Business Perspective on Free and Open Source Software

Andrea Resmini

Brave Gnu World

Andrea Resmini

How much are your free drinks?
A Business Perspective on Free and Open Source Software

Internationella Handelshögskolan i Jönköping
September 2 2009

how much are your free soft drinks?
a business perspective on free and open source software

Who
am I,
actually?

Internationella Handelshögskolan I Jönköping
September 2nd 2009


Information architect
I design
shared information spaces

September 2nd 2009


Monday, 10:00 – meeting with the stakeholders

September 2nd 2009


Associate editor
Journal of
Information Architecture

September 2nd 2009


Tuesday 12:45 – Note to the board: is that guy DANCING?

September 2nd 2009


F/LOSS advocate
contributed to
FaceTag, OSCOM, FreeTes

September 2nd 2009


Thursday 14:15 – Hey! That's my magazine you cut to pieces for those tags!

September 2nd 2009


I'm also
an advisor for the IAI, coordinator for REG-iA,
chairman of the Italian IA Summit, founding member
of the European IA / UX Network, a FatDUX
consultant, a PhD student, blah blah blah
Many hats, but today ...

September 2nd 2009


… very much like waking up the sleeping bear. Good penguin.

September 2nd 2009


… today we speak of
free + open source software
or F/LOSS (FOSS)

September 2nd 2009


What is
this thing then?
A few examples

September 2nd 2009


Free software
you may already
have heard of

September 2nd 2009


Firefox, a web browser

September 2nd 2009


Linux, an operating system. Ubuntu is a Linux distribution

September 2nd 2009


OpenOffice, an office productivity suite

September 2nd 2009


But it's not
just software
in your desktop

September 2nd 2009


The just-announced Linux-based mobile phone by Nokia

September 2nd 2009


The Apache Web server. One of many

September 2nd 2009


The TIVo, a personal digital video recorder

September 2nd 2009


And some free software
you most surely
haven't heard of

September 2nd 2009


[http://www.microsoft.com/technet/interopmigration/unix/sfu/sfucustm.mspx]

September 2nd 2009


Oh, yes.
Not just software.
Free beer as well

September 2nd 2009


September 2nd 2009


Free speech
or
free beer?

September 2nd 2009


or is it

September 2nd 2009


And more important:
are these any different?
Let's go check

September 2nd 2009


The free in free software stands for
free as in free speech
Free software doesn't necessarily
means you get to have free beers

September 2nd 2009


YES! MAYBE?

September 2nd 2009


Plenty of free software applications
being sold or contracted every day:
RedHat Linux Enterprise Premium is
roughly $ 2499 per year
What F/LOSS really stands for is a
different way of looking at what
software is and should be, either
technically or ethically

September 2nd 2009


Different
software
ecosystems

September 2nd 2009


PROPRIETARY
SOFTWARE
OPEN SOURCE
SOFTWARE FREE
SOFTWARE

PUBLIC
DOMAIN

September 2nd 2009


A rough, brief,
sketchy
history of F/LOSS

September 2nd 2009


In the 60s and 70s, mainframe-times, programs usually
were part of the hardware deals and generally then
shared among small communities
In the early 80s, academic licenses started to be used
for work on Unix systems
In 1985 R. M. Stallmann and others created the Free
Software Foundation and the legal definition of free
software under the GPL
In 1998, after the announce of the upcoming release of
the Mozilla source code, B. Perens and others started
using the term open source to seek fast
commercialization and acceptance of free software

September 2nd 2009


Then, when the European Commission started looking
into this free software affair, they wanted to avoid the
ambiguity of the word free and the misunderstandings
carried on by open source. Their solution was to use
an expression which was in use here and there since
1992, Libre Software

Hence, F/LOSS (Free/Libre and Open Source Software)

September 2nd 2009


Free Software
a
definition

September 2nd 2009


Four freedoms define Free Software:
 The freedom to run the program, for any purpose
 The freedom to study how the program works,
and adapt it to your needs
 The freedom to redistribute copies so you can
help your neighbor
 The freedom to improve the program, and
release your improvements to the public, so that
the whole community benefits

Source: FSF

September 2nd 2009


These freedoms are rights, not obligations, although
respecting these freedoms for society may at times
oblige the individual
Free Software does not exclude commercial use. If a
program fails to allow commercial use and
commercial distribution, it is not Free Software

Source: FSF

September 2nd 2009


Open Source
a
definition
September 2nd 2009


Open source doesn't just mean access to the source
code
There are other criteria which have to be respected
for a license to be OSI (Open Source Initiative)
compliant. These are:

Source: OSI

September 2nd 2009


Free Redistribution
Source Code Available
Derived Works Allowed
Integrity of The Author's Source Code
No Discrimination Against Persons or Groups
No Discrimination Against Fields of Endeavor
Distribution of License
License Must Not Be Specific to a Product
License Must Not Restrict Other Software
License Must Be Technology-Neutral

Source: OSI

September 2nd 2009


Oh, I get it
It's like
public domain

September 2nd 2009


WRONG!
Mh.
Tweet this:
#fail (1)

September 2nd 2009


F/LOSS is deeply rooted in Copyright Law
The GPL and other F/LOSS licenses rely on Copyright
Law
You can only use and distribute the software under the
terms and conditions of the license
The author strongly retains authorship and control

September 2nd 2009


On the
other hand,
though

September 2nd 2009


Public Domain has no Copyright
Works in the public domain has no person or legal
entity who can establish or maintain proprietary
interests within a particular legal jurisdiction: so to
speak, it has no author but rather is considered
common knowledge
There are no laws which restrict its use by the public
at large
Proprietary rights are founded in national laws, so an
item may be public domain in one jurisdiction but not
another

September 2nd 2009


But, wait a sec,
the GPL is bad!
F/LOSS kills squirrels!

September 2nd 2009


Oh, I see. Maybe
you are thinking about
the viral thing and all?

September 2nd 2009


The Measles virus. This is a virus.

September 2nd 2009


This most certainly isn't

September 2nd 2009


Let's check this out
and debunk some myths
For example:

September 2nd 2009


F/LOSS is bad for governments
F/LOSS is a huge security risk
F/LOSS forbids commercial use
F/LOSS (the GPL) is a virus
F/LOSS forces you to release your changes
F/LOSS is against intellectual property
F/LOSS is untrusted
F/LOSS wouldn't stand in Court
F/LOSS offers no path to revenue
F/LOSS comes with no guarantee nor support

September 2nd 2009


But how
do
we do that?

September 2nd 2009


Let's have a look
at some
business case studies

September 2nd 2009


French Gendarmerie
France
Migration = flexibillity
Source: OSOR, EU

September 2nd 2009


The French Gendarmerie Nationale is composed of
the police forces and the military police
Their police work includes everything from criminal
investigation to airport security and support of
military services
It is one of Europe's largest public bodies, having over
100.000 employees distributed all over the country
Decisions are made in Paris
Need of a communication infrastructure that does not
depend on third parties

September 2nd 2009


In 2001 the Gendarmerie Nationale started
introducing open source software
The main goals were to gain greater independence
and flexibility than proprietary software could offer

September 2nd 2009


The use of F/LOSS allowed more flexibility and made the
introduction of new standards easier
F/LOSS met their needs and offered greater
transparency and was easier to adapt and change
In 2005 the Gendarmerie replaced Microsoft Office with
its open source counterpart OpenOffice, which not only
was available at no cost, but also allowed for exactly
this modularity and transparency the Gendarmerie
required
“We didn't want any of our software to force us to
employ a special operating system”

September 2nd 2009


When Microsoft announced its new operating system
Vista in 2006, the Gendarmerie thought that at some
point in the near future a migration of the whole
operating system would be necessary
The group had gained considerable expertise in working
with open source software through the several projects
implemented since 2001
The desktop usability of several GNU/Linux distributions
had also significantly improved since that time
The decision to migrate all new workstations to Ubuntu
Linux was finally taken in January 2008

September 2nd 2009


In the year 2008 alone 5000 new workstations have
been deployed, all running on Ubuntu
Every new workstation will ship with the same setup
During 2009 the Gendarmerie is planning to migrate
close to 15.000 workstations in total

September 2nd 2009


The LiMux Project
Munich, Germany
Migration = independence
Source: OSOR, EU

September 2nd 2009


The German city of Munich is migrating its computers
to open source and GNU/Linux, both on desktops and
servers
Rather than lowering IT costs, the main motive is the
desire for strategic independence from software
suppliers

September 2nd 2009


The LiMux project puts great emphasis on becoming
independent from software suppliers. “Microsoft has
shown us what it means to be dependent on a vendor.”
Until 2003, the city was using Microsoft Windows NT 4
across the board, and was by and large satisfied
The City commissioned a study checking on both
proprietary and open source solutions, with regard to
their cost effectiveness, technical feasibility and
strategic implications. The result of this was a tie
match

September 2nd 2009


The total cost for the proprietary solution were
calculated to be 35 million Euro, against 37 million
Euro for GNU/Linux
These included all costs beyond the solution itself,
such as personnel and training costs, over five years
While the proprietary solution was deemed to be
slightly more cost-effective over the full period, the
strategic advantage of being free to take its own IT
decisions led the city council to decide in favor of the
migration to GNU/Linux

September 2nd 2009


The city partnered with SuSE/Novell and IBM and
worked out a detailed concept for the migration
during 2003 and 2004
The actual migration has been running since 2005
once all legal sides had been cleared
For most it has been a soft migration, first installing
the open source applications Thunderbird, Firefox and
OpenOffice on Windows computers, then rolling out
the GNU/Linux basic client
This gradual approach keeps the demand for training
and support services manageable
Proprietary software will be used where a migrations
is either impossible or not cost-effective, possibly
migrating to platform independent web browser
applications

September 2nd 2009


This will also complete the internal move to the ODF
document format and stop the incessant flow of
templates being built all over different offices
The migration also offers an opportunity to standardize
the city's heterogeneous IT environment
In August 2008, 8500 of the city's 14.000 workplaces
are using OpenOffice, and 1.200 workplaces LiMux
The city goal is “80% + X by 2012”

September 2nd 2009


Who writes Linux?
A simple enough question
has an unexpected answer

September 2nd 2009


If you are like me
you are going to say
something like this:

September 2nd 2009


“Oh, I know, that's easy
It's that geeky guy who
never gets out of his room”

September 2nd 2009


WRONG!
Mh.
Tweet this:
#fail (2)

September 2nd 2009


1. Red Hat: 12.3% 9. Parallels 1.3%

2. IBM: 7.6% 10. Renesas Technology: 1.3%

3. Novell: 7.6% 11. Academia: 1.2%

4. Intel: 5.3% 12. Fujitsu: 1.1%

5. Independent consultant: 2.5% 13. MontaVista: 1.1%

6. Oracle: 2.4% 14. MIPS Technologies: 1.1%

7. Linux Foundation: 1.6% 15. Analog Devices: 1.0%

8. SGI 1.6% 16. HP: 1.0%

Source: Who writes Linux: Big Business [http://ow.ly/nDyG]

September 2nd 2009


Linux is not techies for techies
Major computer companies like IBM,
Intel, Oracle, Fujitsu, and HP, spend
hundreds of millions in making Linux
better
They don't think Linux is "cool"
Linux makes good, hard business
sense for traditional hardware and
software companies

September 2nd 2009


Ha!

September 2nd 2009


General
business advantages
in the use of F/LOSS

September 2nd 2009


Try before you buy as much as you need
Lower startup costs
Lower licensing and auditing costs
Possibility to profit from an enormously large pool of
existing software
Possibility to adapt for local needs
Possibility to deploy on demand
Higher share of added values remains local
Can drive ICT and innovation
No single-vendor lock-in and your data stays yours

September 2nd 2009


Payoffs
for developers
for merchants
for entrepreneurs
Source: OSI
September 2nd 2009


DEVELOPERS
Development Speed

Commercial developers using the bazaar mode might have a
substantial initiative advantage over those that don't
First commercial developer in a market niche may gain substantial
advantages over later ones, as pool of available talent is limited

Lower Overhead

Significant overhead reduction in per-project software production
costs. The open-source model allows software shops to more easily
outsource some of their work, paying for it in values less tangible
than money

Source: OSI
September 2nd 2009


MERCHANTS
Closeness to the Customer

Management advice often repeated is "Stay close to the customer."
If you sell software, what better way to do this than by co-opting
your customers' engineers to help your development?

Broader Market

An important side-effect of the open-source model will be a much
wider platform range for your product. Open-source authors
frequently find themselves receving, for free, port changes for
operating systems and environments they barely know exist and
can't afford developers to support. Each such port, of course,
widens the market appeal of the product.

Source: OSI
September 2nd 2009


ENTREPRENEURS
Grab mind-share

The best new concept in the world won't make money unless
people know it's interesting

Value in service and integration

Whether this makes sense as a strategy depends on whether you
think your main value proposition is in the software itself or in
service and the expertise associated with the software. Software
easily becomes a commodity, though

Source: OSI
September 2nd 2009


Higher level
business' and investor's
points of view

September 2nd 2009


1. Support Sellers
2. Loss Leader
3. Widget Frosting
4. Accessorizing
[http://www.opensource.org/advocacy/case_for_business.php]

September 2nd 2009


Support Sellers
or "Give Away the Recipe, Open A Restaurant"
In this model, you give away the software product, but sell
distribution, branding, and after-sale service. This is what Red Hat
does

Source: OSI
September 2nd 2009


Loss Leader
In this model, you give away open-source as a loss-leader and
market positioner for closed software. This is what Netscape did

Source: OSI
September 2nd 2009


Widget Frosting
A hardware company for which software is a necessary adjunct but
strictly a cost rather than profit center goes open-source in order to
get better drivers and interface tools cheaper. Silicon Graphics, for
example, supports and ships Samba

Source: OSI
September 2nd 2009


Accessorizing
Selling accessories - books, compatible hardware, complete systems
with open-source software pre-installed. Easy trivialized but books and
hardware underly some clear successes: O'Reilly Associates, and SSC
are among them

Source: OSI
September 2nd 2009


Support / service sellers and Loss leader have so far proven to be
reliable business methods for commercial success in the free and
open source software arena.

Nevertheless, there is good reason to believe that the clearest
near-term gains in open-source will be in widget frosting

For widget-makers (such as semiconductor or peripheral-card
manufacturers), interface software is not even potentially a
revenue source. Therefore the downside of moving to open source
is minimal

Source: OSI
September 2nd 2009


Conclusions
and a short story
concerning free soft drinks
September 2nd 2009


Me: “Hello, what can I get for you today?”

Customer: “Yeah, how much are your free soft drinks?”

Me: “… I’m sorry?”

Customer: “Are you deaf son!?
HOW MUCH ARE YOUR FREE SOFT DRINKS!?”

Me: “Oh, I’m sorry sir. I couldn’t hear you and thought you said
something stupid. The free drinks are $5 each.”

Customer: “That’s f***ing highway robbery!
You people should be ashamed!”

Me: “Oh, we are…”

Source: Not Always Right, http://notalwaysright.com/just-tell-%E2%80%98em-what-they-want-to-hear-part-three/1124

September 2nd 2009


You might give them what they want, but
knowing your options always pays off

September 2nd 2009


Questions?
It's either now or
mail: andrea.resmini@gmail.com
read: http://andrearesmini.com
tweet: http://twitter.com/resmini/

And thank you!
September 2nd 2009

Business Perspective on Free and Open Source Software

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