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How I Stopped Worrying and Learned to Love Open Sources
continued... page 2

Why Are Customers Turning to OSS? The Quantitative Reasons…
David A. Wheeler, an expert in computer security and has a long history of working with large and high-risk software systems, makes five quantitative arguments for the adoption of open source software:
  • Reliability
  • Performance
  • Scalability
  • Security
  • Total Cost of Ownershipx
I won't go into all of the detail behind these newly accepted and inalienable truths. Suffice it to say that these are very powerful forces to sell against if you are a small company trying to get a large entity like the United States government or other large enterprise to adopt your proprietary software. Small companies, by embracing the open source and standards movement, are able to inherit these benefits rather than having to build brand awareness around a new proprietary technology at the expense of the shareholders.

Why Use OSS? The Qualitative Argument…
David makes five qualitative arguments about the advantages of OSS. Here we are primarily concerned with three of them. Put as simply as possible, they are:
  • OSS protects its users from some disadvantages of single source solutions.
  • OSS has greater flexibility than its proprietary equivalents.
  • OSS encourages innovation.xi
Leaving aside for the moment the quantitative arguments, and the remaining qualitative arguments, if it is true that OSS provides only the three benefits listed above, this would be reason enough to encourage its adoption across a variety of markets.

Why Develop Solutions Using OSS?
As a small software company, you are fighting an uphill battle. You are facing an increasingly sophisticated and conservative buyer in today's CIO. Even medium sized companies are wary of placing a bet with a small proprietary software company. One of the most obvious benefits of choosing to become an OSS developer is the ability to inherit the benefits and reputation of the open source product.

Other Compelling Reasons:
  1. More intellectual resources: Your organizational knowledge base increases drastically. Peer review means you can borrow good ideas from the collaborative and implement them for your customers. "If you give everyone source code," says Sun Microsystems' chief scientist John Gage, "everyone becomes your engineer."
  2. Innovation: Despite popular criticism of OSS to the contrary, it is still possible to innovate, and sell that innovation. As mentioned above, this will no longer happen on a Microsoft scale. It will no longer be possible to root around and take other people's code and wrap it up as your own and build a monopoly. The GPL (Gnu public license) requirements will make this a risky venture as it requires code, once free, to remain that way. But there will be niche opportunities to exploit.
  3. Cheaper to support: No licensing fees. Your support organization will be the entire known development universe. This mostly volunteer, cooperative community is much cheaper than forming your own first line support organization or even outsourcing to India. Post a problem and you will usually get an answer (and often a solution) within 24 hours.
  4. Make more money sooner: OSS could be a faster route to revenues and profitability than developing and supporting proprietary code.
If you think OSS development is only for volunteers consider these numbers. HP claimed $2.5 billion in Linux-related revenue in 2003. IBM claimed $2 billion the same year. Red Hat had $278 million in revenue in 2005 and has a market cap of $4.8 billion trading at 63 times trailing earnings.

There is indeed room for small, agile software companies to carve out valuable code and content niches. Prosperity will depend on the ability to team with the collaborative community on projects. The critical skill will not be writing code and jealously guarding it but in learning how to sift through the collaborative consciousness of the OSS community to glean the code you need and work with your customers to become the trusted source for providing the features they need.

Business Models for Small Companies:
The various business models for small companies are:
  • Service model
  • Training
  • Publishing
  • Content
  • Own the domain
For more information on the multiple ways people are making money the non-proprietary way check out Eric Raymond's books, The Cathedral and the Bazaar and The Magic Cauldron.

 

i Netcraft web server survey http://news.netcraft.com/archives/web_server_survey.html
ii Ibid.
iii D'Antoni, InformationWeek, November 1, 2004 Open source Software Use Joins The Mix.
iv "Open Source Software Use Within UK Government", 15 July 2002.
v "Why Open Source Software / Free Software (OSS/FS)? Look at the Numbers!", David A. Wheeler, revised 7 November 2004, http://www.dwheeler.com/oss_fs_why.html.
vi "Free and Open Source Software: A Viable Cost-Saving Opportunity for the Department of National Defence and the Canadian Forces", Issues in Defence Science and Technology, July 2004, http://www.drdc-rddc.gc.ca/publications/issues/issues17_e.asp.
vii "Indian president calls for open source in defense", Dinesh C. Sharma, CNET News.com, 7 July 2004, http://ecoustics-cnet.com.com/Indian+president+calls+for+open+source+in+defense/2100-7344_3-5259836.html.
viii "Defense department endorses open-source software", Michael S. Mimoso, SearchEnterpriseLinux.com, 12 June 2003, http://searchenterpriselinux.techtarget.com/originalContent/0,289142,sid39_gci905975,00.html.
ix Wikipedia entry, "Open Source Definition", http://en.wikipedia.org/wiki/Open_Source_Definition.
x "Why Open Source Software / Free Software (OSS/FS)? Look at the Numbers!", David A. Wheeler, revised 7 November 2004, http://www.dwheeler.com/oss_fs_why.html.
xi Ibid.


Richard Boyd is CEO and President of 3Dsolve. Prior to co-founding 3Dsolve, Richard served as the CEO of 3dvillage, Inc. Prior to that, he was General Manager and VP of Sales for Virtus. Richard has become a highly sought-after industry speaker, logging numerous appearances at key industry conferences such as I/ITSEC, Comdex, MacWorld, Windows World-London, NCGA, Web3D and the Meckler Virtual Reality conferences. He also currently serves on the Board of the 3D Industry Forum and the Advisory Board of the ADL Co-lab SCORM/S1000D testbed. He is a graduate of the University of North Carolina at Chapel Hill. For article feedback, contact Richard at richard.boyd@3dsolve.com

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