[Beberg] To open source or not to open source...

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From: Adam Rifkin -4K (adam@XeNT.ics.uci.edu)
Date: Wed May 03 2000 - 21:25:30 PDT

Slightly-old bits, but lots of good nuggets in here, and I want 'em in
the FoRK scrapbook...


It will be an abomination in the eyes of [insert deity here] if this
doesn't get funded:


I'm not kidding, FUND THIS MAN. It's the only sensical thing to do.
After all, there is such a heavy amount of cruft out there getting the
sweet, sweet dollar -- e.g.,

| o Goldman Sachs Invests in, Will Use Elevator News Network
| TORONTO -- Elevator News Network, developer of Internet-based narrowcast
| networks and video monitors that may be installed in elevators to
| provide real-time business news and information, said the Goldman Sachs
| Group invested approximately $4 million in the company. The Whitehall
| Street Real Estate Limited Partnerships, Goldman Sachs's real estate
| opportunity funds, has also signed a letter of intent to deploy the
| Elevator News Network system in its office properties throughout the
| United States. Steven Feldman, managing director at Goldman Sachs, has
| been named to the company's board of directors. http://www.enn.net/

or, [deity] forbid, their competitor...

| o Elevator Info Service Captivate Networks Raises $40 Million
| WESTFORD, Mass. -- Captivate Network, which installs display screens in
| the elevators of high-rise office buildings, providing news, weather,
| traffic, and stock market reports to passengers via wireless networks,
| said it raised $40 million in third round funding from venture capital
| firms and a group of real estate companies. Previous investor ABS
| Capital Partners led the venture investors, which collectively
| contributed $14 million to the round. New investor AEW Capital
| Management and previous investors Advent International, Olympic Venture
| Partners, and Primus Venture Partners participated. Real estate
| companies led by Equity Office Properties Trust and TrizecHahn Office
| Properties contributed the remaining $26 million. Boston Properties,
| Cornerstone Properties, Crescent Real Estate Equities, Reckson
| Associates Realty, and Shorenstein Company also participated. These
| realty companies, along with five others that did not invest in
| Captivate, have signed exclusive ten-year agreements to use Captivate's
| service in approximately 500 high-rise office buildings throughout the
| country. Michael Sheinkop, senior vice president of real estate services
| at Equity Office Properties, and Casey Wold, president of TrizecHahn,
| will join Captivate's board of directors. Captivate will use the new
| financing to install its network in the buildings under contract, and
| for its offices and staff. Captivate's networks are installed in
| buildings in Boston, Chicago, New York, and Stamford, CT. The company
| generates revenues through advertising, which is posted on the lower
| quarter of each display panel. http://www.captivatenetwork.com/

I have been floored by the dealflow in VentureWire -- I can't believe
how many awful ideas are getting funded. Each day there's an
opportunity for an entirely new awful idea to get funded. Remember, ten
thousand vanity angel and VC funds -- there's just plain too much money
chasing too many ideas; some strong ones get left on the cutting floor
and a whole bunch of weak ones get to step up to bat. When these dudes
pull their ducats from the public markets like they did over the past 8
weeks, they're looking for "ground floor" private equity dealflow and
will roll the dice on just about anything.

For the love of [deity], will someone PLEASE fund this man? :)

[Ain't I subtle? :]


> To open source or not to open source
> Adam L. Beberg
> President, Mithral Communications & Design, Inc.
> April 2000
> Open source represents both opportunities and threats that need to be
> taken into account when planning the future of any software project.
> Adam L. Beberg examines the times when open source is a good idea, and
> when it's not, from a business perspective.
> The open source movement has grown to a level of religious devotion, and
> this may have scared you away from using open source in your projects.
> But the open source movement has gained momentum for many reasons: it's
> idealistic, coders work on fun things, and it gets everyone low or
> no-cost software complete with source code. Keep in mind that no matter
> what the zealots say, there is no one way to define the terms and no
> right answers.
> The fact is, open source isn't an all-or-nothing thing. There are times
> when open source is the only sensible choice; there are other times when
> open source doesn't make much sense at all; and there are more ways to
> apply an open source license to your code than you might have realized.
> The bottom line
> Assuming that you are a company considering open source for your own
> code, then the bottom line is revenue. If the software can't make money,
> you can't pay the bills, and everyone will need a new day job. The
> choice to open source has many implications to revenue, so the
> implications need to be considered as primary reasons for or against
> open source.
> If you do open source, revenue purely from the software is all but
> eliminated. This leaves only publishing (sticking the software in a
> pretty box), tech support when the user gets stuck, and consulting for
> people that need help setting up your software as sources of revenue.
> Unless your product is many megabytes, hard to use, and hard to set up,
> then these may not be enough to cover development and marketing costs.
> Open source does give you some advantages that offset the inability to
> sell the software: bug hunting, reliability, and community. Since the
> source is out there, if there is a bug, anyone can hunt it down and then
> send the fix back in to be incorporated into the master copy. With all
> of this bug-stomping, your software will end up being very stable and
> reliable; this is offset by all the semi-functional "neat stuff" that
> users will want to add.
> While the open source community can be a large source of programming
> talent, do not open source your software because you expect them to
> solve your problems for you. You will still have to do all of the
> design, initial development, maintenance, and product documentation. The
> desire for programmers to fix any bug that doesn't directly affect them
> or to add a feature that they don't personally want is very low. Any
> sufficiently hard bug to track down will result in a bug report, not a
> patch. User-submitted "features" will tend to be neat things that they
> and a few other people may use, but all core functionality will still
> need to be developed by your programming team.
> Benefits of open source
> There are many areas where open source is a simple and wise business
> decision from any angle.
> Legacy applications that are no longer a part of current products being
> sold are an excellent area for open source, assuming that no third-party
> software is incorporated into the product. Old applications that are no
> longer cost effective to maintain or support can be made open source as
> a way to abandon the product, while not abandoning the users (as users
> who feel abandoned typically become ex-customers in a very short time).
> This way, the users who cannot migrate to newer products get the source
> and can use it to fix or modify things to suit their needs, while your
> entire development staff can move on to current projects.
> The specifications to hardware and device driver code is another obvious
> place where publishing more information will benefit the product. In the
> past many vendors withheld the specification on how to work with their
> hardware fearing it would give competitors an advantage. The only real
> effect this had was preventing many users from having the option of
> buying their hardware. Writing device driver code is a development cost
> that is only made up by selling more of the hardware. Publish everything
> you can about it, and even help to get drivers written for the various
> open source operating systems. This will help you sell more hardware to
> anyone who wants it.
> Any product that is aimed at establishing a standard protocol or API
> needs to be open source. If the source is available, then the adoption
> of any protocol or API will be much faster, and the programmers who use
> it will be far more comfortable with it. Many modern protocols and
> attempts at standards that were not open source failed before anyone
> even noticed they existed. In these cases the software itself does not
> represent the value; the things it enables does. Often, the amount of
> revenue from consulting, training, and licensing from the additional
> developers will completely dwarf any revenue that would have been gained
> by keeping the code proprietary. Many large Fortune 500 companies make
> 100 times more revenue on their consulting and support contracts than
> they do on their hardware and software sales. The key to this case is
> that the protocol, API, or hardware is worthless until a developer takes
> it and uses it to create value for the user.
> Open source can be used as a powerful attack and defense mechanism while
> competing with rivals. If a rival's application has no need for support
> or consulting to use it, and an open source version of that application
> can be created and released, then the revenue from the closed
> application will be removed. This is very similar to the old method of
> discounting a product until a competitor is driven out of business, or
> salting the earth in a war. On the other hand, if you can develop your
> application as open source, then a rival will have no way to attack you
> in a similar way.
> The realms of closed source
> There are still many areas of the software world where open source has
> not made much progress. In these cases, open source projects are rare,
> and those that do exist are not a threat to commercial developers.
> Game and entertainment software is the first area where cost is not an
> object, and open source alternatives rarely exist. People want the
> latest and greatest entertainment software, and are happy to support the
> developers if it will get them more frames per second, more players in
> the game, and more realistic blood splattering and gore. The developers
> of this software are also so in demand that anyone showing signs of free
> time and talent would be hired instantly. If the user is not willing to
> pay, then they will either pirate the entertainment content or simply
> buy one of thousands of other entertainment alternatives. The driving
> factors in this category are that the applications are more entertaining
> to use than they are to write, and it requires constant work to keep up
> with the state of the art.
> The realm of scientific software, large complex applications, and
> applications that require a Ph.D. or years of experience to even
> contemplate working on are also not of general concern to the open
> source world. Open source projects succeed when large numbers of coders
> each contribute something to a project. Since the supply of extremely
> skilled people is very limited, and they are often already working 60+
> hour weeks, they do not generally have any time left to contribute to
> open source projects unless the project has gone commercial. As a
> general rule, if the average to advanced coder can develop an
> application, there are probably several open source versions of it
> already. If the average coder cannot begin to work on the software, then
> it is likely there are only commercial versions of the software.
> The other area that is not very open source friendly is boring software
> that is not sexy to develop, or applications that need end-user support.
> Things like word processors, spreadsheets, and other end-user tools.
> It's no secret that most open source software is not documented in a way
> that an end-user can use. You don't tend to see applications where the
> user is likely to need to call in for help for something that is being
> given away for free. Until open source projects started forming
> companies and paying people to develop all the boring applications
> non-programmers actually needed, there was no sign of them.
> One thing to remember no matter how you license your source is that it
> takes about 1/20th the time to copy and reverse engineer software then
> it takes to develop it the first time. Your competitors, be they another
> company or an open source project, will be on your heels from the start
> unless you have something they can't do. Usually, things that they won't
> be able to do include hardware devices, patented technology, or a
> reliable service and support infrastructure. This has been true since
> the dawn of time, but in the past you could at least turn around and
> compete on price. Those days are gone. Now, once they catch up, your
> revenue is in danger. But they won't be making any money either, so if
> the stock market bubble funds your competitors but not you, then you may
> have to worry - unless you use open source or other tactics to head them
> off.
> Innovation issues
> One thing that open source is not generally known for is innovation. In
> general, the rate of innovation in the closed source world is far faster
> because the desire to stay ahead and stay in business has always been
> stronger than the desire to re-implement something that's already been
> done. Even the operating system gems of the open source world are just
> starting to gain the security and critical enterprise reliability
> features common in the high-end commercial systems 10 years ago.
> All coders by nature like to do new and interesting things, but not
> necessarily things that are really new, just things which are new to
> them personally. A simple search for any common application will result
> in dozens of nearly identical open source projects to build it. Like an
> army, there are a few high-skill generals and masses of low-skill
> soldiers working their way up the ladder by working on projects like the
> ones that the generals worked on when they started out. Projects have
> high overlap, with low innovation.
> If you have an application you need to build and there is an existing
> open source project to build it or something like it, then join that
> project or hire some of the main people in the project to work on it
> full time. The application can then move to the level where service,
> support, and consulting become sources of revenue. There is a long
> history of projects that started out as research or open source and
> turned into commercial ventures.
> Licensing issues
> If you do decide to open source your software, you will face the
> decision of choosing a license or writing your own. If one of the
> existing blessed open source licenses (see Resources) is acceptable, it
> will save you having to go through the approval process and months in a
> very uncomfortable spotlight. Put on your flame-proof suit, because you
> will encounter fanatics no matter what license you choose to use, but it
> is your software and you get to decide how to license it.
> Unlike commercial licenses, open source licenses have never really been
> tested in court. So far peer pressure and threats of bad press have been
> enough to enforce them. No one is sure what will happen when the
> licenses are finally tested in the courts, not to mention the courts of
> countries with laws different than the United States. Odds are no
> license (open source or otherwise) means anything due to the patchwork
> of international laws applied to a global Internet.
> Final tips
> Avoid using the terms "open source" or "free software" completely. They
> seem to tap too many raw nerves and cause confusion. Simply refer to the
> license by name.
> Use an existing license if you can, but even this will bring criticism.
> Expect it, and don't let it disturb you.
> Not everyone speaks English; and lawyer-babble doesn't translate. Keep
> it simple and in common language no matter what license you use.
> Keep the marketing team at bay so that they don't aggravate the open
> source community by saying something "wrong."
> Open source meets the real world
> There is a rapidly growing middle ground in the licensing of software to
> deal with the interests of companies and authors while also having the
> spirit of open source.
> Hybrid licenses like the Apple Public Source License, or the Sun
> Community Source License (see Resources) are not considered "pure" open
> source by the older factions of the open source community. The licenses
> still protect the ownership, patent, and other interests of the
> inventors but publish the source and make it usable to many people. The
> open source community initially objected to these new licenses, but
> eventually licenses evolved that were reasonably acceptable to both
> commercial inventors and the open source community.
> Dual licensing is also a common option. One way is to release everything
> under both a traditional commercial use and an open source license.
> Users who wish to use the code commercially can provide revenue while
> providing the benefits of open source to noncommercial and academic
> users. The other way dual licensing is done is to lead with the current
> version under a commercial license, and follow later releasing old,
> obsolete versions under an open source license. Again many paying users
> will need the most current version; others can wait for the version to
> be made open source. Dual licensing seems to be more acceptable to the
> open source community since it has been done for a longer time.
> Summary
> In the end, open source is one software licensing option, which like any
> other, has advantages and disadvantages. The path is tricky for
> commercial interests to walk down. Experience shows that neither pure
> commercial or pure open source licensing works in most modern cases.
> More and more things are being done in that fuzzy middle of the real
> world. Open source companies are acting more like traditional companies,
> and software under dual or hybrid licenses is growing.
> Resources [for the links, go to
> http://www-4.ibm.com/software/developer/library/su-open.html ]
> * GNU Public License (GPL)
> * Mozilla Public License
> * Apple Public Source License
> * Sun Community Source License
> * The temple of the "open source" definition and the list of
> "blessed" licenses
> * The developerWorks open source zone
> About the author
> Adam L. Beberg is the President of Mithral Communications & Design, Inc.
> and is best known for his work in the field of distributed computing and
> with Cosm. In 1997 Beberg founded distributed.net which solved several
> encryption contests. In April 1999, he left distributed.net to return to
> the Cosm project's goals to create a general purpose distributed
> computing infrastructure. Beberg holds a degree in Computer Engineering
> from the Illinois Institute of Technology. He can be reached at
> beberg@mithral.com.


It's just one of those days, running like a freight train. First one to complain leaves with a bloodstain. Damn right I'm a maniac. -- Limp Bizkit, "Break Stuff"

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