[p2p-research] Fwd: In today's NYT about software commons

Tue Dec 1 08:23:46 CET 2009

---------- Forwarded message ----------
From: David Bollier <david at bollier.org>
Date: Mon, Nov 30, 2009 at 11:17 PM
Subject: Re: In today's NYT
To: James Quilligan <jbquilligan at comcast.net>
Cc: Michel Bauwens <michelsub2004 at gmail.com>

A fascinating piece that points up a real vulnerability of commons-based
software innovations.  They clearly serve the needs of the commoners in
efficient, low-cost ways and perform better than proprietary software.  Yet
for lack of adequate capital and legal protection as collectives, these
software communities (both developers and users) are by default held hostage
by private businesses and their parochial strategic and competitive
interests.

What's really needed is a "cooperative/commons development fund" that would
let the communities have more sovereign control over their own code, and
perhaps a new type of legal entity that would recognize its non-market,
commons-based functioning.  (Perhaps the new Vermont virtual corporation law
passed last year might be helpful?
http://www.onthecommons.org/content.php?id=2336)

I'd love to hear what Michel has to say about this piece.

David

James Quilligan wrote:

 Open Source as a Model for Business Is Elusive

   -

  SAN FRANCISCO — In many ways, MySQL embodies the ideals of the populist
software movement known as open source, in which a program’s creator
releases it to the world free of charge, and legions of volunteers
contribute improvements that are also freely shared.

The start-up company came out of nowhere, building a database application
beloved by vibrant, young Internet companies. Logging in from homes
scattered around the globe, its workers seemed more a part of a virtual
commune than a corporate monolith, and they relished taking on proprietary
software giants like
Microsoft<http://topics.nytimes.com/top/news/business/companies/microsoft_corporation/index.html?inline=nyt-org>.

But like most open-source companies, MySQL’s sales, tied to support deals,
never matched the astronomical number of downloads for its product, about
60,000 a day. In January 2008, the founders decided to sell the company for
$1 billion to Sun
Microsystems<http://topics.nytimes.com/top/news/business/companies/sun_microsystems_inc/index.html?inline=nyt-org>.
And this year, Sun agreed to sell itself to
Oracle<http://topics.nytimes.com/top/news/business/companies/oracle_corporation/index.html?inline=nyt-org>,
which makes database software aimed at larger companies and tougher jobs,
for $7.4 billion.

Now, disagreement over the value of MySQL — both as a stand-alone entity and
as part of a big company — lies at the heart of a bitter public battle
between Oracle and the European
Union<http://topics.nytimes.com/top/reference/timestopics/organizations/e/european_union/index.html?inline=nyt-org>over
the Sun acquisition. The fight illuminates a larger truth about
open-source companies: their societal and strategic importance far exceeds
their financial value as operating businesses.

European regulators view MySQL as sort of a database of the people, a
low-cost alternative to Oracle’s costly proprietary products. The regulators
worry that Oracle may stop improving MySQL in favor of protecting its core
traditional products, and customers will lose an important option in the
database market.

“In the current economic context, all companies are looking for
cost-effective I.T. solutions, and systems based on open-source software are
increasingly emerging as viable alternatives to proprietary solutions,” said
the European Commission<http://topics.nytimes.com/top/reference/timestopics/organizations/e/european_commission/index.html?inline=nyt-org>’s
competition chief, Neelie
Kroes<http://topics.nytimes.com/top/reference/timestopics/people/k/neelie_kroes/index.html?inline=nyt-per>,
in a recent statement. “The commission has to ensure that such alternatives
would continue to be available.”

Oracle, meanwhile, insists that it will continue to develop MySQL and other
Sun technologies. Oracle’s chief executive, Lawrence J.
Ellison<http://topics.nytimes.com/top/reference/timestopics/people/e/lawrence_j_ellison/index.html?inline=nyt-per>,
contends that MySQL serves a different part of the database market than
Oracle’s main products do — an assessment supported by many analysts. One
main incentive for Oracle to keep improving MySQL is that the program serves
as a bulwark against Microsoft’s SQL Server database, which challenges
Oracle’s products on the low end.

“The commission’s statement of objections reveals a profound
misunderstanding of both database competition and open source dynamics,”
Oracle said in a statement.

To Ms. Kroes’s point, there is an open-source alternative, and usually a
pretty good one, to just about every major commercial software product. In
the last decade, these open-source wares have put tremendous pricing
pressure on their proprietary rivals. Governments and corporations have
welcomed this competition.

Whether open-source firms are practical as long-term businesses, however, is
a much murkier question.

The best-known open-source company is Red Hat, which produces a variant of
the Linux operating system for server computers. Like most of its peers, Red
Hat offers a free version of its base product and relies on selling support
services and extra tools for revenue. In its last fiscal year, which ended
in March, the company’s revenue rose 25 percent to $653 million, and it
reported net income of $79 million.

But Red Hat is a rare case. “There’s only one company making real money out
of open source, and that’s Red Hat,” said Simon Crosby, the chief technology
officer at Citrix
Systems<http://topics.nytimes.com/top/news/business/companies/citrix_systems_inc/index.html?inline=nyt-org>,
which acquired the open-source software maker XenSource for $500 million in
2007. “Everyone else is in trouble.”

The enduring appeal of open-source software revolves more around its
disruptive nature than blockbuster sales.

As long as there has been software, there have been some people eager to
share and improve it for the common good. The rise of the Internet made such
sharing easier than ever, enabling people the world over to work together on
projects outside the confines of a formal corporate structure.

Open-source software has thrived and played a prominent role in the building
of the Internet’s infrastructure. Many companies rely on Linux-based
computers and Apache Web server software to display their Web pages.
Similarly, the Mozilla<http://topics.nytimes.com/top/reference/timestopics/organizations/m/mozilla_foundation/index.html?inline=nyt-org>Firefox
Web browser has emerged as the most formidable competitor to
Microsoft’s Internet Explorer.

The grass-roots nature of open source has led advocates to view the projects
as a populist foil to proprietary software, where a company keeps the inner
workings of its applications secret.

But in the last decade, open-source software has become more of a corporate
affair than a people’s revolution.

In some cases, dominant technology companies have used open-source projects
as pawns. Google<http://topics.nytimes.com/top/news/business/companies/google_inc/index.html?inline=nyt-org>,
for example, has needled Microsoft by providing financial support to the
nonprofit Mozilla Foundation, which oversees of the development of Firefox.
I.B.M.<http://topics.nytimes.com/top/news/business/companies/international_business_machines/index.html?inline=nyt-org>has
been a major backer of Linux, helping to raise it as a competitor to
Microsoft’s Windows and other proprietary operating systems.

Many of the top open-source developers are anything but volunteers tinkering
in their spare time. Companies like I.B.M., Google, Oracle and
Intel<http://topics.nytimes.com/top/news/business/companies/intel_corporation/index.html?inline=nyt-org>pay
these developers top salaries to work on open-source projects and
further the companies’ strategic objectives.

In the last three years, there have been five big acquisitions in which a
major technology company bought an up-and-coming open-source company for
many times its annual revenue. Sun, for example, bought MySQL for about 10
times its revenue, while Citrix bought XenSource for more than 150 times its
revenue, according to people familiar with the companies’ sales.

Most recently, VMware<http://topics.nytimes.com/top/news/business/companies/vmware-inc/index.html?inline=nyt-org>,
the leading maker of virtualization software, brought SpringSource for $420
million, or about 20 times its annual sales.

   - 1
   - 2<http://www.nytimes.com/2009/11/30/technology/business-computing/30open.html?pagewanted=2>

Next Page »<http://www.nytimes.com/2009/11/30/technology/business-computing/30open.html?pagewanted=2>
Next Article in Technology (1 of 24)
»<http://www.nytimes.com/2009/11/30/technology/internet/30google.html>
A
version of this article appeared in print on November 30, 2009, on page B1
of the New York edition.

-- 
Work: http://en.wikipedia.org/wiki/Dhurakij_Pundit_University - Research:
http://www.dpu.ac.th/dpuic/info/Research.html - Think thank:
http://www.asianforesightinstitute.org/index.php/eng/The-AFI

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