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The Almighty Buck

The Open Source Financial Year in Review 58

Posted by CmdrTaco from the stuff-to-read dept.
Normally I avoid stories about the businessy side of the whole Open Source thing, but november sent us a pretty good year in review documenting the highlights (IPOs, Mergers, and Bandwagons, oh my) jokingly concluding that Open Source was simply IBM's revenge on Microsoft for screwing them on OS/2. Its a surprisingly good story, and worth a read.
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The Open Source Financial Year in Review More

The Open Source Financial Year in Review

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  • Revenge on Microsoft (Score:1)

    by Anonymous Coward
    Sometimes I think open source advocates are more interested in being anti Microsoft than being pro anything else. Unfortunately the open source efforts cannot compete with Microsoft's products, despite what people say. I remember this time last year when Windows 2000 had not been released, people were saying "In 2000 linux will come to dominate the server and desktop". Look where its at now. Do you really think there is hope for 2001?

  • Re:CNN didn't like open source much (Score:1)

    by Anonymous Coward
    Open source will always be around. You do not have to worry about it being a passing fling. What people don't understand is that there are two communities out there, one whose members goes to school to get a well paying job in the CS market and really could give a crap less about technology, and the other whose members live by the machine whose only ambition is to do something that has never been done before. The second have been around for far longer and were the ones that started this revolution. Ingrained in these individuals is a sense of academia and the need to show others how to accomplish what they have in hope that the other will in turn provide added insight about how to improve the technology. If you look back only a decade you will see that most technology communities had computer clubs. In these clubs individuals shared innovation freely and openly to other members. The open source movement of today is derived from the same concept essentially they are just computer clubs. Fortunately today, we have Internet access deployed in mass scale so geographical regions do not bind us to the computer clubs of old. My point is that the Open Source (Computer Club) movement has been around for far longer that the close source model and therefore is a viable idea. I have no idea if the companies of the movement will survive but the idea will live on.

    It is my personal opinion that you will see the hardware vendors release there own distros eventually and I think this is the best solution. The companies make their revenues from hardware and there is no licensing fee for an open source operating system. The community helps in building the OS that they desire and the hardware vendors are not chained to a proprietary OS vendor that calls the shots. I think an open OS is a win-win situation for all parties. As far as other software it really doesn't matter to me if it is open or closed. But as for the OS it has been proven that if you control the OS you control the software industry. I see an open OS as a balance of power.

    Now, on to address to the first community I spoke of in the first paragraph. If you whinny morons want to bitch about open source being a communist idea. I suggest you look at the underlining idealism behind open source. Open source developers do not provide their contributions to a project for the betterment of society as a whole. They provide it to learn and teach. Much the same way as medical journals provide new techniques and ideas from members of its community. Open source projects are nothing more than professional journals by example. Don't worry your job security is safe and you won't have to go back to school due to the fact that open source took over. You can look at your MCSE and still see the green dollars that it brings. My suggestion to the members of this community is that you try to understand open source and look at the code of some of the projects you may very well improve you viability as a company asset due to the new ideas and techniques you learn.

  • HEY! (Score:1)

    by Anonymous Coward
    Rather than the IBM connection, I would have put the following quote from the linked article in the lead-in:

    Linux stocks are now officially in the tank. Both VA Linux and Red Hat plow through their 52-week lows. Privately held Turbo Linux, meanwhile, says it wants to float an IPO. Go figure.

    I wonder why Slashdot didn't.

    Oh...Nevermind.

  • Re:It is most impressive! (Score:1)

    by Anonymous Coward
    And Communism thereafter managed to become the governing system for 1/3 of the worlds population for more than 60 years. Whats your point?
  • This has been an interesting thread to follow. I've noticed the tidal change that could be called a "cancer of disillusionment", but I also have hope that this could be a good thing in the long run. The Movement has been under such harsh spotlights for so long now that it might be time for a die-off. With luck, maybe the trolls will lose interest and we will be left with folk that take a more responsible, selective approach to the memes that they propagate. Well, there's always hope.
  • You missed the point. Hate Caldera and SCO if you want, the fact is the Caldera IPO and SCO merger were both year 2000 news, and Upside acted like neither happened.

    Perhaps you work for Upside...
  • Regardless of what people think of Caldera and SCO, the Caldera IPO and merger with SCO was BIG NEWS in 2000. Not only was this not highlighted with all the other companies Upside wrote about, but it WASN'T EVEN MENTIONED.

    Yet another example of "I don't understand Linux so I'll just write about the two or three companies I'm familiar with" journalism. I'm starting to grow numb to it (I guess not fast enough, though).

    If you want a good, complete wrap up of 2000, go to Linux Weekly News and check out their timeline. Upside's wrap up is a slapped together piece of journalistic guano.
  • >... I can ..... _smell_ the money ...
    Methinks you are right. It has to do with the infrastructure that is necessary for business-to-business to be viable on tomorrow's hardware. Compare the credibility of SuSE Linux (or Red Hat Linux or ...) on an IBM mainframe versus an IBM-only-Linux on same mainframe. The money is not _in_ Linux, but in what can be built on it. If IBM gets any kind of edge in bringing 20 and 30 year-old COBOL systems into the 21st century, ...
  • Not all dotcoms are hype, most were though. Silly business plans are put in front of investors every day. Its their job to pick out the ones they thing wil succeed. With the public in the fashion they were, they ones that succeeded were ones that made it to the IPO and then failed shortly after. Why? They got their money back out. So... in a business plan they were looking for something to attract the masses, and IPO.

    Now they're looking for something that will actually stand a chance to fight, as the public isn't as dumb as to buy inflated stock in the 'I want my millions for nothing' type companies.
  • Just let me paraphrase your saying and you will see yourself the lack of information that you give:

    "Hello, we have heard that you know something about doing everything out of nothing. Me and my friends have developed something, which is actually nothing, and we would like to get at least anything in return. So, could you please help me with something to do anything not to get nothing out of it. TIA" ;)

    What have you developed? Is it a Beer-glass-and-coffee-mug-in-one magic driver for anything-that-has-anytype-connector? Or maybe it is a publishing-which-is-a-simple-writing-for-documenti ng-puposes-piece-of-software in 10 lines? How many analogies of that "something" are there around? How many friends were their developing it? Etc.. ;)

    I hope I have made my point ;)

  • How do you single out CNN as not liking open source because they bashed Netscape 6. By that definition half of /.ers hate open source. As a matter of fact, half the world hates open source.
  • How typical - a bit of constructive critizism and you can't handle it. Where would we be if it was not possible to acknoledge the flaws in the software we make?
  • Variety and disorganization can be weakeness as well; a unified front puts on a better defense than one made of individual cells. Of course, the individual cells react better to changes.
    Good and evil in everything.
  • It isn't Red Hat's fault that investors decided to run up their stock to a ridiculous level. This has more to do with a sick market than with the businessworthyness of linux.

  • I could pull out some trite shit here about IBM or open source software not needing financial success, but hey, we already know that dont we? I think free software is a lot like the internet a few years ago, some people knew it was going to be a success but how, what is the revenue model that will work?

    Honestly, I don't know the answer but can't you feel it. I sure as hell know that I can, I can ..... _smell_ the money, don't know when, don't know where (If I could - thats where you would find me)

    BTW has anyone else forgotten about the _fun_ of open source. Shit, I didn't get into this stuff for money, I'm still having fun!!
  • Very good post. Made me think about a few things.

    My first thought is "Why is this posted under AC? maybe there are other valid reasons, but I can only think of two.

    1) You believe in personal integrity and the intrinsic value of your words and as such eschew the obvious benefit of the karma bonuses such a well-written essay would bring as a basic part of your philosophy. A variation on this might be: "I don't need no stinking karma".

    2) You would rather not have to deal with the realities associated with having a firm opinion. You wrote this and then realized that it could get you fired, in other words. Or hunted by the FBI who owes Bill Gates a favor.

    It made me think of the original Open Source model. The one I was taught in grade school. The Scientific Method. I learned in school that there existed a transcendent philosophy among the community of scientists that realized that the way to ensure maximum technological progress and scientific advancement is to share ideas freely. You mention the medical community: I count them as part of the larger whole of Scientists. Of course in my youthful inexperience I idealized the relationship among Scientists and truly imagined them above petty dollar-mongering. Now I know that scientists can be bought; some are even Science whores. Some of the Global Warming 'experts' come to mind. And they besmirch the once good name of Science.

    Now, the Open Source community is a lot like the Science community of my idealized vision. It is my opinion that in this post-cold-war, corporate power structure of the present, Open Source people may be viewed as heretical to the Business Model that is beginning to predominate in the Internet world, or at least annoying and not very profitable or as a consequence useful to the new power brokers, the Companies. Witness how the open Scientific Community is becoming Closed, with patents arriving before discoveries. I am thinking particularly of the genetics industry.

    Don't get me wrong, I love the idea of Open Source. But does Big Business? It's clear from the referenced article that they don't understand or have an appreciation for idealists. None at all. There is no room for Idealism in the Corporate BoardRoom.

    Finally, users don't care about operating systems until they crash. Or, as in the case of M$, annoy. Much to Bill Gates' grief, the best OS is a Commoditized OS. Your comment about 'who controls the OS controls the industry' rings very true, indeed.

    The next US administration would do well to heed that point!

    Unfortunately, that party maintains as its philosophy that what is good for business is good for the country, as so will not press hard on the Department of Justice to break up the current 800-pound gorilla that is sitting on all Open Source projects and squeezing the life out of them.

    Imagine the Taft administration allowing Standard Oil and Ford Motor to merge, producing a proprietary gasoline that only Ford cars could operate on.

    Um, that's the best analogy I could come up with tonight, but I hope you get my point-...

  • Can opensource survive big corporations? If it goes the way of dotcoms, it'll be all hype and everyone will forget what the point was. Kind of like what happened with Netscape
  • I'm sorry, but when I sit down to read a news article, I expect it to educate me and not spread propaganda or FUD. Look at this excerpt from the article

    The smackdown cometh. When U.S. Judge Thomas Penfieldd Jackson rules against Microsoft

    Since when did respectable reporters use the phrase "smackdown cometh"? I expect this type of shoddy journalism with no regard to anything but sensationalism from Slashdot. But I'd like my real news sources to have a little dignity. Is that too much to ask?

    Steven
  • I believe I've heard all the arguments about how open source development is an economic dead end, and I've heard the contradictory arguments regarding how one can generate income in open source, but I still have a question. Quite simply, how does one make money in the actual engineering of open source software. That is to say -- and with all due respect to open source developers -- how does one make money by programming it, as I've seen naught but a couple open source projects that actually were engineered.

    It is easy to see that one can generate revenue by selling a packaged build, complete with documentation and support. But to be honest, the wealth is generated purely by activities unrelated to programming. Because anyone can acquire the code and build it themselves, that piece is removed from the economic equation. The end user is buying ease of use, tech support, and a brand name, not software.

    So from the point of view of an engineer, I have to wonder what's in it for me, economically speaking that is. Of course I delight in the tantalizing notion that I've written something compelling, but that anyone who wants to improve it must also release their code. It's beautiful. But karma -- if you'll excuse the regrettable non-slashdot use of the word -- does not translate into income.

    I am currently in a situation where a software solution is required, and an open source project is proving to be a good foundation for getting a head start on the engineering. I revel in the ability to base a commercial piece off of an open source library, and I enjoy that I'm getting paid to develop code to be released back into the wild. But I am unable to kid myself that if this piece of software were crucial to generating revenue and differentiating ourselves from our competition we would still be basing it on GPL code. The very fact that I can use it and release the result indicates that this code is not generating income, and thus it is not generating my salary.

    If an entire product were to be developed open source and marketed -- much like Linux -- the economic advantage would necessarily have to be in marketing, since the software is factored out as a differentiator. Where does that leave engineers?

    -- ShadyG

  • Possibly the investors.
  • The law shapes the kinds of environment that we live in, regardless of whether we're making money or not.

    As with any business, traditional companies lobby, both in court and in the legislature, for laws to protect their interests. Often the laws these companies advocate hinder open source software development, or are otherwise antithetical to the values of many members of the open source community. Among the legal defeats that the open source ommunity has suffered:

    • legal recognition for software patents
    • UCITA [badsoftware.com]
    • Digital Millenium Copyright Act (DMCA) bans on reverse engineering
    • Sonny Bono Copyright Term Extension Act
    Although not strictly related to open source softare, many open source programmers are also sympathetic to efforts to oppose other efforts to restrict online freedoms:
    • future versions of the Communications Decency Act
    • Carnivore
    • internet gambling statutes
    Hiring competent lawyers, lobbyists, and fundraisers to fight these laws will be expensive, and many supporters of laws damaging to the open source community have deep pockets. They include organizations such as:
    • Recording Industry Association of America
    • Federal Bureau of Investigations
    • Business Software Alliance
    • Software and Information Industry Association
    • Disney Corporation
    • Microsoft Corporation

    Non-profit organizations that help defend our online freedoms, such as the Electronic Frontier Foundation [eff.org], League for Programming Freedom [mit.edu], the Free Software Foundation [fsf.org], and the ACLU [aclu.org] get their funds from companies and individuals who share values with them, e.g. open source companies and programmers. If the individuals and companies sympathetic to these organizations are impoverished or go bankrupt, the non-profits can't effectively fight for the freedoms we want.

  • I'm still at a loss as to why comercializing the open source community is a good thing.
  • Open source is very appropriate for general purpose software such as operating systems, web browsers, web servers, etc. It is also good for general purpose programming tools such as compilers, editors, debuggers, etc.

    Why is it good for these types of applications? Because the markets are huge, and even if you can't make money directly, you can make a name for yourself and gain tremendous influence and/or future income potential.

    Consider Linus Torvalds and Richard Stallman. I'm sure they love what they do, but do you think they would have done it if they had to remain anonymous? Where do you suppose Torvalds would be today if he had tried to "sell" Linux the conventional way? And do you think Stallman doesn't try to use the influence he has earned when he broadcasts his technical and political opinions?

    Open source will never be appropriate for niche or custom software--at least not until the niche has been filled for some time with conventional commercial software. Programmers have to get paid somehow, whether it be with actual money or with recognition. The latter translates into influence and/or future income potential.
  • you are ignoring the finical numbers. Red Hat has sales of 87million and income of negative (NEGATIVE!!!) 83 million. That's totally their fault for having a dumb business model.
  • The impact goes beyond just you. That was the whole point. Try re-reading.
  • allow me to explain it to you.

    When you are a public company you have a responsiblilty to the shareholders to make money. You owe them. So when your dad's pension fund (i assume you're 12 years old) invests in a company's stock and it tanks because the company doesn't care about making money, your dad gets fucked.

    Dumb companies hurt everyone.

  • This entire thread has me thinking of a newsgroup posting I saw a few months back in comp.os.linux.advocacy from someone that I know. With his permission I am reprinting some of it here.
    (speech)
    I always find stories like these humorous. Why you ask? Because the assumption is that Linux is just another "business" like all the big name software is now. People try so hard to fit Linux into the pre-concieved notion of how software has been developed up to now that they don't understand how Linux intends to (and in many ways already has) break out of that mold.

    Linux isn't a singular business. It doesn't depend on R&D money nearly as much as software "businesses". It depends on users creating software, which bring in more users/developers, which create more software, which bring in more....

    This process started slowly, and continued to increase. Yes, some commercial companies have taken interest, but the underlying OS and a lot of the software that runs on it are still based on the Open Source/Free Software ideals that launched and maintained it up to now. Linux isn't Windows. Linux isn't Microsoft. They are nothing like eachother. Linux has a large following and that isn't going to go away. As far as the "chicken and the egg" problem, that is strictly a concern for the "commercial" businesses that are into Linux at the moment. Some of them may fail before Linux truly "makes it" all the way to the top. But Linux itself isn't going to just disappear because a few of the companies interested in it do.

    Linux also doesn't fit the traditional sense of "market" and "market share" the way software "houses" and businesses do. How do you proclaim market share for something that is basically free? I have no idea, and really, no one else does either. It can be downloaded, bought on a CD that can be installed on hundreds of computers, bought on a CD that is never installed on any computer, bought from an OEM (and that CD taken to other computers), handed out at trade shows for free, etc. etc. There is no way to say: there are "X" number of systems running Linux today. I don't think that will ever happen. I don't think it will ever be possible to say the exact number of systems running Linux. But, it will continue to turn a profit for consultants, "Help Desk" type support companies, resellers, bundlers, book companies making literature about it, and other businesses. However, traditional software companies will also begin to see a profit returned from some of their Linux ventures through the years. Whether that happens immediately upon entry into the Linux market isn't certain, but as it gains mindshare (as you can't really say market share here) it will be a bigger money maker for software companies.

    As far as the whole "We need big business to succeed, even though we made it this far without them." I'm reminded every time I hear it of the scene in Braveheart towards the end. I know it isn't factually correct with history, but the scene is completely relevant to this discussion. William says, "We need the nobles to succeed". His friend and the others around him wonder why. "They made it that far without them, why do we need them now?" is the general thought. Then William walked off and was betrayed by the "nobles" in order for them to have greater success in court. Now, why again do we "need" the big business attention now? I say, it will come eventually if Linux just keeps developing in the way it is. Eventually may not be tomorrow, but it would be best of business came slowly after seeing real-world performance from Linux than jumping in and trying to take it over.

    Some businesses are already coming over on Linux's own terms. IBM comes to mind as one huge part of this. Oracle, Sybase, Informix, and others are all coming to Linux in one form or another. Sure, they all aren't jumping in head first like IBM is doing right now, but like I said, let them approach slowly and see what they are getting into. There will be more satisfaction all around if they do so. If they jump in head first and totally try to absorb the Linux culture/software all at once, they will behead themselves. The whole chicken and egg problem isn't nearly as big a problem as what some would make it out to be. GNOME grows, KDE grows (each with their own "free" office suites), MySQL and Postgres grow (and add features), all levels of the software we 'need' are coming along slowly from within the community (and from donations outside the community, like Helix Code on GNOME). It's happening just like it always has. If all commercial interest stopped today (not something I see as being likely) the community would continue, because to most of them it is a labor of love, not work. The chicken and the egg problem as it is presented by the press is just a part of the growth of Linux. A couple of years ago the press would say, "What the hell is Linux?" Today they are saying, "Linux can't succeed because of the chicken and the egg problem." In two years time....(left to your imagination).

    Linux has "succeeded" up to this point because of the driving force behind it. It's developers and users are people that love the system, and push it forward. No amount of marketing or news is going to make that community disappear, and it will continue to grow. Slowly? Or quickly? It doesn't really matter. It's not going away. It's not going to "take over the world" anytime soon, but that's OK too. We (the community) just want to see it continue to "succeed" in exactly the way it has up to this point. Keep growing, keep building, keep adding to the community, keep developing. The best thing for Linux and the community around it is to ignore the little blurbs coming at it from all sides and concentrate on what it always has concentrated on: continuing to build momentum behind itself through growth and learning. Let the press say it will never succeed. In the communities opinion, it already has, and will continue to succeed in the way that only it can.
    (/speech)

    --
    leenat@willinet.net
    Nathaniel Jay Lee
    I realize that's a bit lengthy, but it sums it up so well.

    This guy is a business associate of mine, and said he invites you to e-mail him if you would like to "talk shop". I wanted to write a nice little rant about this, but I don't think I could have written one that says it as well as he did.

  • I just hope that this love affair with open source software isn't a passing fling. Let's face it, free stuff never made for a great business plan. Think about one of the major reasons the internet failed to make money. Could it have something to do with, the internet wasn't designed for a business plan and sales of large scale items, like furniture, for example. Likewise, it's hard to say that Open Source software was really designed for sales.
  • I could pull out some trite shit here about IBM or open source software not needing financial success, but hey, we already know that dont we?

    Open Source might not need financial success (that is debatable), but IBM, as a public FOR-PROFIT company, sure does.

  • You said:
    Think about one of the major reasons the internet failed to make money.

    The last time I checked, the internet was making money. In fact, with companies like Amazon.com paving the way for other companies shifting towards online sales. If the internet wasn't making money then why are so many companies earn profits from it. One could go on all day of the various examples of companies making a killing in the Internet business (a.k.a. e-Commerce). Although there have been and still are companies that flop (fail), there are enough of them that are successful that make it a worthwhile venture.

    Now to address Open Source, true it's not the best business plan, but it sure does give the ability for people, outside the company, to make signficant additions/changes to the the open source program (i.e. Linux/Unix). This makes it a huge advantage over companies that don't do open source (MS).


    Project: To Take Over The World
  • I am quite new to Linux, so perhaps I don't remember the 'good old days', but could the 'cancer of disillusionment' perhaps be restricted to those that do remember the 'good old days'?

    I suppose that popularity has brought in undesirables to the community, but I would bet that for every disillussioned old timer there are sveral enthusiastic newbies (like me;). I don't think that Linux will suffer too much - ultimately everybody is committed to it, despite doctrinal differences, and everyone remembers or has read about the 'Unix Wars' of the Eighties. Also, the Linux community is paranoid about splitting. I see a lot more people talking about a split and fearing it than I do people advocating one. I just don't think its *too* great a concern, in the long run ;)

  • The momentume that Open Source Software has built up over the last year has been really quite remarkable. I would say that the year 2000 has been a watershed year for Linux and the Open Source movement, as it has been the year when business really got serious about it, I think. IBM, Sun, Oracle, Dell, Compaq - all these mainstream companies have jumped on the merry bandwagon. The good thing is, that now they are not doing it because it is new and they want to stay on top of it, they are investing in Open Source because they see it as a viable future for the Computing Industry. It is good that we have hard headed businessmen alongside the idealistic core segment of the community, it gives us another strength. Our happy concoction of Visionaries, Leaders, Coders, Hippies (tee hee!) and businessmen shall give us great diversity and strength, unlike other parts of the software industry that are solely guided by the profit motive.

    I only hope that the smaller Open Source companies survive the push by IBM and the rest - I don't want to see us lose any diversity at all! But I am glad that things seem to be succesful so far. I wish I could get a job in a Linux company :-)

  • Hi! What you say is really quite interesting, but aren't you jumping to conclusions? Just because some Open Source stocks have fallen, this does not mean that the entire business model is doomed! Imagine if people had said that about the Telephone business in the slump of 1905 - we should not be too hasty to judge, you know. Also, ESR is probably just a figurehead on the board he is on. He doesn't know anything about it because he has better things to do, surely? I'm sorry if my arguments aren't very good, I'm not an expert, just quite interested.

    Karma Whore - Haha! Thats really funny, actually.

    Thanks, and sorry if I seemed a bit condescending!

  • I don't know really. I would be surprised if what you say is true regarding the animosity among developers. From what little I have seen there is a degree of variety hall style humour, but little in the way of personal dislike. Does ESR dislike RMS personally, or vice versa? I would be surprised if they do. Also, I would guess that the more factions there are, the less likely a split becomes. If the factions are many and small, then each depends on the other all the more, but if there were, say, only two factions, then each could harvest ambitions of making a split.

    I just don't see much evidence of genuine dislike in the Linux Community, but then you probably know more than I do - I am not Au Fait with the mailing lists you mention, for one! Perhaps I shall look into them though, Linux gurus mention them often, I have noticed :o)

  • CNN didn't like open source much (Score:2)

    by Anonymous Coward
    At least they bashed [cnn.com] Netscape 6 which along with Apache must be the most visible product of the Open Source community...
  • This response is actually a great illustration. People think that if one does not have blind faith in Capitalism, then one must be a Communist. As if they are mutually exclusive sets that we can divide all economic thinking into. It's just a model. Expect reality to diverge from it.
  • I doubt that Redhat is intentionally making the software hard to use now. But the only incentive right now for them to improve the software is that they are in a market losing position and need to leverage marketshare.

    If they were in a monopoly position, that incentive would no longer exist. It would instead be their revenue stream dictating how to respond.

    I actually rather doubt that the support services, even Consulting Services at Microsoft supply more revenue than their software sales.

    Yes, they do make some money off of that support, but it isn't their primary source of income.

    I also don't feel it should be any companies source of income. Look at some of the really big boondoogles like SAP, Peoplesoft, etc. They see most of their revenue coming from services.

    These are also software packages that end up costing multiple millions to install at a company, and if you've ever had the chance to see them in operation... the quality sucks.

    I think it's an exceptionally bad business model, at least from a consumer standpoint.
  • Hmm. I think Open Source as a business model is a failure, and it has nothing to do with RedHat and VA Linux stocks being in the crapper.

    Actually they aren't in the crapper yet, as long as they still have a value above $1 they are listed on NASDAQ.
  • RedHat is similar to a Microsoft or Novell Solutions Provider.

    They anticipate making money by selling integration and customization services.

    The difference is just the amount of overhead. RedHat has choosen to take on all the overhead of developing the software, whereas most VAR's pass this on to a third company.

    They could possibly make money, although they'll never be as profitable as a old-world solutions provider/VAR. Unless they can somehow make it up in volume, which again seems unlikely.

    Unfortunately the whole market for consulting services and such has gone downhill since Y2K. I don't know if it will recover or not.

    I think RedHat is likely doomed, long term.

    VA Linux on the other hand is just a computer reseller. That's not a good market right now either, and the only way to succeed is to keep overhead low and volume high.

    Bu again, VA Linux has to front the bill for the software development, whereas most companies pass this on to third parties.

    We'll see.
  • Look at this from a financial perspective on the part of RedHat.

    Your duty to your stock holders is for the company to make money.

    You have a choice:

    - Make the software easy to use and bug free, thus making customers happy because it requires less support.

    - Leverage your software to increase your support services by making it difficult to use, install, and buggy as hell.

    There is a contradiction in this mix.

    Microsoft has encouragement to improve the quality of their software because support services add to their overhead. They would prefer it if you did not call them asking all kinds of dumb questions.

    Long term I would prefer to see a software world which did not require support services. I don't have to purchase a support contract to use my car, my VCR or my microwave. Why should I to use my computer?

    I believe that's the vision that Microsoft has, it is obviously not the vision that Redhat has.
  • The funniest portion of looking back at ESR's response is at the current moment his stock portfolio isn't even at 1.5 million now - that must hurt losing $40 million dollars that was yours on paper but you never saw.

    I know that would suck from my point of view.

  • Leverage your software to increase your support services by making it difficult to use, install, and buggy as hell.

    I agree somewhat with your viewpoint, but think you might be going a little overboard. I think it might be more appropriate to say that Red Hat is possibly not as motivated to make things intuitive because of the support revenue. However, I doubt they're intentionally making the software buggy or hard to use. It's probably reasonably to say that there's potential for conflict of interest.

    Microsoft has encouragement to improve the quality of their software because support services add to their overhead

    Depends on the situation. For consumers, yes, it is a burder. For businesses, it's called "professional services," which brings in big bucks.

    - Scott

    ------
    Scott Stevenson
  • Nothing could be more free than air, yet companies compress it, scent it, or wrap bits of fried potato or flavored cream around air and sell air for outrageous sums.

    Nothing could be more free than water, yet companies filter it, bottle it, flavor it and sell water for outrageous sums.

    Meditate on this and perhaps you will see that the idea of selling that which is free is not so odd after all.


    --
  • A group of us have come with what we think is an amazingly cool, unique, idea. We'd love to open source it, but we realize that we can't make much money off it if we open source.

    We want adequate compensation for the time and creativity that went into it. Open sourcing doesn't seem to make sense, from the point of view of making money - unless you were redhat and could just resell something that was already done (with relatively little developmental expense on your part).

    Wise sages of Slashdot, teach us how we can open source it and still make the money we think we deserve.
  • I actually think Open Source IS the way of the future for business, just think about it:

    Red Hat et all give the software for free but they charge for support. Corporations save money on incredible expensive licenses and can instead spend it on real support.

    The internet keeps getting faster, at about doble the speed per year... freenet or maybe some other not yet known programs will make it easy to download free soft. Big soft corps like MSFT keep losing sales to those free downloads. The faster the internet gets, the more business they lose... etc etc.

    20 years from now all the money will be on support.
  • The open source business model will probably settle down in a year or so, with the hardware companies (HP, Dell, Compaq, IBM, maybe Intel) putting some money in. But pure software open-source companies are probably doomed - no revenue model.

    I wonder who'll end up owning SourceForge. Or Slashdot.

    Still, RHAT and LNUX may be around for a while. They both got so much cash out of their ridiculous IPOs they can coast for quite a while longer. Neither is on Downside's Deathwatch [downside.com], even though the stock is in the tank.

  • "It makes you wonder if the entire Linux movement wasn't just some clever strategy cooked up by the geniuses at IBM to get back at Microsoft for the screwing they took on OS/2 way back at the beginning of the decade."
    But you got to admit, it is such a wonderful opportunity.

    If nothing else it takes advantadge of all the ill-will the MS has developed for itself over the years. It is like seeing people sitting on the sidewalk with signs that say "will work for free if it screws Microsoft"

    The bad blood between the two companies is lengendary. IBM was developing OS/2 in cahoots with MS, and then MS wanted out, keeping many of their "better" technologies to themselves, and jumping into the market earlier.

    [I am really fuzzy on the critical details, but I'm sure these are documented well enough around the web, etc.]

  • Variety can be a strength indeed, and at the moment I am not too worried about the factionalism.

    At present I'm more worried about the poison of cynicism and bitterness spreading at the grass root level with no apparent reason. The feeling I get when I read Debian and linux kernel mailing lists as well as Slashdot is that of the paradise lost; something's wrong but you can't quite say what it is. It's like on a beautiful summer day when you suddenly feel the coming storm in the air even before the clouds themselves appear in the horizon.

    What I am afraid of is that like so many fine and noble movements in the history, this one too will fall victim to internal strife and bickering over money, power and prestige and eventually come to nothing -- destroyed from within like Camelot.

  • A utility company being paid to deliver water to the tap is one thing, but an entire business model based on people's laziness to download the OS and on selling them tech. support contracts?

    I'm not an Ayn Rand zombie but I think she pegged this part of human nature correctly. People love collectivist schemes in large part because at some level they believe they're the ones who are going to profit at someone else's expense.

    Is your company going to buy 150 Red Hat boxes for 150 workstations? No, but there's this idea that somebody is going to pick up the tab, out of altruism or cluelessness. Lots of people seem to think Eazel is going to make money by charging for their hard drive space service. Is there a single person out there who intends to pay for it himself?

  • Net Profits.....................: $0.00
    Net Expenses....................: $0.00
    Net Products & Services Rendered: $5,000,000,000.00
  • "...I really have problems understanding why companies like VA and Redhat are valued as they are."

    "...an entire business model based on people's laziness to download the OS and on selling them tech. support contracts?"

    First of all, there are no "companies like VA and RedHat". VA is a hardware company, RedHat is software. Two totally different ball games. VA makes money just like Dell/Compaq/Gateway--selling hardware at a slight markup. They have an advantage, though, in that the software they install has no cost.

    RedHat's business model is totally different than VA's...AND totally different from what you describe. RedHat isn't trying to make money from users. Haven't you noticed all the "partnerships" and "tools" RedHat has announced in the last year? THAT'S where the money is. RedHat is giving away the blades AND the low-quality/cost razors and then hoping that Big Names will pay Top Dollar for high-quality/cost razors (or razor consultants, or razor-management tools, or razor-branding, etc).
    --
    MailOne [openone.com]

  • "It makes you wonder if the entire Linux movement wasn't just some clever strategy cooked up by the geniuses at IBM to get back at Microsoft for the screwing they took on OS/2 way back at the beginning of the decade."

    <laugh> What goes around comes around, I guess. Although I never thought of Linux as an IBM conspiracy, I think it's pretty great that the once-monolithic company with the legendary suits (and the tag line "No one was ever fired for buying IBM") is now supporting something that's almost like the hippie movement. =) And Microsoft, although it still tries to think of itself as a fast, nimble start-up - and perhaps manages to pulls it off in some cases - is now the Bad Guy. Amazing role reversal.

  • Re:Hang on a minute... (Score:3)

    by the red pen ( 3138 ) on Friday December 29, 2000 @05:36AM (#539175)
    You raise some obvious issues about Open Source as a direct source of income, but don't forget "vertical markets." Vertical Markets are specialized niches where the likelyhood of finding existing, shrink-wrapped technology is very, very small. A vertical market I'm working with right now is telecom billing.

    There are, at most, a few thousand companies, worldwide, who need the level of billing software I'm working with. On top of that, each one of them needs heavy customization, which really means that each one of these companies practically has a custom billing system. This means there isn't enough "critical mass" to start an "open source" project to perform this level of billing, so there are going to be zillions of dollars in it for the foreseeable future.

    What I'd like to see in the future is a day when Microsoft can't make money selling Exchange because nobody pays for basic email anymore. When I set up my company's internal email, it never occured to me that I'd have to pay a dime for the software. I have to pay for the hardware. I have to pay an administrator. If I want some feature that is specific to my vertical market, I'll have to pay some geeks (possibly myself) to create that function. And that's how I like it -- email is not an interesting problem anymore, but some quirky new feature... hey, that's geekworthy!

    So, there's plenty of money out there, but Open Source means it's going to the people solving the interesting, new problems, not last year's basic, recurring problems. (Yeah, that's a bit worrisome to VA Linux and RedHat...)

  • Re:I my god *yawn* (Score:3)

    by the red pen ( 3138 ) on Friday December 29, 2000 @05:19AM (#539176)
    • Unfortunately it's a financial review and last time I looked this wasn't News for Stock Brokers
    A common "nerd experience" is the entry into the workforce, either as teenage "whiz kid" or shiny new college grad, and making the observation, "Wow! I can't believe someone will pay me to do something I'd do anyway!"

    Maybe you make a living selling beads at crafts shows and this "nerd" thing is just a passionate hobby of yours. Good for you, if that's the case, but for the majority of us who's profession is intertwined with their interests in Things Geeky, the "business of Open Source" is Stuff That Matters.

  • Hang on a minute... (Score:3)

    by DrWiggy ( 143807 ) on Friday December 29, 2000 @04:43AM (#539177)
    Perhaps I'm missing something here, but the business model for Open Source doesn't stand up to long term economic scrutiny very well in the same way that the business plans of many dot.coms don't either - if there is no revenue, nobody gets paid, etc., etc...

    This means that to support Open Source businesses are going to have to get more into the service side of the industry which is absolutely terrible. This is terrible because service industries cost more to run, require more staff, and worse of all, requires the "consumer" to stump up cash for stuff that is free.

    Perhaps I'm being ignorant, but I really have problems understanding why companies like VA and Redhat are valued as they are. A utility company being paid to deliver water to the tap is one thing, but an entire business model based on people's laziness to download the OS and on selling them tech. support contracts? This doesn't feel right.... please, explain to me how this works in an economic sense in the long term and how Redhat's "custom development, consulting, training" is not going to fail in the face of a geek with a compiler, usenet and some man pages?

  • The cancer of disillusionment is spreading (Score:3)

    by Peter Dyck ( 201979 ) on Friday December 29, 2000 @03:25AM (#539178)
    I agree that the year 2000 has been a watershed year for Linux and OS but in quite another manner.

    In mechanics you can increase the momentum both either by going faster or by increasing the mass. In the context of this analogy, I'd say that the increased momentum of the Open Source Software has more to do with its increased mass than its innovation speed.

    Furthermore, the ideological basis of the entire movement seems to be shaking. Just as it often happens with ideological movements, the Open Source community is fragmenting into more or less opposing cliques led by cults of personality such as RMS, Linus and ESR. With the implicit and sometimes explicit (Netscape) pressure from the corporate world as well as the growing discontent and disillusionment down at the grass root level, we've indeed reached the watershed. The community has got the visibility and recognition now. What to do with it? Where should it be heading? Back to the ideological roots or compromise and even try that suit on?

  • Isn't the variety a strength though? I thought that one of the points of the whole 'Bazaar' idea (not bizarre;) was that disorganization is not necessarily bad. So there being lots of different factions or cults shouldn't really be bad for Linux, I would guess, but should help to give it variety and creativity. Just as long as everyone can still steal everybody elses ideas, and things remain open and free on the whole, I don't think the development of multiple factions need be bad for Linux, in fact it could be an opportunity, a development for the better, don't you agree? I tend to think so anyway, for what little thats worth!

  • What about RMS? (Score:5)

    by l33t j03 ( 222209 ) <l33tj03@hotmail.com> on Friday December 29, 2000 @03:21AM (#539180) Homepage Journal
    Hello. In the event you missed my previous posts about my Ask Slashdot that was rejected, you may read it's text here [slashdot.org]. Due to the lack of followup to that post I decided to conduct my own critique of ESR's 'I'm better than you' letter in light of the new happenings with regard to LNUX. (You may read the original letter here [slashdot.org])

    Now then:
    A few hours ago, I learned that I am now (at least in theory) absurdly rich....That's interesting," said I to myself. "I didn't think we were going out till tomorrow." And I oughtta know; I'm on VA's Board of Directors
    This sentence would explain why he is now, both in theory and in reality, no longer absurdly rich. If the members of the Board don't even know when the company is going public, something is wrong somewhere. Possibly it may be composed of morons.

    VA had indeed gone out on NASDAQ -- and I had become worth approximately forty-one million dollars while I wasn't looking.
    I don't think I congratulated ESR when that happened, or maybe I did because I was still using my Karma whoring account back then. Anyway, it appears that again, while ESR wasn't paying attention, the company's stock price fell into the crapper. That tends to happen when members of the Board not paying attention becomes a recurring theme.

    Well, that didn't last long.
    How prophetic.

    Trouble with the "keep it quiet" theory is that I've made my bucks in a very public way.
    First, ESR didn't make any 'bucks', he already said himself that he was wealthy on paper and not in reality. Given his current situation I'm sure he knows this though. That aside, shouldn't he be losing all of this in a public way as well?

    I'm wealthy today because my efforts to spread the idea of open source on behalf of that community helped galvanize the business world
    Now that he is broke, does this mean that his efforts were really a failure? Certainly this must be true, if his efforts really had galvanized the business community then what happened to all of these millions he paraded in front of everyone?

    Fairness to the hackers who made me bankable demands that I publicly acknowledge this result -- and publicly face the question of how it's going to affect my life and what I'll do with the money.
    Yet he hasn't publicly acknowledged the result of the stock price falling into single digits. How is that affecting things?

    This is a question that a lot of us will be facing as open source sweeps the technology landscape. Money follows where value leads,
    In this particular context he is using market success to validate Open Source's position as a legitimate competitor of proprietary software. Lately, the only sweeping Open Source has been doing in the markets is in the basement. We can also assume that proprietary software is now the value leader, as the money is breaking north for Open Source companies.

    Red Hat and VA have created a precedent now, with their directed-shares programs designed to reward as many individual contributors as they can identify
    Reward, ruin, whatever. Its all the same I guess.

    So while there aren't likely to be a lot more multimillion-dollar bonanzas like mine,
    For the sake of the economy I hope not.

    Gee. Remember when the big question was "How do we make money at this?
    That still is the question. As if anyone ever needed any proof that the people who keep saying that you can make money off of GPL'd software really don't know what the hell they are talking about, you have it right here. Here is a guy declaring a victory when the battle has just begun. He's also equating making money with the stock price of the company. Maybe these guys should take a few business courses, or maybe their mindset has too much of a socialist bend, I'm not sure how to educate them other than letting the market run them out of business over and over. Whatever, that question is yet left unanswered.

    The first part of my answer is "I'll do nothing, until next June...I will be wealthy in six months, unless VA or the U.S. economy craters before then. I'll bet on VA; I'm not so sure about the U.S. economy :-).
    More prophesy! The economy seems to be doing well but the outlook for VA isn't so rosy. Maybe there is a future for Open Sourcers in the business world: consultants. Whatever they say, just do the opposite. Hope you got out in June.

    Assuming the economy does not in fact crater, how is wealth going to affect my life in six months?
    Economy = good, VA share price = bad. Enough said.

    Reporters often ask me these days if I think the open-source community will be corrupted by the influx of big money
    Wonder if they still ask...maybe they ask the question but in past tense. Hard to tell.

    And maybe a nice hotrodded match-grade .45 semi for tactical shooting.
    This is something we agree on. A nicely modded 1911 is an excellent investment let me tell you. Even though I'm more of a rifle person myself, 1911s are amazingly well crafted guns. I sincerely hope he was able to purchase one before his wealth dried up. I would probably even sell ESR some handloads on the cheap, given his current situation.

    I'm not going to minimize my attachments by giving it all away, though, so you evangelists for a zillion worthy causes can just calm down out there and forget about hitting me up for megabucks.
    It must be a load off of ESR's mind now that these evangelists have no reason to call him.

    Ironically enough, one result of my getting rich is that I will probably start charging for speaking appearances, now that nobody can plausibly accuse me of doing it for the money
    Heh, I wonder if he is charging now or no. On one hand, he probably needs the cash, on the other, people can again plausibly accuse him of doing it for the money.

    But enough trivialities; I'm going to get back to trolling.

    Indeed, I will now do the same. I guess I should stop knocking VA. At least they didn't buy up a bunch of other companies with their overvalued stock (like RHAT) and spread their ruin around any. Oh wait...

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