Open Source Forming a Dot Com Bubble?

sebFlyte writes "ZDNet is running an interesting look at the sudden upswing of investment in open source products and the ensuing debate as to whether the open source business model has given us a bubble (akin to the dot-com bubble) that is about to burst. The counter-argument is that the increase in investment is just the natural progression of a robust business model whose time has come. One point that few people, whatever their viewpoint, could disagree with is that the key to a financially successful open source project rests with the community, rather than just the technology."

Comments

DRM

[duerra]

I think one of the arguments for an open source "burst" would be the reluctance of the open source mentality to accept things such as DRM. While I am very much with the typical slashdot mindset that thinks of DRM as bunch of BS, the corporate world is still heading in that direction. If the open source community can't come up with something acceptable on the DRM front, it's going to give the closed source vendors such as M$ a one-up where there otherwise may have been an open source trend.

One of the problems that I have been struggling to grasp in terms of its impact on my job is how important of a role DRM is really going to take in the coming years. As a pretty much Linux-exclusive shop, and as a media company, we could be in a very awkward position in the coming years since we don't really support anything in the way of DRM right now, and there doesn't appear to be a lot of headway from the OSS perspective, either.

Re:DRM

[Kjella]

This means that given the full source of the DRM implementation it is possible to circumvent it. This is a design flaw in DRM. DRM is the idea of storing keys with the encrypted content and hoping that nobody will find the keys.

Ah, but the root key isn't in Linux, isn't in software at all. The root key lies in hardware, in the TCPA chip. It is fully possible to design an OSS system that uses DRM and is secure despite being open. The reason OSS and DRM go together like oil and water is that the smallest possible change will render your system useless as the DRM validation hierarchy fails. It is as if you could modify Linux - but it would no longer run on any Intel or AMD processor ever again. That, together with the DMCA which in practise seems to trumph any notion of interoperability makes sure that you can't join them and you can't beat them without breaking federal law. The saving grace may be virtualization technology. Sure, you need your DRM-crippled VM to play media, but your Linux VM will do the rest and more. And then there's always p2p, which they will never manage to put a lid on.

who pays for this stuff?

[boxlight]

I use lots of open source software, Apache Tomcat, JBoss, a bunch of Eclipse plug-ins. In fact, before I tackle most tasks I check to see if there's a free open-source project that has already solved the hard problems.

I'm really happy that these projects exists because being able to stand on their shoulders make me a much more productive and a better programmer.

But I have often wondered -- who are these people that pay (in money or time) to develop all this stuff? I'm really glad they do, but I hope all the "funding" doesn't all dry up someday. I'd have to do all that work myself!!

boxlight

Re:who pays for this stuff?

[xappax]

Your argument reminds me of an ongoing controversy between the volunteer and paid firefighters in my town. The paid firefighters make their living from fighting fires, and they're more than a little pissy towards the the volunteers, because they see them as a potential threat to their jobs. Indeed, there are municipalities which have gone "all volunteer" due to budget cuts.

The problem that firefighters run into, just like software engineers, is that although the work they do is difficult and requires advanced qualifications and knowledge, there are lots of people out there who are willing to do it for free.

How do you resolve this problem? I dunno, because I sort of sympathize with both sides. Many paid firefighters would be happy to have the county refuse all volunteers, since that would make their jobs more in demand and therefore higher paid, but this seems selfish to me. In the same way, I don't think developers should try to eliminate or de-value open source models, they should just figure out how they can make the best of the new part-volunteer landscape of software development. There may not be as many riches involved, but to pursue personal wealth at the expense of the advancement of knowledge, technology, and quite possibly society at large seems wrong to me.

Community vs. Technology???

[MisterLawyer]

> "One point that few people, whatever their viewpoint, could disagree with is that the key to a financially successful open source project rests with the community, rather than just the technology"

What a vacuous tautology!

The technology of open-source projects are the direct result of the efforts of its community.

This is like saying "the key to a successful private R&D firm rests with its researchers, rather than with its research!"

Re:Opensource isn't the problem...

[dslauson]

I agree with you that Open Source will live on regardless of money invested by venture capitalists. The question is, at what level. Hobbyists? Tinkerers?

Or can it exist as a robust business model that can compete with commercial competitors?

I've been seeing more and more paid programming positions advertised on my campus' job site for open source projects. As cool as I think it would be to take a job like this when I get out of school, I don't want to go somewhere where the floor will fall out from underneath me.

Anyway, I'm not trying to predict doom for OSS, I'm just saying that this is a valid discussion, and I'm curious to hear what people have to say.

What's with this bubble fear?

[Anonymous Coward]

Ever since 2000, everytime anybody invests any significant amount into anything at all, people start proclaiming "Bubble!!!"

The great bubble crash happened half a decade ago now. It's time to get over it.

What if...

[drgonzo59]

ZDNet's comment would actually change the perception and make some investors out there doubt the decision of investing in open source. Kind of like a measurement of a quantum system would change the system, so perhaps an article in a popular tech news commenting on the investment situation in the tech industry would end up somehow changing the overall open source investment trends eventually...

Open source is not a business model

[jhoger]

FOSS is not a business model. It is way of licensing code that protects the user's ability to user and modify the software. It can also be seen as a vast body of resuable code for projects with compatible licenses. In the case of GNU/Linux it is also a software stack with $0 licensing fees, so conceivably it only costs as much as it takes to get it installed, maintain it, and extend it for a given business's purposes.

Paid support and customization of software IS a business model. It's called "software contracting."

That business model is well understood. It can be profitable, and can sustain most salaried engineers at a rate ABOVE their current salary, but not usually as profitable on a large scale as a software product company can be, because as part of the bargain we choose not to leverage the amazing power of government-granted monopoly profits.

However, given the success of the FOSS development model I wouldn't give mass-market proprietary software more than another 20 years unless the government(s) intervene to stop it, or consumers buy into locked-down platforms that will only run signed code.

From the programmer point of view it doesn't really matter. We seem to get paid the same whether our customer can make billions off of the bits we create, or only gets to charge a markup on our rate. Weird, huh? ;-)

-- John.

Re:Open source is not a business model

[museumpeace]

mod this guy up! open source has a community. it does not have a revenue stream aside from packaging and customizing. it has users but not customers. Not that some of the vanished dotcom startups [I worked for a few, note past tense of verb "to work"] had much better business plans. The people who package, test, document and train still have a hope of a viable business model but developers can't pay for their plasma tv and xbox and jetta with the pride and good feelings you get from checking in a solid piece of code to a project. Someone please explain to this old wage slave coder how on earth development as an economic activity fits into the emperor's new business model? Free as in speech, if you haven't noticed, has a nasty way of turning into free as in beer. Toothless licenses are NOT going to get original and valuable code out of any programmer or consortia unless they can support themselves by some other means than their programming effort. RMS solved the innovation problem but I think the bait has a compensation hook in it.

No Bubble

[TheIndifferentiate]

Are hysterical investors acting like there is some Open Source land-grab going on like they did when the WWW was picking up? Are they again willng to burn through billions of $$$ to try to gain some sort of elusive Open Source market share? Is the Dow Jones shooting up 150 points a day with commentators pointing out that Open Source tech stocks are behind the rallying? Are the idiots-that-be talking about gambling the non-existent U.S. Medicare "lockbox" funds on the stock market again due to the strengths of Open Source companies? Nope, I don't think there is a bubble going on.

The Bubble Is Microsoft, Not FOSS

[Anonymous Coward]

Microsoft is the last and largest of the DotComs; we are waiting for its stock to fall. Once investors realize Microsoft has only cash, no ideas, and that their best people have left or have too much money and are no longer motivated to contribute effectively to the company, then the stock will plummet.

There's no OSS bubble, just a few VCs investing in the area. Some of the VCs are very poor at picking winning technology, OSS or otherwise, so they'll die. But it's nothing like the DotCom bust and it is certainly nothing like what will happen when Microsoft stock loses its inflated value.

Re:It's a development model, not a business model.

[iabervon]

The current state of Linux is largely due to corporations. Only a small fraction of development has been done lately by people who aren't employed full time by companies to do it. On the other hand, it's a consortium effort, like Apache. Organizations that would benefit from Linux being a bit better in particular ways put in effort on those areas.

Getting it started was done by tinkerers and hobbyists, but once it became sufficiently important to employers, corporate involvement increased to be much larger than individual involvement.

Of course, this doesn't really fit well with venture capital. What I'd like to see would be for venture firms that invest in a number of related companies (like they often do) to invest in a new company which will take their venture money and produce software that the current companies will benefit from. The open source software company obviously loses all of the investment, having no income, but it provides a good return for the venture firm's portfolio in general.

Re:It's a development model, not a business model.

[shmlco]

Depends on the company. mySQL AB, for example, did create their product from scratch. On the flip side, many "real world" companies exist solely to market products manufactured by others.

And as near as I can tell, the investment folk mentioned in the article are looking for the companies WITH products, and not just for the "me too" marketers.