Anonymous Coward]

Donations do not work. It is not a matter of convenience. This is well known from the shareware community. Ask ANY shareware author. The shareware community has been going a lot longer than the free software community and they have tried out every "easy-pay" strategy and know what works and what doesn't. The only thing that works (i.e. brings in money) is a time-limited version of the software which must be registered after 30 days or the application won't run.

To actually get donations you have to create moral pressure, which is unpleasant for both sides. Remember that most people routinely pirate commercial software, and don't care about blatantly breaking the law, let alone remunerating the author. Piracy is a serious crime, and businesses can be get a hefty fine for running unlicensed software. Nobody willingly pays, let alone donates without significant moral pressure, except in amounts so small that it is not worth the hassle. Ever see people begging in the street? That's the lifestyle you get from donations where there is a huge amount of moral pressure ("Hungry and homeless, will work for food, please help me"). Sure maybe a developer can get $10 or maybe $100, which might be useful for a student, but it's not really relevant for a professional developer w mortgage/family. Free sofware is "cool" but as someone once said "if I could pay my bills with 'cool' I would be well-set".

I don't want to be cruel here but people are basically selfish most of the time, and do not think about donating. You can give them paypal, fancy GTK applications, or stand in the street with a collecting box asking for money but people will try to avoid giving. After all, millions of people around the world are starving to death, or dying of easily curable diseases while we read slashdot, we know this, we have seen it on TV, but statistically speaking most of us (including me) don't donate much money to organisations that work to solve the problem. There's always an excuse. "Sorry I don't have any change", "How do I know the money won't be wasted?" , etc.

I am a free software developer, quite a lot of people use my software, and it is easy to donate money to me via paypal or ask me to make an enhancement for money, or hire me. I explicitly say this on my webpage. Nobody ever has, and I don't really expect them to. Most of the emails I get are complaints about something not working the way someone expects (usually because they haven't read the manual), or comments that underestimate the amount of work I put into the project, like "This package would have been much better if you had written it in <my favorite language&gt". Sometimes I get some emails that say "Great program!" but that's about it and that's all anyone can realistically expect. Maybe I did too good a job and made the software too reliable ;-)

I didn't have any illusions about this before I started writing the software, and my experience has confirmed what I expected. The only reward you can expect from writing free software is the satisfaction of seeing it being used, sometimes by people who don't know that they're using it, or simply knowing that you did a good job.

If you actually wanted to get donations you would have to start pressuring people who use software but don't donate, for example by implying they were "parasites" or calling them that, etc. This is exactly what happened in communist countries where people were supposed to donate their labour to society for the good of all. I don't really think it's a good idea to introduce it into free software, even if there is some truth in it.

I'm being an A/C because I don't think the specifics matter here.

Re:Open-source is parasitic

[Arandir]

Okay, so you now have one million non-paying customers versus one thousand non-paying customers. I would rather have the latter because I am making the same amount of money with a fraction of the support headache.

Re:Open-source is parasitic

[Arandir]

I am a free software developer, quite a lot of people use my software, and it is easy to donate money to me via paypal or ask me to make an enhancement for money, or hire me. I explicitly say this on my webpage. Nobody ever has, and I don't really expect them to.

I hear you! I have a home brewing program that is quite popular in it's admittedly limited market. My documentation clearly says that monetary payment is not required, but that donations of homebrew (or even pictures of homebrew) created with the program will spur further development. To date I have received one bottle of homebrew and one picture of homebrew. If I was counting on monetary renumeration to pay my rent I would be living under the nearest overpass.

That said, I am not doing this as a way to make a living. I'm not stupid. This is my hobby. I have received code contributions and many thank you notes. This all makes it worthwhile.

Re:Open-source is parasitic

[cduffy]

I work for an open source company. Let's say we have 200 other companies as clients. Those 200 clients wouldn't be happy with the software they purchase if not for the hundreds of thousands of folks who use it for free and contribute to its development.

If you're doing all the development and support yourself, then maybe you've a point. If your organization exists to support customers who are using a 3rd-party product (in our case, customers who are using it in a very specialized way), then every extra user is a benefit, paying or no.

(Even the projects we lead benefit from 3rd-party involvement; we couldn't support nearly the amount of software we do were it not for community involvement).

Are the hobbyists really driving open source?

[Junks Jerzey]

Sure, there are some smaller and lesser known open source programs out there. Heck, lots of little solitaire games and remakes of Breakout (Arkanoid, for you young 'uns) are released under the GPL. But those are not the programs that give open source it's high profile. We're talking about:

1. Perl & Python
2. Apache
3. the Linux kernel
4. gcc
5. KDE
6. X

There are certainly commercial interests behind most of these, in that some people--not all--have full time jobs working on them. gcc especially wouldn't be anywhere near where it is today without the input of a number of large companies.

Re:Are the hobbyists really driving open source?

[Eloquence]

I think it is unfair to characterize open-source development as primarily driven by companies. After all, the projects you mention started as open-source projects without much or any commercial support. It was only when corporations recognized the benefit this software would give them that they jumped on the bandwagon. So what we see here is really a hybrid economy, where everyone who benefits from a certain piece of software, which is effectively in the public domain, has a self-interest to contribute to its improvement, either with money or with code. As I stated in my other comment, I'm afraid especially the "contribute with money" part is currently underdeveloped.

Re:Are the hobbyists really driving open source?

[swb]

They probably do view it that way, but a lot of places would rather reap rewards with zero input, which has always been the bugaboo of open source development or any other "from each, to each" kind of economic model.

If every shop with more than 20 programmers donated 1 FTE of programming time to some centralized open source collective, I would imagine that the rewards might be magnitudes beyond what they gave. The question would be how would their time get assigned and who would manage it, both massive political questions.

This is backwards...

[FortKnox]

Because a lot of people are getting laid off their jobs, I'd expect Open Source to skyrocket. When the very few jobs actually start hiring, they'll want people that kept busy, and aren't going rusty. Not to mention you can show you're great coding style on open source projects (ie - during the interview, say "yeah, I wrote anim.h & anim.cpp, please open them up on the website and see how I animated this spline using the super-quick algorithm").

If you unemployed are smart, you'd log off of slashdot, and get your coding groove on.

Re:This is backwards...

[NineNine]

Actually, no. If you don't have any money coming in, you spend ALL of your time trying to land something that pays. Programming for free is the LAST thing on your mind when you're unemployed.

Re:This is backwards...

[FortKnox]

If you don't have any money coming in, you spend ALL of your time trying to land something that pays

Programming for free is a way to land a job that pays. Like I said before, it impresses the employer. Look at most tips on getting into the gaming industry. They always say, they only accept coders that code because they like to. They want to see what you code -outside- of work. Open Source is an advantage in this manner.

Put yourself in the position of a recruiter. Here's a guy that's been unemployed for 3 months, that's been working at McDonalds to get by, but he's got a portfolio of coding from an open source project he's been working on; versus a person that's been sliding by making web pages. Who you gonna hire??

Re:This is backwards...

[NineNine]

Actually, talk to a recruiter. They don't want to see big non-industry related gaps in your resume. Actually, they'd prefer if you got by making web pages.

Re:This is backwards...

[beth_linker]

Seriously. Besides, if you're living in a major American city then "working at McDonald's to get by" probably isn't a realistic option because a minimum-wage job won't cover rent.

Which is not to say that open-source coding is a bad idea. Especially when the pickings are slim and it could take months to find a new job, working on your skills while you job-hunt is a good idea. If I get laid off, I'll use some of my free time to pursue Java certification. Working on an open source project might be another option, as would volunteering to do some free/cheap tech work for a local non-profit.

But having a real impact on an open-source project would seem to require more of a commitment than a few weeks of downtime while between jobs. Realistically, the only projects that do well are the ones where people invest serious effort on a long-term basis.

Re:This is backwards...

[Syberghost]

It's not surprising that you think this. It's a common naive misconception in the Free Software community.

Understand, people; programmers work on Open Source either because they're paid to by a company that can benefit from it, or because they're scratching an itch. You don't have time to scratch an itch if there's not food on the table, and most programmers (and I mean the vast, vast majority, probably in excess of 90%) put food on the table by writing CLOSED SOFTWARE internally for corporations.

When reality doesn't agree with your preconceived notions, the smart thing to do isn't attempt to deny the reality; the smart thing to do is examine your preconceptions.

Re:This is backwards...

[sporty]

Being of the unemployed status, not having a job, being a bum until my next job is found all i have time to do is read, program, play v-ball and what not. Its not because I'm not looking, its because the first week, I did most of what I could and now doing incremental searches, following up and what not, takes 2 hours a day. At least now, with this OSS, I can show employers that I do have the potential with another project I'm working on.

I'll give myself another month or two before I take any job I can find..

Re:This is backwards...

[yog]

Typical putdown of McDonalds that isn't borne out by the facts. A quick search at http://www.monster.com reveals that shift workers in Dallas are being recruited for $7-$9/hour. Management positions are $25,500.00 to $37,500.00 per year. It's not very much compared to computer programming, perhaps, but it's not minimum wage either. I wonder if there's a McDonald's anywhere in the U.S. that actually pays minimum wage.

Re:This is backwards...

[mnf999]

They don't want to see big non-industry related gaps in your resume

I beg to differ. One of our contributors in JBoss landed a high profile job, not because he was wasting time in cubeland but because he used his sinking company time to work on JBoss while at work. The competition on his job was fierce the guys picked the one who coded for the "love of coding".

the point that was made was that a Open Source track record shows you LOVE coding, you do it for free. Beware of impostors now but the point is clear

Re:This is backwards...

[Salamander]

One of our contributors in JBoss landed a high profile job, not because he was wasting time in cubeland but because he used his sinking company time to work on JBoss while at work...
...a Open Source track record shows you LOVE coding, you do it for free

But the guy in your example didn't do it for free. He stole time and resources from a prior employer to "do his own thing" and for that reason I would never hire him. If people want to work on open source on their own time fine, in many ways I agree that work on open-source software is a better indication of someone's true capabilities than what they do in a constrained corporate environment, but that's not what we're talking about here. Once a thief, always a thief. If someone wants to have their voice heard in determining what work we do that's fine, but I can't afford to have people working for me who will get bored and start working on personal projects behind my back instead of working toward our supposedly-shared goals.

Services and Support

[SirSlud]

The OS community has learned that S&S doth not a profit make. But the universal conclusion seems to be that OS can't be profitable (after all, what else is there?)

Photoshop users know exactly how OS can be profitable. Corperate clients pay. Personal users do not. Since we all go to work, there should be at least some level of support from the corperate community. When we go home, it's free.

Xerox, laptops ... there are many products that work has paid for, that we, for all intents and purposes, get free personal use out of. Heck, Windows is like that (ie, so much personal pirating, MS gets most of its money from corperate clients.)

I think most people will disagree with me, but oh well.

Maybe nothing to do with open source

[rnb]

I worked for a company for a while that was as proud of the fact that it was creating (some) open source software as I was. Then it went under. Not because open source wasn't working for them, but because management spent all of the investors' money on renting halls to have company wide meetings, throwing parties, "business trips" to various places, etc, etc, etc.

Just because a company is wise to open source doesn't mean they're wise to good business practices.

Isn't this part of the problem.

[jvmatthe]

In the article about Microsoft doing well, MSNBC writes:

And its antitrust settlement with the Justice Department earlier this month is expected to free it to focus more fully on expanding beyond PC software.

Isn't that part of the problem? That is to say, are people so blind that they don't see that "expanding beyond PC software" mean (for Microsoft) that they will leverage their grip on the consumer PC desktop to gain advantages in new markets and shove out competitors [sic]? This line of the article says, to me, "the antitrust settlement effectively frees Microsoft to continue to violate antitrust laws".

Re:It's a recession, what did you expect?

[brunes69]

As muhc as some of you might mod this down as a troll as soon as you see te words "Communism", I'd suggest the opposite: This commentary is very true, as much as you'd hate to admit it. And no, Communism != Evil, as much as American history may have taught you otherwise

Um, no.

[NineNine]

Convenient that you link shows just the past two years. This is what shareholders REALLY think of Microsoft. Notice that even in this recession, you'd be up over 600% just in the last 5 years. You'd be up several thousand percent if you stretched it back further than that chart shows.

Any surprise?

[Otter]

"Where is our business model if everyone else can copy it?" asked Holger Dyroff, former CEO and now director of sales for Linux software seller SuSE. "The question is where we can make money now. Nobody cared about profitability two years ago."

The recession seems like a pretty weak excuse for everyone here to invoke. How good does the economy need to be get before profitability stops being a necessity?

The article (kind of a gumbo of random bits from the last month of LinuxToday) also jumbles together licensing (closed vs open/free) with community development, which is something entirely different. Where I burst out laughing was at:

One key motivation said to drive volunteers to open-source projects--the prospect of leaving a lasting mark on the software world--has shown its limits. "I'm tired of people who complain loudly when something doesn't work but fall silent when asked to help in fixing it," groused Christoph Phisterer in his resignation from leadership at the Fink project to bring open-source and Unix software to Mac OS X computers. "I once thought sharing my knowledge, experience and time with the community was a good thing, but now I know better."

Well, the guy wanted name recognition and he's certainly gotten it. Yeah, I think we can draw all sorts of sweeping conclusions about free software from the case of a single college student-run project...

cost of nothing?

[JDizzy]

What does nothing cost? Does nothing have a tangable asset value? What is the portfolio of nothing?

open source has always been a nothing type of bussiness. I'd say a small fraction of open source developers get contributions back from their user base in the form of donations, contributions, etc.. I'd say an even smaller a number of folks are on the pay-roll of a company paying them to work on open source. Think of this: IBM pays a guy to rip-off the linux kernel to make it work on the BIG-IRON machines. THis would be something that the company has a vested interest in. THese developers are the exception, not the rule.

I write open source sorftware, and do as a contribution to humanity. I hope I violate as many patents, and copyrights as I can allong the way. I do everything for free, with zero tangable gain, except for the intelectual prowes gainned from doing code. There inlies another major aspect of the open source comunity: rebel developers without a cause. Most developers code just because its fun, or because there is a vacume to be filled, or like me just do it to be-little the stock of major companies selling non-open software of the same merrits.

However, for those folks at the wall street journal (the anylists, market watchers, and the entrenched hardcore oldies) who look at all bussiness's prospects. To them they see "open source" as something almost anti-capitalistinc, or rather something to sink you money into if you are eager to loss money. From their perspective, open source is an open-money pit ready for a camp fire. Lets just say I belive the anyalisis of these folks are correct, open source's capital sucks... as it always has. DUh!!

Open source is not run by money. It is operated by the motivation of its creators, maintainers, etc.. Open source is a spark, but this spark doens't nessecarily power an engine of commerce. Rather the engine is the pride, the joy of accomplishment we humans have before we die. Sorta like the building of the pyramids: totally crazy, yet totally cool! ;)

I know I speak to the choir here on /. ... but heck... who cares, right?

Re:5 billion in R & D

[night_flyer]

R&D to microsoft is Retail & Distribute

Open or closed, does it matter?

[Ars-Fartsica]

VA Linux didn't fail due to the "openness" of its products - considering that until recently its primary business was hardware. VA simply couldn't be price-competitive with larger hardware vendors. As for SourceForge, its not clear that its a very compelling revenue-generator in any case - regardless of the openness of its source.

As for the other companies, most of them were questionable in any sense, and considering that most of them were predicated on the fad aspect of open source, it should come as no surprise that they flopped.

There is hope though, RedHat seems to be doing respectably, and IBM is making large investments in open source that are predicated upon sound business principles.

Open Source Benefits Users Not Software Developers

[Carnage4Life]

The beauty of Open Source especially Free Software is that it gives immeasurable benefit to users. Unfortunately it also takes away from developers the opportunity to make money just from software. Now this doesn't mean people can't make money from Open Source, they can. It just means that the people who'll make money from Open Source are most likely the people who use it as a means to an end (e.g. IBM, TiVo) and not the ones who spend time and money developing software only to give it away or try to charge for software that can be obtained elsewhere for free.

This is why Microsoft does not like Open Source because they think long term and can see the future. Eventually Open Source will drive away off-the-shelf software, and the only people making money from it will be the consultants and the hardware people (again IBM is already be at the forefront of this) who are actually primarily users and in most cases not developers of the software. Giving away software and trying to make it up in services that anyone else could provide is a dead business model because there is zero barrier to entry into the market. The one who does all the initial expenditure of capital to create the market and develop the products can be subpurned at any time by anyone with enough capital to enter the market. VA Linux found out exactly what happens when you rely on Open Source in a market with zero barrier to entry...thats right, the big boys with money come in and take over your playground.

Microsoft is smart and has already started branching out to get ready for the software apocalypse. XBox and .NET MyServices (aka Hailstorm) are just the beginning. If you work for a company that isn't thinking that far ahead then I suggest you begin to plan your future elsewhere or start working towards being an independent.

IMHO, in the future once Open Source Software is commonplace the people making money from software will all be users; consultants and people who use it as a way to avoid paying high licensing costs. This is fine by me since consulting sounds like fun and is better than being a cog in the wheel anyway.

At least open source video editing

[heroine]

Can definitely assert that open source video editing took a hit. Kino and Linux Video Studio programs are great consumer tools but no good for professional work. The professional offerings died when VA Research/linux/software/I.O.U. tanked, not to mention cluster management software. Let's put it this way.

4 years ago open source was moving a lot faster with software costs not being the responsibility of the programmers while X Box, Pocket PC, and C# seemed dead in the water. Today open source programmers have to pay for their own software and criticizing those dead in the water projects, X Box, Pocket PC, and C# for being too slow get you banished from slashdot.

Re:fairytail 'economy'

[night_flyer]

Another good example of "throwing money at education" not fixing the problem....

"At least Microsoft is doing well..."

[dpilot]

You'd think that some IT execs would look at the better-than-market performance of Microsoft, and then look at the *pain* they're having on their bottom line with IT expenses, and figure out that there is some relationship between the two. Then start plotting an escape.

Natural Selection not an OSS problem

[Kefaa]

The objective of OSS is the sharing of information in hopes of return. I have code that will do "X" and need it to do "X+Y". Hey, you happened to have done "Y" and can send it to me.

Soon enough people are sharing that not only is "X+Y+Z..." available, but I can get the entire package without any work on my part. Unfair? Hardly. People who needed them built "X" and Y and Z, and could not wait. They hope that when they need "Q" or "R" or "S" you will pass it on to them. [Like we do in our offices on a weekly basis.]

In addition, they ask that if you enhance or fix "X", you send it back so we all benefit. Let's face it, I gave you 20000 lines of code, you put in a 20-line fix, sounds like a good deal to me. Or if you cannot fix it, tell me it is out there so I do not find it a 3:00 a.m.

I also want to be certain you do not take "X+Y+Z", put your name on it and sell it. Much like I would frown on my neighbor planting crops in my yard and selling them.

So why is the business side of this failing? It is not, if we consider that around 50% of US businesses fail each year, and many of those are based on products. For a service model to work, I need to bring something to you, you do not have. To keep you as a customer I must always have more, know more, or control more.

OSS development is the antithesis of this. We are sharing in hopes the information will become well known. We want everyone to be as good as we are, because we want to use them as a resource, like they use us. We also recognize that OSS is many times a short cut toward, not the solution prepackaged for consumption. This means your people can be as knowledgeable as OSS developers, because we do not hide how we do it. Great for OSS, tough on Service companies without a value add piece.

Being unemployed...

[Ron Harwood]

...until Dec 17th has given me plenty of time to work on my open source project...

Surprise, surprise

[underpaidISPtech]

The economy is in the shitter. This whole article is nearly pointless. Open-source (the business model) was circling the drain before any other sector of industry was, and this is news?

And now to burn some karma....

I think that the open-source phenomenon will quietly, undignifiably, dissapear soon. It is a lofty and noble goal to be sure, however as a sustainable movement, I believe it will become less important over time. Why? Because the high-flying VC money and gold-rush speculation that drove those fat boomtime salaries are what really paid for open-source. The time to code the time to host it, the time to collaborate, just aint there any more during the dot-bomb hangover.

Open-source is an idea; that will remain. Linux the kernel, and any derivatives; they will remain. Unix is still with us after 30 odd years, and so too will Linux and OSS. Good. But, making money and supplanting a capitalistic machine that is designed for high proiduct turn-over, planned obsolecence, and not giving the customer what they want is the sustainable model, not selling services to free products. If you pay for the product, then you will pay for support. Get a free product, and you find out its not up to par or whatver, why pay for support, just get another free clone....

As an example, look at the mp3, CDR, DVD products out there. Is there a single product (game console, entertainment device or otherwise) that can play mp3s, read and write CDR, CDRW, DVD, DVD-ROM/RAM/RW and any other format? No. It is much better business sense to force the consumer to buy a couple of different devices than one do-it all device.

As with software, you want return customers, hence the excruciatingly long path to a stable windows platform (some may argue this point, although at this time I think it's the licensing/terms of use that is the problem not the OS itself).

There is alot of uncertainty around everthing right now, both socially and economically, and open-source is a real gamble. Will it become a security threat to use OSS? Of course it isnt, we know better than that, but we don't make the law.

Where does crypto stand? Do you want to continue to code for free, or maybe you're unemployed (or facing it) and would like to see a return on your effort? I dont think selling services is the way. I can just as easily support your software as you can.

Anyways flame away, mod me down for blasphemy, whatever, maybe I forgot my happy pills this morning...

Re:Surprise, surprise

[geomon]

I believe it will become less important over time. Why? Because the high-flying VC money and gold-rush speculation that drove those fat boomtime salaries are what really paid for open-source.

Now that we have heard from Bill Gates, perhaps we can pump a little more reality into the discussion.

When I started using Linux in 1994, the Information Superhighway wasn't on the radar. MOST IT jobs were in the same sectors that they are in now: database management. At that time, I saw thousands of listings on usenet for DB administrators and sysadmins. What the hell did those jobs have to do with open source? Nothing! People got paid for computing and open source projects were flourishing. This momentary dip in open source funding does not equate to a death knell for non-proprietary software development.

But now that you have done your obligatory dance on the open source grave, keep this in mind: As long as there are programmers who are willing to collectivly contribute their spare time to a project, open source will survive. That may seem alien to you, but people contribute to all kinds of collaborative efforts without the expectation of monitary gain ($1BUSD donated to Red Cross).

You might not agree with the cooperative sentiment, but there is 400 years of history behind the open source philosophy.

Re:Surprise, surprise

[Skapare]

But, making money and supplanting a capitalistic machine that is designed for high proiduct turn-over, planned obsolecence, and not giving the customer what they want is the sustainable model, not selling services to free products. If you pay for the product, then you will pay for support. Get a free product, and you find out its not up to par or whatver, why pay for support, just get another free clone....

The reference to selling support for a free product is probably true. However there is a variation on this that can potentially succeed. By selling a service, not as support for some free product, but as a service in and of itself which happens to have free source tools as its foundation, you are then selling a complete solution to a business. Few businesses are going to choose Linux for the sake of having Linux. What businesses want is something that works for them, and most of them (smaller ones, anyway) want something someone else is going to take care of. So instead of selling "Support for that Linux you bought", you sell "A service to manage your office computers and network" which you've chosen Linux (or whatever) to be a part of that.

Re:Surprise, surprise

[ChaosDiscordSimple]

Open source software has been and will continue to be profitable. It may not be insanely profitable, it may not apply to every problem, it may be unconventional, but it works. It will slowly grow, because once open source moves into an area, it becomes very hard to dislodge.

Sleepcat Software's open source Berkeley DB has "been profitable since inception" in 1996

Using multiple licensing models L. Peter Deutsch is able to provide Ghostscript under the GPL and make enough money to retire.

Cygnus Support (now part of Red Hat), was founded in 1989 and was "profitable, increasingly profitable, every single year" before the Red Hat buyout.

It's very unconvential, O'Reilly must be happy enough with sales of books to pay Larry Wall to keep developing Perl.

Open Source works. Maybe not as well as VA Linu... erm... Systems wants it to, but it does.

Re:Surprise, surprise

[dkixk]

I think that the open-source phenomenon will quietly, undignifiably, dissapear soon. It is a lofty and noble goal to be sure, however as a sustainable movement, I believe it will become less important over time. Why? Because the high-flying VC money and gold-rush speculation that drove those fat boomtime salaries are what really paid for open-source. The time to code the time to host it, the time to collaborate, just aint there any more during the dot-bomb hangover.

It depends on how you define the term open source. You hint at this in the paragraph that follows.

Open-source is an idea; that will remain. Linux the kernel, and any derivatives; they will remain. Unix is still with us after 30 odd years, and so too will Linux and OSS. Good. But, making money and supplanting a capitalistic machine that is designed for high proiduct turn-over, planned obsolecence, and not giving the customer what they want is the sustainable model, not selling services to free products. If you pay for the product, then you will pay for support. Get a free product, and you find out its not up to par or whatver, why pay for support, just get another free clone....

When you write in the first paragraph that open source will "quietly, undignifiably [sic], dissapear [sic]" but then write in this paragraph that "Linux the kernel, and any derivatives [...] will remain," you are implying that the most important aspect of open source is "making money and supplanting a capitalistic machine." I'm more than a little confused as to how making money could possibly help supplant a capitalistic machine but I'm assuming that you meant something more like "supplanting the capitalistic machine based on proprietary software with one based on open source software." Well, perhaps it is an important element of what many people mean when they use the term open source as a conscious decision to avoid the term free software. In other words, I think that some people who use the term open source, e.g. Eric Raymond, invented the term specifically to describe the socio-economic concept of making money from non-proprietary software. So, what if we talk about free software, i.e. open source software without the libertarian, capitalist spin? Will free software disappear? You yourself even wrote that "Linux the kernel, and any derivatives [...] will remain." Not only Linux but GNU, BSD, et al, will remain for quite a long time. In this sense, how is free software failing? If I want to use software that I am free to copy, modify, and share with the community, I can still do it. Was this not the original aim of the FSF and the GNU project? Larry Wall can still keep providing Perl. I can still look at all of the source code to BSD and W. Richard Steven's TCP/IP Illustrated, Volume 2 is as free to publish all the gory details of the BSD implementation of the TCP/IP stack today as it was when he first wrote it. How are any of these things failures for free software?

Personally, I think that free software will continue to flourish in the same way that it has always flourished, e.g. as a free exchange of ideas communicated with source code in the grand tradition of a academic community. Perhaps the views of those who supported the idea, for example, of "Open Source as a Business Strategy" might have try and buttress their arguments in the light of economic realities. Of course, if some of these open source businesses might even manage to survive the current economic downturn and come out strong on the upturn. However, for those who think that one can see "Open Source Software Development as a Special Type of Academic Research", the particular market woes of any .bomb have little, if any, relevance. And what could possible interfere with Larry Wall's idea of open source development as an exercise in "Diligence, Patience, and Humility"?

Re:Surprise, surprise

[Bruce Perens]

Because the high-flying VC money and gold-rush speculation that drove those fat boomtime salaries are what really paid for open-source.

Gee, where have you been? We've been working on this, if you count from the start of the GNU project, since the early eighties (and some would say longer). VC and stock money was fun, hey, I got two years employment out of it, but it was a blip in a continuing history. Most of the good work has been, and continues to be, done without it.

Bruce

Re:Surprise, surprise

[sheldon]

"Is there a single product (game console, entertainment device or otherwise) that can play mp3s, read and write CDR, CDRW, DVD, DVD-ROM/RAM/RW and any other format? No. It is much better business sense to force the consumer to buy a couple of different devices than one do-it all device."

Well you could always go out and buy a Pioneer DVR-A03 and install it into a small personal computer. The drive reads and writes CDR, CDRW, DVD-R, DVD-RW.

The drives are getting cheaper, now down around $450.

I don't think your complaint is terribly valid. People don't want single purpose speciality devices. But they are willing to buy an add-on to a personal computer like what Pioneer sells, which then makes you capable of doing what you ask.

I think the same is true with software.

As a company you do the best you can with the technology available, understanding that you need to be able to bring your product in under a certain price point. If Pioneer charged $5,000 for their drive, I would not buy it. At $450 I am going to consider it. At $200 I would have already bought one.

Re:Surprise, surprise

[Ogerman]

I think that the open-source phenomenon will quietly, undignifiably, dissapear soon. It is a lofty and noble goal to be sure, however as a sustainable movement, I believe it will become less important over time. Why? Because the high-flying VC money and gold-rush speculation that drove those fat boomtime salaries are what really paid for open-source. The time to code the time to host it, the time to collaborate, just aint there any more during the dot-bomb hangover.

You're forgetting a big part of the picture. At a certain point, it is cheaper for companies to pay some programmers to extend an Open Source package than it is to buy proprietary software licenses. Lets say that after OpenOffice reaches 1.0 status, lots of people start switching from MS Office. Now company X, which is thinking about upgrading its office software in the next 3 months, realizes that OpenOffice is missing some feature that they need. It would cost them $20,000 to contract a programmer or two to add the needed feature or $100,000 to buy all the licenses they'd need for the latest MS Office. Which are they going to choose?

Re:Surprise, surprise

[Chris Johnson]

"I think that the open-source phenomenon will quietly, undignifiably, dissapear soon. It is a lofty and noble goal to be sure, however as a sustainable movement, I believe it will become less important over time. Why? Because the high-flying VC money and gold-rush speculation that drove those fat boomtime salaries are what really paid for open-source."

Wow- rarely have I seen a point missed so breathtakingly :)

What on earth gives you the idea that open source was driven by capitalistic goals? Critics of OSS often call it 'communist' or perhaps 'socialist' and there's some element of truth to it, but to a large extent it is an anarchist phenomenon- key licenses such as the GPL deftly render centralised control absolutely impossible.

Open source is not an economic phenomenon in the first place. It's an information-control phenomenon- it's not driven and sustained by the direct motivation of greed and profit, it is driven by a REACTION against information control. The whole POINT is to establish a commons of software information that cannot be taken away from people, or placed under hierarchical control. Hence, the anarchist analogy.

During the 'dot-bomb hangover', things are so tight that the proprietary guys, in the best tradition of their centralized-control, creator/consumer (not to say master/slave!) system, inevitably turn to controlling their consumers, withholding more, figuring out ways to turn the screws and compel payment from people who themselves are hard pressed. The VC money isn't there anymore and it's 'make people pay' time.

This will drive more Open Source proliferation, rather than less- because OSS is not driven by people's desire for personal gain, it is driven through people's desire to escape a bind. The tighter you turn the screws on people, the MORE they will flee to open source software authoring and using- if they can.

Barring really interesting authoritarian behavior way beyond simply outlawing OSS- they can. You have it exactly backwards and are looking in the wrong places for motivation-to-use-and-code-OSS...

Re:Surprise, surprise

[Bruce Perens]

OK, coming in at 1994 you're going to miss a lot, although you could have been around a lot of projects that had excellent collaboration before SourceForge and its ilk. I ran some collaborative projects on USENET before there was an Internet that mere mortals could access, and in fact released important Free Software like Electric Fence that way. Debian's main method of collaboration was in 1994, and continues to be, email and simple file transfers. The web is fun, but not essential - but some means of digital communications is essential.

So, we did get some hype, yes, but IBM's spending more on Linux hype today than has ever been spent before.

I'm going to write a commentary on CNET to reply to Steve.

Bruce

SuSE guy is clueless

[reaper20]

"Where is our business model if everyone else can copy it?" asked Holger Dyroff, former CEO and now director of sales for Linux software seller SuSE. "The question is where we can make money now. Nobody cared about profitability two years ago."

Oh, ok, his company didn't care about profitability two years ago, and SOMEHOW, this is open software's fault, hey wait a minute, isn't YaST closed source?

"The development model of open-source software is wonderful. But let's not confuse a development model with a business model. Basic business principles were forgotten by some," said Turbolinux Chief Executive Ly-Huong Pham.

Now that is the smartest thing I've heard regarding OSS companies and their lack of profitability.

This is all bandwagoning - If you are an incompetent company, you are going to fail, regardless, evidently SuSE didn't even care about profitabilty until recently ... WHAT!? I'm sorry, but you could be selling liquid gold and still fail with that mindset.

Who found the Open Source b-plan?

[mnf999]

OK, the article is actually interesting. Having founded JBoss Group, a commercial entity behind JBoss I relate to many of the points.

But somehow the thinking is backwards still, thinking with old filters. One of the fundamental flaws of business in open source is that you give away your core competency.

But then OSS existed before companies tried to grow on its ground (Linux) and very succesful service companies existed independently of Open Source (EDS). So there must be a middle ground.

I believe part of the problem is that is that business folks out there (mostly VCs, I have met my share of arrogance back in the good ol days of the valley, confusion!) well VCs try to apply the old model of company building on the new way of producing software. It doesn't work. Open Source CANNOT support fat and overhead and corporate structures, just because IT CAN'T.

My (small) company is profitable and we are growing but I clearly see that I cannot AND SHOULD NOT grow with employees, just not flexible enough. As research on business plans goes, I understand that JBoss even though it is in the very rich field of enterprise software (and there is a lot of service), well JBoss for all its success cannot support a massive company right now. And again it is probably not the right structure ANYWAY. VCs got it wrong, most business men are scratching their heads, we at JBoss Group are trying, trying hard. Can't say we got it, we don't, but like many others in open source we make a living.

We offer many services around our free product are thinking about subscriptions and paying for information. The product is free, the service is not. The information is not (documentation, help, support, training (plug: http://www.jboss.org)).

Training is our biggest gig, people want to meet the developers of the framework. Also I don't think this would work with "GUI" frameworks. Just not enough customization to go by. If it is hard in the J2EE field, I can imagine how much harder it is in other fields.

Had I taken VC money (not that it was offered) or had I hired anybody left and right with borrowed money (what VC money is in the first place), well I WOULD BE DEAD TODAY.

It's a bitch out there, but I for one still believe, believe strong, we'll get it

marcf

Are we losing the rats or the driftwood

[Wateshay]

The way I see it, there are two ways that this can be looked at. The knee-jerk paranoid reaction is that the rats are jumping ship, and the end of open source is looming just over the horizon. And it just might be true. Open source is a radical, untested business model, and as much as we slashdotters want it to succeed, it may just be a deeply flawed system that will never work long term and large scale. That's not the only way to read this, though, and I certainly hope a more positive view is the reality.

Every new industry goes through an initial period of boom, where everyone sees golden opportunities and jumps onboard. Eventually the market gets saturated with a lot of poorly conceived wannabes that jumped on, and it collapses under its own weight. When that happens, though, the market doesn't go away. Instead, the most solid competitors survive the collapse and come back stronger than ever.

So far, it seems that we are looking at the initial collapse right now and we can expect a few casualties. The survivors, though, will come back stronger than ever and take open source to the next level. Furthermore, open source has the unique advantage that the casualties don't disappear completely, but rather the failed companies' products live on due to their open nature.

When the big boys (IBM, Sun, SGI, etc.) with the resources to weather the storm start to jump ship, then I'll start to worry. Until then, I look at this as a sign that open source is ready to move to the next level.

Re:Are we losing the rats or the driftwood

[Znork]

Any sane model based on Open Source software does not even include the concept of making money by selling software, because that idea is doomed to fail.

You _save_ money by using opensource software, driving some other buisness model entirely. Using open source software to reduce IT budgets, using open source software in the solutions that you sell, using open source software to drive hardware, and using it to compete with your poor license beridden or proprietary development beridden competitors who simply cannot match your cost effectiveness. Of course, there are also several possible services based models, but these require real added value and/or a large market base.

I'd worry if IBM dropped the idea, because they have a buisness model suited to using opensource. Sun has always been sorta-maybe about opensource, and I think their corporate subconscious ID really would prefer replacing MS and Intel with themselves. But they see the pragmatic benefits of fostering development that doesnt leave them alone facing the Final Conflict of Doom. SGI have their own problems.

What really would be good is if some of the other huge consultant corporations start bidding wars against eachother for largescale corporate implementations of linux installations.

Who writes open-source software?

[Salamander]

Historically, I think open-source software has been written by two groups of people: college students, people working on their own time, and professional programmers stealing time and resources from their employers. The first two groups are pretty constant; good times or bad, the numbers will be almost the same. During the dot-com boom, a lot of people in the last group started fleecing investors instead of employers, but that's coming to an end now.

Nowadays you're going to see two dnamics at work. On the one hand a lot of those who once hoped to become dot-com millionaires are being laid off. They'll go back to what they did before, whatever that was, and they'll sneak in what time they can doing open-source projects. At the same time, employers are going to be a lot more focused on the bottom line, cutting deadwood and leaving schedules the same. This will create more schedule pressure, and an incentive not to be the one who appears "unproductive" when the next layoff hits. Between these two factors, I think we'll see a net decrease in the amount of time devoted to open source by people in this group. That shortfall will not be made up by the people who remain unemployed for long periods and figure they might as well use the "enforced downtime" to work on their open-source projects, because those people are likely to be the bottom of the barrel. If they were that good, they wouldn't be remaining unemployed for long even in tough economic times.

In short, lean times are bad for open source. We can expect a slow-down in the pace of open-source development for as long as the bad times last.

Re:Who writes open-source software?

[Salamander]

Oops, that's one of the dangers of overediting. Obviously there are three groups, but I forgot to change "two groups" from an earlier draft.

Re:Who writes open-source software?

[Salamander]

yes many of them are actually stealing time on their job but many are also professionals taking the jump

If so, then good for them and good luck to all of you. However, I'm sure you know that one anecdote doesn't prove much of anything. I've dealt with hundreds of open-source developers, and I can only think of one or two who don't fall into one of the three categories I mentioned. Even those few are questionable cases; they make enough money from consulting to have a lot of free time that they then spend on open-source development, but I'm not sure if that qualifies as "making a living from open-source software".

I seriously think that one of the problems here is that you all assume that you must be working for some stupid corporation to make a living.

I for one don't make that assumption. Several of my friends have done quite well over the years on the consulting/contracting circuit, and I know I could join them any time I wished. Yes, even now, with the high-tech economy sucking wind. However, consulting/contracting != open source. Maybe I could make it a term of my contracts that any code I produced be open source, and still make a living, but I don't think that would be the usual case. Freelancers don't usually have that kind of leverage; all but the creme de la creme usually take whatever they can get.

Actually you can make a living too in open source it is not difficult.

I could make a living as a consultant, on open or closed source, but it's not clear what that has to do with "making a living in open source". Let's wait a little while and see if JBoss's classic-dot-com business model really holds up over time or whether those T-shirts and mugs you sell on your website (pets.com anyone?) end up as dot-bomb souvenirs.

Corporations expect you to pay for it

[heroine]

When you release a substantial piece of
software corporations usually expect you to pay
your own support costs, including flying to the
location to troubleshoot it. They expect the
support cost to be covered in the license fee,
which for you was 0. If you don't provide support
they'll make you wish you never gave out the
software to begin with.

Re:Corporations expect you to pay for it

[SirSlud]

Agreed. Thats what I was saying .. charging for Services and Support doesn't work. It's akin to saying 'The software is free, but you have to pay when it breaks/you can use it.' It's like banking your business model on your softwares lack of ease of use or propesity for not working.

Re:Corporations expect you to pay for it

[einhverfr]

Funny. Microsoft charges for all these things...

Re:Corporations expect you to pay for it

[SirSlud]

Ahh .. additional development/cuztomization is where its at. Agreed. I was only referring to technical support and training.

When it comes to customizing solutions or adding features at a customer's request, I think those are definate opportunities to get revenue, in a context where the customer feels they are getting something for it in return, other than the ability to _use_ the OS'd software.

Anyways, point taken.

Re:Imagine That...

[night_flyer]

an off topic rating for mentioning that I sent in the exact same article for submission....

Utility of the Work

[namespan]

I'm sitting in on an Economics class at the local university right now, and I've brought up open source a time or two in class. The instructor, who really is a sharp guy, finds a lot of aspects of it baffling.

I think it's because the conventional economic thinking tends to divide human activity in to consumption and labor. Labor is, by and large, done to receive wages with which one consumes.

What I think they forget is that some work is actually done for the enjoyment of the work/accomplishment (economic speak: some people actually derive utility from some work).

So while some observers may look and see a slowdown in the open source world, my guess is that reality is a little different. There's probably a slowdown at open source companies -- just like there has been at many closed-source companies -- but those who've been coding to scratch an itch, or for the fun of it, I'm sure that hasn't stopped at all, unless things have gotten so bad that coders have had to start spending all their time foraging for food and shelter.

As long as hackers have spare time, open source will exist. As long as the protocols/comm infrastructure is reasonably open, open source will probably thrive.

Make money in open source by reduced devel costs..

[sterno]

A common problem with open source software developers is that they seem to be convinced that they can fund most of the development effort of a product and still make a good profit on the product.

Look at what RedHat does, they sell Linux support and services and they package the product with instructions, etc. Are they the primary developer of Linux? No. They fund a small chunk of development, enough to give them some say in where it goes, but not enough to really hurt their bottom line. Now we have RedHat DB which is simply a repackaged postgresql, yet another thing they've not put vast resources into. Because of those reduced costs they can actually afford to have a business where the software they sell is free to download.

The power of open source comes from a community burden of development. Several people and organizations can share the costs of developing the software. Something that I have yet to see take hold is the realization that open source doesn't have to be developed by traditional software companies. When open source will get really interesting is when you see insurance companies, banks, and other software dependent organizations making contributions to the community. There's a tremendous financial incentive to use open source software and to contribute innovations in that software back to the community.

Article equates success with $$$

[mactari]

NEWFLASH! Open source projects aren't making money when commercial ventures aren't making money, therefore open source is fading!

The author of the article referenced here takes examples like VA Linux and says, "See, open source is on the way out." The point should be that times were so wild for a while there you could offer Free[dom] software and *still* make money.

Quoting a quote from the article:
"The development model of open-source software is wonderful. But let's not confuse a development model with a business model. Basic business principles were forgotten by some," said Turbolinux Chief Executive Ly-Huong Pham.
[end quote]

Mistaking open-source for a business model is exactly what this article does. The fact that open-source companies are struggling is not a good indicator that open source is "fading". That's like measuring the well-being of the Catholic Church by how much the Pope makes each year, after taxes, of course. *sigh*

What about education?

[jefferson]

The articles only talk about Open Source in terms of companies trying to make money from it. But education, specifically university CS departments, are both huge users and huge resources for the open source community, and will help keep it afloat in hard times.

Not having to buy licenses for much or all of the software on their un*x workstations saves departments huge amounts of money. Moreover, they can build workstations from commodity components. This allows them to provide more machines for students, and simultaneously exposes huge numbers of CS undergrads and grad students to free software.

Also, the dot-com bubble bursting caused CS graduate school enrollments to swell enormously. Grad schools have traditionally been places where much free software is born, as student researchers put their work out there for everyone to see.

The problem is that only a few schools really do research in user interfaces and similar areas that will advance free software in the mainstream. But in a lot of less visible areas: like the core-OS, distributed computing, networking, scientific computing, high-performance graphics, AI and robotics, free software will continue to progress and improve through universities. In the process the universities will continue to graduate students who are used to working with free software, and who will wonder why they should buy licenses for software when so much is available for free.

Re:California dreaming...

[geomon]

I was laid off ten years ago (when I was 30) and went out and started a company. I was doing okay, but the bills were racking up fast and I needed to stem the cash flow problem. I took a job that I have held ever since.

Where would I be had I kept the company going?

Who knows?

It might have panned out beautifully.

Risk can be a good thing.

If these people are willing to take a short-term risk and keep coding, they may actually be in a better position in the long term.

If you think that certainty comes with age, talk to me again in 10 years.

They were dot-coms

[karb]

Across every industry, the same thing is happening (or has already happened). For the most part, the upstarts that thought they could conquer the brick-and-mortars by being on the internet first have failed.

The brick-and-mortars that do the same thing but could afford to lose lots of money on the internet initially have survived. Commercial open source will survive, but pursued more by the old guard (like IBM, Apple, Sun, etc.).

Faulty buisness models.

[Znork]

You do not _make_ money _selling_ opensource software.

You _save_ money by _using_ opensource software.

How hard is this concept to grasp?

These models are used in, for example, companies doing something else entirely, such as the auto industry, finance or research. The main goal is to reduce IT costs.

Other examples would be companies like IBM selling complete solutions based on opensource software, where the goal is to reduce your pricetag as compared to your competitors. A lot of the failures have been proprietary companies whos buisness is going the way of the dodo anyway, often because their products are competing directly with opensource products and the advantage their product offers above using the free, opensource, product just isnt worth their license fees. If, for example, your product will save a company 10 manweeks of programming as compared to just hacking something together in perl, you cannot charge $50000 for a license, because a) 10 manweeks dont cost that much even if the company hires a consultant and b) dealing with the friggin license manager is going to take half that time at least.

Sistina with its GFS is a perfect example. I mean, sure, I think it sounds great. However, with me being a sysadmin in a 80K employee company who could really use something like that, and even I cant see us migrating to something like GFS in the next 10 to 20 years, where are the customers? It doesnt matter if it's opensource or proprietary.

I mean, come on, it's hard to even create a reliable SAN solution that doesnt blow up in your face every week unless you have DMP _and_ host based mirroring, not to mention the complexities of ordinary various forms of filesharing, not to even try to attempt to get into the corporate politics that would be necesary to implement something like it. It aint gonna happen this decade.

On top of that they're competing with virtually every filesharing hack and strategy in existence. Great idea, but the product will require massive marketing to the right people to even have the slightest chance, and they'll have to target the ones who have an environment where the benefits are larger than the costs (um... clean-slate new 10k plus employee companies? Corporations whose datacenters have caught fire and they can reimplement it all from scratch? The migration pains for this make me shudder).

The same applies to the most of the other companies there. You can live off services if you have the marketshare, but you cant breathe new life in a product that faces killer competition already. The same applies for anyone going the other way. You cant make your product proprietary if it means your marketshare will hit ZERO the second you make the announcement because what you offer has no value. Linux distributions are a perfect example of that. Make it proprietary and you dont have any customers anymore, because you have annihilating competition and part of the value is that there isnt any friggin license hassle involved. You _have_ to have the marketshare to run on services and support or offer something of real value on and above what everyone else offers.

Re:95%? Get real!

[alen]

I'm quoting figures given to me by an MBA from my last job. He said that around 80% of all new businesses fail in the first year. 90% within the first 2 years. And 95% within three years. The survivors are probably doing something right.

Slow paid-work times frees up time for OSD

[MarkWatson]

I had the experience of the dot com that I was working for (an AI company) going out of business earlier this year.

One good thing that happened was that for a few months I was not very busy doing paid work, so I had the chance to work on another Open Source project (Lisp wrapper for the Brill tagger) and to finally release the first version of a free web book (sequel to my published Java AI book).

Bad economic times and slow employment are a bummer, but Open Source projects can benefit from extra free time. (Beats watching network TV!).

-Mark

IT'S GOOD FOR OPENSOURCE !!

[stark_fist_05]

1. When I was out of work I could dedicate 40+ hours at a time to opensource development. Over 100 hours a week. now that I working I'm lucky to spend 20 hours a week.

2. If the economy is slow then companies should be looking for the most bang for the buck. Not, $1000-$5000 per seat in desktop licensing (and much more on servers). Smaller budgets make for smarter purchases due to increased research into value, reliability, and performance, The 3 areas where Linux and opensource dominate.

Depends on the job...

[Svartalf]

If you're a device driver or kernel developer, making web pages is nothing more than working at McDonalds to most of those kind of recruiters- why are you doing web coding instead of what you're applying for?

Let's face it, recruiters in boom times are a benefit- in the shallow times, they're not as useful to worse than useless (I'm getting interview opportunities for positions that people like Hall-Kinion are listing online and elsewhere but they apparently won't submit me because they're looking at the explicit request details and insisting on it (Recruiters are really bad about that in times like these...) even though it's a minor detail and non-critical to the actual work involved with the position- in order to get the interviews I've been doing a little research and applying for the positions directly. Times like these, if you're unemployed or getting screwed, you need to use the recruiters, but if you're not getting places, you need to use your OWN initiative.

That includes continuing to code to keep sharp and not sitting on your duff, expecting that a recruiter will place you.

Re:Well, OSS is dying where I work

[argoff]

Translation ... they've decided to consolidate all their opperations under windows and phase out the extra cost of UNIX gurus.

Analysis ... the manager is getting some kind of kickback from M$ and wants to get rid of the competition.

Open source == subsidy

[MisterMo]

Open source is not a for-profit venture, but rather a subsidized activity.

Here's a gloss on what Webster (at dict.org) sez about the word "subsidy":

1. Support, aid, or cooperation; especially extraordinary aid in money rendered to the sovereign or to a friendly power.
   
2. A sum of money paid by one sovereign or nation to another to purchase the cooperation or the neutrality of such sovereign or nation in war.
   
3. A grant from the government, from a municipal corporation, or the like, to a private person or company to assist the establishment or support of an enterprise deemed advantageous to the public; a subvention, as in a subsidy to the owners of a line of ocean steamships.
   

Synonyms: Tribute or grant.
Usage: Subsidy, Tribute. A subsidy is voluntary; a tribute is exacted.

Each of these is interesting -- think of corporations as sovereign pseudo-states, and you can imagine many parallels.

One implication might be that source code is becoming a medium of exchange or a currency, rather than a form of speech!!

Buying Stock

[Arandir]

Chasing after stock prices is a losing proposition. People forget that last year and dumped a whole bunch of money into a lot of losing propositions. Then they realized their mistake and sold, sold, sold. It doesn't take a genius to know why.

A stock a simple a share in a company. You own a piece of the company. It doesn't generate you any revenue. If the company is profitable it may offer you regular dividends. If you have stock in such a company (otherwise known as old boring brick-and-mortor companies) then hold on to the stock even if the price drops. On the other hand if the company is not profitable then don't even bother with it. The only way you'll make money is to sell the stock, driving the price down. Thus the more money people make on a stock the less viable the company becomes.

Take a look at the hottest stock of last century: IBM. Given the opportunity to purchase IBM stock in 1901 would you have done it? Looking at just the stock price though, you would have been much better off earning interest at a bank. Nobody ever made much money off of the IBM stock price. But a lot of people made money off of the dividends.

Next time you want to buy some stock in an Open Source company, ask yourself if the company is going to be around in five years. We all know that Open Source is going to be around in five years, but you're not buying stock in Open Source, you're buying stock in a specific Open Source company. If you can't envision that company becoming an old boring brick-and-mortor, then don't bother. Otherwise you're just trying to outguess the rest of the market.

Subscriptions and free software

[einhverfr]

Sure, subscriptions make a lot of sense, but software license subscriptions are a definite violation of the GPL....

Subscriptions are a good idea, but you have to look at how your market model works. Development of new features is paid for by those that need the features and bugfixes are paid for by support contracts (sort of bug insurance). These models are how the cost of development gets distributed.

Here are some possible subscriptions that could work:

1: Pay a nominal fee for access to a high-speed FTP site. (Red Hat does this)

2: Pay a nominal fee for regular software and security updates through simple interface.

3: Pay for a support contract.

Note that in all these cases, the products obtained through the subscription are still available after the subscription is terminated. This is like a conventional subscription and unlike the software for rental (aka MS) software subscriptions.

So what if most people don't give back? Those that need the services will have to invest in them. Why should I have to initially pay for Linux? In time and/or money? Why should my parents? Why should I pay for Apache if the current version suits my needs?

My point is that those who need more than is freely available can either develop it in-house or hire someone else to do it. That is how the cost is paid.

All this aside, I have noticed that beginners often eventually turn into developers, who may contribute their time to these projects. So free is not a bad thing.

Re:Subscriptions and free software

[einhverfr]

Software license subscription refers to licensing software on a subscription basis-- when the subscription lapses, you no longer are supposed to run the software.

As far as Microsoft doing well...

[Glock27]

I find this line quite suspect:

Sales of Unix-powered servers, sold by companies such as Sun, grew just 20 percent. Though Unix market share remained almost double that of Windows, Windows' market share rose to 22.7 percent from 20.7 percent.

I don't suppose anyone at ZdNet considered the many companies that have installed "roll your own" Linux servers (often removing Windows in the process)? I know our company has several. Its entirely possible that Unix/Linux marketshare has actually risen. Don't forget MacOS X either, which I'm sure Gartner missed in it's Unix box count. ;-)

There are lies, damn lies and statistics!- Mark Twain

Re:95%? Get real!

[Arandir]

Hah! I guess you believed that line the VCs told you while they picked your pockets clean.

History proves the statistics: the vast majority of new business will not be around in five years. They make a good showing but can't sustain it in the long run.

The Economics of Open Source

[DeadVulcan]

Many people have jumped on their soapboxes, proclaiming (yet again) that free software is not a business model. Yes, yes. You're all preaching to the choir.

I has the same impulse, but on second thought, I realized that economics can be applied to free software, and from a certain point of view, there is a business model there.

A Google search reveals all sorts of stuff on the web out there, none of which I've read, so what follows is an off-the-cuff personal opinion. Take it for what it's worth. (Not much.)

The product of free software is the algorithms, the code, the documentation; so-called intellectual property. The currency is a reputation among other coders, and the use of other free software products.

I'm bursting with things to say, but I have to get back to work (in the other business model), so I'll just say this:

In the free software world, quality counts more than in the business world. How fast is the algorithm? How flexible is the program? How well-written is the code? These are the things that geeks generally consider to be the "success" of a piece of software, and they are near-impossible to measure. The payment that programmers get for their work is equally (if not more) difficult to measure.

So I think there are economics happening. There are (implicit) business plans, (unspoken) mission statements, and (so-called) companies producing products for (a certain kind of) profit, for whom insufficient return will certainly lead to bankruptcy (of sorts).

So, a (financial) economic slowdown doesn't necessarily apply to free software, not because economics (in general) doesn't apply to free software, but because the goods being bartered are totally different, and not being tracked.

A final thought strikes me as I write this: free software is a new kind of underground market, and it's very large, so it seems only a matter of time before governments start asking for a piece of the action.

Then, we might have to come up with new ways of accounting for those intangible things that free software is about: the quality of code, the programmer's reputation... I don't know if that's even possible. As you can see, I'm thinking out loud here.

Urk! Gotta run!

The New New Economy

[scoove]

Some interesting points, though I disagree with many of them. Let me contribute a first-hand "I successfully funded a telecom company in this god-awful market" perspectives, sharing what worked and didn't for us and how it relates to open source:

The economy is in the shitter.

Yes, and even more so, big VC-funded entities. More on this in a sec.

This whole article is nearly pointless.
Yes, I found it very state-focused, static. Declaring the obvious, but totally missing the point and trend.

Open-source (the business model) was circling the drain before any other sector of industry

Open source, as a sole business focus in itself, was (especially when VC funded, again). Open source as a tool for the post-dotcomveeceedisaster, is actually growing stronger.

Because the high-flying VC money and gold-rush speculation that drove those fat boomtime salaries are what really paid for open-source.

I'd say you're half right. Look at my business: we're a rural broadband provider, up against a couple of VC creations. All of them are gasping for air, desparate for yet another round of money. Apparently $60+ million wasn't enough to pay the Lucent consultants and Harvard MBAs for a year.

Meanwhile, the lean and mean guerrilla companies like ours are growing (mostly because cashflow is easier when you don't have the $60 million monster to feed, not to mention all the VC opinions that come along and feel they have a right to tell you how to operate, who to hire, etc.).

not selling services to free products.

No, but consider open source as an element of (pardon the buzzword bingo word choice) "coopetition" (ack). Look at tools like MRTG, netsaint, netstumbler, etc. We're developing our own tools that will be released as well - they'll never be successfully understood by the VC and Fortune 1000 beasts (e.g. Qwest), since they "don't come from Lucent" and aren't backed by a big name firm.

Instead, we'll end up sharing with other guerrillas, each attacking the telecom beasts from a thousand locations. Once we've dealt with them, it'll be interesting to see how well we play together. I do believe we're seeing an interesting transition here though.

VC's had a few fundamental assumptions that the dot-bomb proved to be flawed, including:

o synergies: more is better. Compaq + HP > Compaq & HP. Economies of scale, leveraged buying, etc. We're finding out that Compaq + HP instead equals Compaq + HP + competing incompatible political structures, new focus on internal battles rather than fighting the outside enemy, balkanization, etc.

o startup + $100 million = a mature company: Why else would you hire a Harvard MBA - I've dealt with dozens of them and can attest to not a single one understanding startup dynamics. They're worse than useless - a bunch of British officers fighting the American revolutionary war. Wrong methods. Wrong scope. Wrong level of granularity applied to project/process management. Only good at spending money and getting out before things blow apart. But VCs thought the presence of $100+ million in funding made things post-startup (since startups don't typically have those kinds of financials!).

So what the hell does this have to do with open source?

The pure-play open source death being reported here and being discussed by underpaidISPTech is a VC anomoly - in south park language, a monkey with three asses. They weren't meant to survive; they were meant to have a high IPO exit that the VC would make a killing on. Everyone was part of that party, and the shills buying this stock finally figured out (dotbomb) and stopped playing.

But open source as a strategic tool for post-dotbomb companies is just beginning. Think about it: I've built mediation systems that are light years ahead of Lucent's Billdats (which comes with a $1.25 million+ pricetag, not including hardware or support) for the cost of Redhat, a $2,000 Pentium III and a week's worth of Perl programming by my team.

If you're in the tech world and want to end up a winner, you've got to read Christensen's Innovator's Dilemna and understand that open source, Linux and such are all disruptive, "trivial technologies." They may not be pure plays for a long time, or forever, but they probably are going to cause significant upheaval within industries.

BTW, in the post-dotbomb, there is compelling evidence that the "all companies must consolidate and get large or else die" may also be a fallacy, primarily created out of the SEC investment models that favor public market investment (and restrict private company investment out of antiquated investor "protection" laws, interestingly supported by... you guessed... large corporations seeking to tie up the capital markets).

Build a company that makes a profit. Don't worry about size. We'll see how this plays out...
*scoove*

Not a good analogy

[einhverfr]

5-star restaurants are more like Sun, HP, etc. and proprietary Unix.

Microsoft is therefore like McDonalds. Not the quality, but not the cost either.

Open source is more like the culinary magazine market. Make their money giving away their recipies for free and selling the media.

Re:95%? Get real!

[JabberWokky]

The survivors are probably doing something right.

Possibly, but not necessarily. I've seen lots of very good, sensible, dedicated and well led companies die of bad luck (some of it obvious - a different product or big name competition jumped in, some of it not obvious at all). I've also seen plenty of broken as designed companies office-politck themselves across three years with little problem (often with a few big contracts or with a funder not giving up).

I *would* say that after a decade, the bad ones implode, but three years is still a short enough time for bad companies to survive (and even profit on paper, even though they are failing financially in the longer view).

--
Evan

You don't have to list McDonalds...

[Svartalf]

Uh, you just invalidated your claims there...

"I know most of the better ones in my area, and they all tell me to take something off my resume if it isn't related to what I do."

Do anything you can to get money in there, just take their advice and don't list it if it's not relevant.