What is the history and which type of Open Source Software (OSS) exist and why. Which type of business models can software-vendors apply when entering the OSS market. Open-Source Software are critical components of the Internet and IT systems. Open-Source Software has turned copyright laws and development strategies upside down and it poses a threat to proprietary software business-models.
Open-source software has evolved from being a practical and slightly rebellious undertaking fighting proprietary software and lock-in to being a business-model in itself.
The code has never been proven to better than proprietary code, but has matured tremendously. Up until now, copyright laws have worked as a means to exclude exploitation of the intellectual property rights of the rights-holder, and as a side effect has forced competing businesses to innovate. But with OSS the IP is what drives innovation.
A short timeline of Open-Source Software
When the seed for open-source software was planted some 35 years ago, it was off to a slow start mostly due to misconceptions and the specificness of the software. A circumstance it had been in since the fifties, where specialised software was shipped with the computer itself and maintained by programmers, who would share with fellow programmers the improvements they made.
In the mid 1970's software companies began to close off the source-code in order to make a profit. (Dale, 2010, p. 563). By the mid 1970's as operating systems became more sophisticated much software had become closed-source in order to get a return on the development investments (Gonzalez-Barahona, 2000).
By the early 1980's former MIT programmer Richard Stallman had launched the GNU Project and a legal tool: the GNU General Public License (GPL) to promote the creating of more open-source software. In the late 1980's the Computer Science Research Group (CSRG) of the University of California at Berkeley released a variant of the UNIX operating system called BSD UNIX. Although distributed as open-source software, the software author still needed an AT&T license for serveral crucial parts. The early 1990's saw Linus Torvalds releasing Linux and Bill Jolitz completing a truly propriety-free BSD UNIX called 386BSD (Gonzalez-Barahona, 2000).
A real eye opener to open-source software was the Mozilla project in 1998 and the release of the Netscape browser suite source code, proving what a large community can do when they are allowed to view and build upon the code (Mozilla), a bold move motivated by the release of Eric Raymonds analysis “The Cathedral and the Bazaar“ the year before (Wikipedia, 2011).
Why does Open-Source Software exist
As pointed out above there was a feeling within the developer community that software should be free to change and use, but there are also practical reasons. When a manufacturer of any sort develops a product it is impossible to meet all his customers expectations. For some companies this fact is used as a way to chain users to their products, but other companies see this a chance to encourage user input in the manufacturing process (Hippel, 2001).
What defines Open-Source Software
In the broadest term, open-source software is defined as: software a user can obtain a copy of at no cost. With this copy he is free to use, study and modify the source-code and re-distribute the software – including modifications – as long as the new source-code is licensed under the same or similar license, for instance the General Public License (GPL) also known as “copyleft“. – (Hippel, 2001, p. 84).
This also means that code within the code used from other open-source projects is free to use without any legal implications or inflictions on other developers copyright. Open-source software can be an entire operating system (Linux) or specific applications (OpenOffice).
Does Open-Source Software exist outside IT
The idea of sharing and building upon others knowledge is as old as time itself. Mankind and nature evolved by learning from and observing it's surroundings. Through trial and error, skills where learnt, and tools created and passed on to the next generation, who in turn would evolve these ideas even further before passing them on. The spirit of sharing knowledge exist today in a variety of forms and can be observed, for instance, among surfers (Hippel, 2001).
The Open Source Software Code
Error finding, maintenance and quality of code
There is no evidence that the development process of OSS leads to better or less faulty code (Dale, 2010, p. 564), neither is it faster to develop than proprietary code (Madey et al., 2002, p. 1807). But former CEO of Open Source Development Labs, Steve Cohen, regards OSS to be: “generally great code, not requiring much support” (Cohen, 2008).
Why do people make Open-Source Software
A motive for developing open-source software often cited is “an itch that needs scratching”. Several studies have been made to out why people work for free for the benefit of others. Gaining a reputation, a sense of creativity and obligation, are intrinsic factors where the only extrinsic factor is getting paid (Lakhani et al, 2003).
What are the benefits of Open-Source Software
Kathrine Noyes of PCWorld quotes a Gartner survey among 547 IT leaders in 11 countries that “competitive advantages and lower total cost of ownership were two of the primary drivers” (Noyes, 2011). Also “flexibility, increased innovation, shorter development times and faster precurement processes” where among the main points as well as an expectancy for OSS percentage in of organisations overall portfolio to “reach 30 percent within the next 18 months” from approximately 10 percent only five years ago.
Who is the developer
Participation in open-source projects is a self-organized joint venture collaboration between developers who might never meet in real life often only for pride and satisfaction in return (Madey et al., 2002, p. 1807).
What should business be aware of before developing Open-Source Software
At the Esclipsecon 2005 Tim O'Reilly listed several point to take into consideration. Here are but a few:
- Design for Participation – modular software, easy to integrate in a larger system and use a OSS license.
- User-Centered Development – Release early and often, systemise bug fixing, promote active users.
- Don't Differentiate on Features – Don't build exclusive and proprietary features.
- Follow industry standards – let users decide configuration and support emerging services.
- The Perpetual Beta – Add new features regularly. Test on users and collect the data.
- Leverage Commodity Economics – Use the LAMP stack to be able to scale quickly.
- Users Add value – Involve users and let them add their own data.
(O'Reilly, 2005, p.10-13+15)
Advantages of Open Source Software
Apart from no price tag, there is little administrative hassle and no lost CD's. The software can be used continuously and indiscriminately. It is easily downloaded which encourage use of speciality software or one time use. It is easy to modify to special needs or plug onto existing OSS. There is some debate about better support, safety and bugfixes regarding OSS vs. Proprietary software (Lamb, 2006).
Disadvantages of Open-source software
OSS is often hailed for it's huge pool of knowledge-sharing websites that offer help, but there is no formal support and users may be charged a fee when wanting support or help with modifications. Once interest for a piece of software is lost there is often no more support, bug fixes or upgrades. There is also a risk of not being able to exchange files with proprietary software which can lead to workflow problems. (Lamb, 2006)
Open-Source Software and Licenses
The basis of open-source software is licensing. Without signing over the rights to freely use, modify or distribute the code the spirit of OSS is lost. About 50 different types of licenses exist but can be summed up like this:
- “provide credit”: use, modification, redistribution are allowed, but credit to the original author is due, if redistributed. Examples: BSD license, Apache License v2.
- “provide fixes”: use, modification, redistribution are allowed, but source code for any changes must be provided to the original author, if redistributed. Examples: Mozilla-style licenses (Mozilla Public License).
- “provide all”: use, modification, redistribution are allowed, but source code of any derived product must be provided, if redistributed. Example: GPL.”
(Daffara, 2009)
With the advance of OSS-projects growing from smaller to larger more commercial scale OSS the Mozilla Public License is thought to be significant as it relates to corporate thinking (Fitzgerald, 2006).
Business Models for Open-Source Software
Proprietary software business models rely on customer “lock in” which often leads to high purchasing, indirect acquisition and operational costs of and for the software. It is often regarded as a “safe buy”. That's good for suppliers, but not for customers. Although OSS often is viewed as free of charge, this is a misnomer, since companies may still have to deal with operational costs along with possible adjustments to the source-code.
And this is exactly where many open-source software companies make their money. By offering support and customisation of their products. Not only does the customer get software for free, he is also gets the significance of having help, or even someone to shout at and blame, when it all goes south (Williams, 2007).
A problem for many OSS companies is that they only have one product making it difficult to grow a business (Vance, 2009).
What is most profitable? Open-Source Software or Propriety Software?
It is difficult to pick whether an application or platform is most likely to be profitable as open-source or closed-source. Study suggest the importance of evaluating the market as a whole since there are numerous variables to take into account.
A large variety of proprietary applications for an open-source platform can lead to profits above that of a proprietary platform industry, yet users craving a large variety of application leads to proprietary profit, which in turn is offset by the fact that open-source platforms generally have a wider selection of applications (Economides, 2006, p. 1057).
Examples of strategic Open-Source Software
Another possible advantage of entering the OSS market is for strategic purposes. In 2006 Microsoft teamed up with Novell who specialise in Linux, an OSS that competes with Microsoft, to form a partnership where Novell can provide interoperability between Linux and Microsoft (Cohen, 2008).
Also Google and IBM have used strategic relations. Google's financial support towards Mozilla Foundation paints Microsoft's Internet Explorer into a corner and IBM has for many years backed Linux helping it in becoming a competitor to Microsoft while developing proprietary software of it's own to be used on Linux (Vance, 2009).
The future of Open-Source Software
Stuart Cohen suggests OSS has reached such a high level of quality, that businesses relying on revenue from support, will find it hard to meet the expectations of their investors, and perhaps companies should collaborate since they often have the same itch that needs scratching. (Cohen, 2008).
The “Future of Open Source Survey – 2011” from North Bridge Venture Partners (450 respondents) suggest that OSS is “fully embraced by organisations in both the public and private sectors”, and pinpoints SaaS, cloud, and mobile computing as growth drivers in OSS markets. Also noteworthy, is that for the first time freedom from vendor lock-in, surpassed lower cost as a point of attraction. (North Bridge, 2011)
Discussion
Open-source software has evolved from being a practical and slightly rebellious undertaking fighting proprietary software and lock-in to being a business-model in itself.
The code has never been proven to better than proprietary code, but there seems to be a consensus that it has matured tremendously, and this could in fact have an impact on the businesses that rely on selling support.
Up until now, copyright laws have worked as a means to exclude exploitation of the intellectual property rights of the rights-holder, and as a side effect has forced competing businesses to innovate. But with OSS, including others unlimitedly in the IP is what drives innovation.
Companies do not only see OSS as a business opportunity, but also a strategic means to battle with the competition.
The future for businesses wanting to enter the OSS market looks bright if they research their respektive markets to position themselves.
References
- Cohen, Stuart (2008), [website news article], “Open Source: The Model is Broken”, Businessweek, USA, http://www.businessweek.com/technology/content/nov2008/tc20081130_276152.htm [captured 2011-10-10]
- Daffara, Carlo (2009), [website], http://guide.conecta.it/index.php/1._What %27s_Free/Libre/Open_Source_Software%3F [captured 2011-10-03]
- Dale, Nell & Lewis, John (2010), “Computer Science Illuminated”, 4th edition, Jones and Bartlett Publishers, Massachusetts
- Economides, N & Katsamakas, E (2006), “Two-Sided Competition of Proprietary vs. Open Source Technology Platforms and the Implications for the Software Industry”, Management Science Vol. 52, No. 7, pp.1057-1071, ISSN 0025-1909
- Hippel, Eric von (2001), “Innovation by User Communities: Learning from Open-Source Software”
- Fitzgerald, Brian (2006), “The transformation of Open Source Software”, MIS Quarterly Vol 30 no. 3, pp 587-598/september 2006.
- Gonzalez-Barahona, Jesus M. (2000) [Website], http://eu.conecta.it/paper/brief_history_open_source.html [captured 2011-10-10]
- Lakhani, Karim R. & Wolf, Robert G (2003), “Why Hackers Do What They Do: Understanding Motivation Effort in Free/Open Source Software Projects” , MIT Sloan School of Management., Massachusetts.
- Lamb, Anette (2006) (updated 4/2008 ), “Freedom or Nightmare? The implications of Open Source Software”, [Website], http://eduscapes.com/sessions/freedom/ [captured 2011-10-03]
- Madey et al., Greg Madey, Vincent Freeh & Renee tynan, “The Open Source Software Development phenomenon: An analysis based on social network theory”, 2002, Eighth American Conference on Information Systems.
- McGowan, David () “Legal Implications of Open-Source Software”, SSRN-id243237.pdf
- Mozilla (2011), [Website], http://www.mozilla.org/about/history.html [captured 2011-10-03]
- North Bridge – [pressrelease] Key points taken from “Survey Reveals Open Source Growing Quickly in Mobile and Cloud Development”, http://www.businesswire.com/news/home/20110516006850/en/Survey-Reveals-Open-Source-Growing-Quickly-Mobile [captured 2011-10-10]
- North Bridge OSBC 2011 Survey Results, [Keynote], http://www.futureopensource.net/osbc-2011-survey-results , [captured 2011-10-10]
- Noyes, Kathrine (2011), [website news article], “Competitive Benefits Drive Businesses to Open Source”, http://www.pcworld.com/businesscenter/article/219032/competitive_benefits_drive_businesses_to_open_source.html [captured 2011-10-10]
- O'reilly, Tim (2005), Eclipsecon, [Powerpoint presentation] http://www.eclipsecon.org/2005/presentations/EclipseCon2005_Tim_OReilly.pdf , [captured 2011- 10-03]
- Raymond, Eric (1998). “The Cathedral and the Bazaar”, chapter: “Necessary Preconditions for the Bazaar Style”, [Website], http://www.catb.org/~esr/writings/cathedral-bazaar/cathedral-bazaar/ar01s10.html [captured 2011-10-03]
- Vance, Ashlee (2009), [website news article], “Open Source as a Model for Business is Elusive”, New York Times, USA, http://www.nytimes.com/2009/11/30/technology/business-computing/30open.html?pagewanted=all, [captured 2011-10-10]
- Wikipedia (2011), [Website], http://en.wikipedia.com/wiki/History_of_free_and_open-source_software [captured 2011-10-03]
- Williams, Brent (2007), Eclipsecon, “What The Recent Fuss Tells Us About Open Source Business Models”, [powerpoint] http://www.chforum.org/library/linux_wars.pdf , [captured 2011-10-03]