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Businesses GNU is Not Unix

Best Presentation on Software Business and OSS 50

Posted by kdawson from the Linux-as-Lamborghini dept.
stephe writes "Brent Williams presented 'Open Source Business Models: A Wall Street Look at a Wild 2006 and the Prospects for Even More Fun in 2007' at EclipseCon last Tuesday. Brent is (temporarily) an independent equity research analyst, who moved to Wall Street after 20 years in the software trenches. He starts with a tear-down of the Oracle Linux debate and the Microsoft Novell deal. I especially like his taking apart the commoditization myth and his observations around interface standards versus standards of implementation. He graciously allowed me to post the slides on my blog. They're getting a lot of interest from the open source business crowd, and I thought the Slashdot crowd would want to see them as well. Enjoy."
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Best Presentation on Software Business and OSS More

Best Presentation on Software Business and OSS

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  • First thought from first slide... (Score:4, Insightful)

    by Zapraki ( 737378 ) on Tuesday March 13, 2007 @01:55AM (#18328685)
    Can I really take the guy seriously when he's using a hotmail account?
    • Believe it or not, I know a lot of profesional people who use hotmail accounts. Why? I have no freakin clue outside maybe they aren't technicly inclined and someone insisted then needed email. It is porbably the same reasons why people were paying extra to have AOL, they started on it and didn't want to lose it.

      I even use hotmail and yahoo acounts for public interaction. This way i can control the spam to my real accounts a little better. Maybe this is his thinking?

    • Re: (Score:3, Insightful)

      by Provocateur ( 133110 )
      Don't be such an email nazi. He may have just decided to keep one email ID that didn't cost anything or force him to remember yet another password or maintain yet another mailbox free from spam.

      But if he uses Outlook, hand me that pitchfork will ya, you hold the torch...

      • Re:First thought from first slide... (Score:4, Interesting)

        by Zapraki ( 737378 ) on Tuesday March 13, 2007 @02:32AM (#18328847)

        Ya, sorry, I didn't mean to sound snobby. It just frustrates me when people insist on sticking with what is an inferior solution (imho), when much better ones are there for the taking, with basically nothing extra required.

        Although I guess the very weakness of hotmail is what could prevent people from changing. No forwarding?? If somebody had a long list of contacts who emailed that account, they might have to stick it out rather than risk losing contacts with a switch over. Or else maintain multiple accounts, which could be even worse.

        And yes, haha, may Outlook burn and burn.

        • I've never understood why more people don't pony up $5-10/year for their own domain name. GoDaddy includes 100 free email forwarding accounts. That way you get to pick your own personal domain name and email address and never have to change it. If you want to switch from hotmail to gmail or to some other ISP just change over the forwarding. If you don't like your domain name provider, then just transfer the domain name to another one.

          I guess even this is either too complicated or too much of a hassle for th
    • Considering you got an "Insightful" moderation when you have no e-mail address and your message is the product of an association fallacy... I'd say this fellow is at the least more credible than our moderators tonight. I know you're just being a bit silly behind that incredulity, but someone agreed with you.

      It used to be that you had to be black or female to warrant that kind of discrimination.

      And that's all I have to say about that.
    • yes you can. Hotmail has been around a lot longer than most other web-based, free email solutions and is perfectly adequate for day-to-day use, especially when you don't want to give out your private email address to all and sundry. Sure, gmail and others might be better now, but it's a pain in the rear to start giving people new email addresses and expect them to all change from using an old one. if you've been using one for years and it's served you well, why change?

      Is this just slashdot-snobbery because

      • Hotmail has been around a lot longer than most other web-based, free email solutions and is perfectly adequate for day-to-day use, especially when you don't want to give out your private email address to all and sundry. ...if you've been using one for years and it's served you well, why change? Is this just slashdot-snobbery because Hotmail is now owned by Microsoft?

        There is a difference between taking into account that a person is using some brand of product and taking into account when someone who is supposedly a professional in a field is using a very poor quality product in a way that is visible to others. It does speak to their probable level of competence. When I see a resume come across my desk and the engineer in question has an AOL e-mail address, that raises a concern. Hotmail may not be quite the same, but it is still a concern. As for public versus privat

  • premium brands ignoring price competition? (Score:5, Interesting)

    by turing_m ( 1030530 ) on Tuesday March 13, 2007 @02:02AM (#18328723)
    FTA:
    "What price changes did Red Hat make immediately in the wake of
    the Oracle announcement?
    - None. Zero, zip, nada.
    - We're not hearing of any individual deal discounting.
    - Red Hat knows that they have a premium brand, so ignoring people
    competing on price is the right strategy.The role of a premium brand
    - Lamborghini ignores price competition between Hyundai and Kia.
    - Oracle ignores price competition between MySQL and PostgreSQL."

    This is not the case at all. In the last few years, MySQL has matured and more people have found out about PostgreSQL (in fact, PostgreSQL is probably the best kept secret OSS has to offer - it has a kick ass feature set and it's completely and utterly free). For a large amount of enterprise stuff, PostgreSQL is more than adequate and as a bonus, does not treat your data as garbage.

    Anyone considering building some sort of database application has the option of spending a couple months (with change left over) from the money they would spend on an Oracle license, and invest it in learning PostgreSQL. At the current rate of developement, it will in all likelihood solve any future problem they could have. For free. No worries about licenses. Anyone in a startup where money is tight and time is cheap should be considering PostgreSQL.

    This has had direct ramifications on the strategy of all the big database players. At the very least, they all now have a free entry level option to compete with OSS competitors.

    • Re:premium brands ignoring price competition? (Score:4, Insightful)

      by Kjella ( 173770 ) on Tuesday March 13, 2007 @03:17AM (#18328991) Homepage
      "- Oracle ignores price competition between MySQL and PostgreSQL."

      This is not the case at all. In the last few years, MySQL has matured and more people have found out about PostgreSQL (in fact, PostgreSQL is probably the best kept secret OSS has to offer - it has a kick ass feature set and it's completely and utterly free).

      How are those two statements at odds with each other? Oracle doesn't want to be seen as a price competitor, they want to get customers who think their 10,000 row DB is "enterprise" and those who think "you get what you pay for".

      They say that if you make a RFQ and get one offer for $100k, three for $10k and one for $1k, they're likely to drop the $100k (too expensive) and the $1k (must have missed something). MySQL and PostgreSQL score about 10x as high on the WTF scale to most PHBs. If anything is free* in their world, they expect a bait-and-switch like *upgrade now to $foo pro for the good features, that was just the hook.

      • Re: (Score:2, Interesting)

        by turing_m ( 1030530 )
        "They say that if you make a RFQ and get one offer for $100k, three for $10k and one for $1k, they're likely to drop the $100k (too expensive) and the $1k (must have missed something). MySQL and PostgreSQL score about 10x as high on the WTF scale to most PHBs. If anything is free* in their world, they expect a bait-and-switch like *upgrade now to $foo pro for the good features, that was just the hook."

        I suppose if you are dealing with a PHB you have your work cut out for you, and in all likelihood at this s

        • Re: (Score:1)

          by djw ( 3187 )

          I suspect the rise of PostgreSQL will be more meteoric...
          I'm not sure what the exact definition of "meteor" is, but I'm pretty sure they aren't allowed to rise.

    • Postgres (Score:4, Insightful)

      by Savage-Rabbit ( 308260 ) on Tuesday March 13, 2007 @04:27AM (#18329323)

      This is not the case at all. In the last few years, MySQL has matured and more people have found out about PostgreSQL (in fact, PostgreSQL is probably the best kept secret OSS has to offer - it has a kick ass feature set and it's completely and utterly free). For a large amount of enterprise stuff, PostgreSQL is more than adequate and as a bonus, does not treat your data as garbage.

      Anyone considering building some sort of database application has the option of spending a couple months (with change left over) from the money they would spend on an Oracle license, and invest it in learning PostgreSQL. At the current rate of developement, it will in all likelihood solve any future problem they could have. For free. No worries about licenses. Anyone in a startup where money is tight and time is cheap should be considering PostgreSQL.
      That's only partly true. PostgreSQL is a nice database for small businesses or even in larger companies or corporations for small to medium projects. You can save a bundle on Oracle licenses if you use Postgres wisely just like you can save a bundle on Red Hat Server licenses if you use Centos wisely. I'm not even going to get into the debate as to why I'd choose Postges over MySql since that discussion has a disappointing habit of degenerating into a flamewar. I have seen Postgres used numerous times in the Corp world and where it failed was usually in projects that went from small to very large and highly loaded with great speed. Basically it did not scale well. The problem was not so much the issue of missing features in Postgres since the feature set is growing at a steady pace, the problem was with stability. As the projects grew larger, the traffic went up and it became imperative that the database be available 24/7 with next to 0 down time Postgres didn't work out all that well because of stability issues. This will change as Postgres matures but at the moment developers should think hard about when they use Postgres instead of Oracle or some other high end database. In some situations it will work in others you will end up porting your Postgres system to a proprietary database after getting burned and changing databases in mid stream can be a bitch. You might want to do that because the proprietary product is more stable but even if it isn't the most important reasons would be that it comes with guaranteed vendor support and because there are plenty of Oracle Certified mercenaries you can bring in to help you an emergency. When you are loosing the equivalent of the price of a new server every few of hours or so because your database is down, the idea of throwing hardware, Oracle consultants and Oracle licenses at the problem, becomes less of an issue. In the end I think Postgres and other similar OSS database have the potential to do to the database market what Linux did to the *nix server market, it will eat up the low end niche of the market, especially when it grows the kind of support base Linux now has. At the moment the only support I can get for Postgres databases where I live and work is by advertising for people with experience and hope somebody bites, there are four companies here that hire out Oracle specialists as consultants and all offer 24/7 emergency services. The prices are obscene but it's comforting to know the option is available

      As always this is my experience, your milage may vary.

      • I have seen Postgres used numerous times in the Corp world and where it failed was usually in projects that went from small to very large and highly loaded with great speed. Basically it did not scale well. The problem was not so much the issue of missing features in Postgres since the feature set is growing at a steady pace, the problem was with stability. As the projects grew larger, the traffic went up and it became imperative that the database be available 24/7 with next to 0 down time Postgres didn'

        • ...Having gone through this, I would feel comfortable starting with Postgres with an eye towards eventually migrating to Oracle when/if the situation warranted - it shouldn't be the huge IT migration nightmare some might fear. Although going back might be a little harder, depending on what Oracle features are used.

          The biggest part of the project was translating PL/pgSQL to PL/SQL, and I wrote some throwaway scripts to translate the subset that we used...

          I'd have to agree, that's pretty much the worst part of it all. Complex DB enabled applications tend to have a lot of PL/pgSQL or PL/SQL code which often makes use of custom features unique to the database. Another thing that often causes problems is when developers of code external to the DB, i.e. webapps, servlets, webservices writen in .NET/Java/Python/etc. fail to abstract the database code from their program code. If a Postgres specific library is hardwired into these applications, migrating is more

  • The magic happens on Slide 35, where he argues against the "myth" that commoditization will destroy all profits in the open source software market. (This is related to the more general argument that OSS vendors are trading on nothing but fad in a bubble, that will eventually burst once people figure out that this stuff is available for Free and that there is no barrier to entry in this market.)

    Specifically, he claims that the open source software marketplace is unlike a generic commodity marketplace and mo

    • For instance claiming that there are a large number of producers and consumers in the commodity market.Eh what? How many commodity producers are there? Flower mills, power generators, oil producers etc etc. Not all that many and they are merging all the time.

      He also claims that it is easy to go into that market, yeah right. Isn't it exactly other way around usually, hard to get into a commodity market?

      I think we got the wonders of reverse logic in a powerpoint presentation at work here.

      The trick is to pu

    • Re: (Score:3, Informative)

      by kripkenstein ( 913150 )
      I think he does a good job in pointing out the 'brand loyalty' issue with OSS - people prefer distros etc. for reasons that are, in part, not completely rational. But he also points out other issues relevant here, on slide 38, issues that are relevant to both proprietary software and OSS: that software has risks, and has a high degree of inability to estimate those risks. This leads to brand loyalty for fairly rational reasons.

      For example, it makes sense to stick to Red Hat as opposed to switching to Ora
  • I went through the slides and looked at what business models there is for Open Source. The slides do not make the point that there is a business model. Yes Redhat makes money, but to me Redhat is a peanut gallery company. Sure people know them, but they do not have a serious revenue stream.

    Let's compare. Redhat and Google started in the same era of the Internet bubble. Look at both companies today. Google is a gorilla making oodles of money. Redhat, well, they make money, but billions? I think not. And this
    • I'm not sure google and redhat is a fair comparison. Thye do completly different things. I owned a dumptuck about the time they stated up. I didn't make billions or even millions.

      But i do see were the seperation is as you pointed out. Companies usinf feree software tend to do better then companies making and selling free software. But then again, Both if them make more then i did with my failed dumptruck business.

    • Though what people need to realize is that these days it is not about building a software business model, but about building an information business model. The Google's, Amazon's, EBay's, Flicker's, etc use open source, but their business is data, not software. People need to get that through their noggen...

      A agree with you as far as you take it, but I don't think you're taking your argument far enough. The open source business model is one in which you use open source and contribute to open source in order to facilitate your main value proposition, but where it is not your main value proposition. Google sells organization and a service that allows people to find what they want and businesses to deliver ads to who they want. They utilize a lot of open source software to do that, but not for their core value

    • Google can provide a more valuable service than Red Hat because there is much more money in mass advertising than there is in providing software support and consulting, even for critical OS components. Businesses make money using FOSS by providing the software as an adjunct to services; if the services are good enough, then the business makes money. It's a competitive market but, on the other hand, the customer relationships established are often durable; while Oracle may eventually take over Red Hat's se

  • Source - EclipseCon (Score:5, Informative)

    by NovaX ( 37364 ) on Tuesday March 13, 2007 @03:30AM (#18329031)
    Perhaps the editors could have taken the slides from the source, rather than an opportunistic blogger who couldn't handle the bandwidth?

    Tech Session [eclipsecon.org]
    PDF slides [eclipsecon.org]

    • Re: (Score:2)

      by NovaX ( 37364 )
      Hmm. Well, I take that back now that he can finally handle the bandwidth and his blog isn't riddled with ads.
  • FTA:
    Open source community can get very good at defending against patent
    litigation very quickly.

    Prior art claims, third-party reviews, using Internet to help "patent
    busters" coordinate efforts.

    Real possibility that 100% of Microsoft patents will be attacked in
    initial counterstrike.
     

    I can't wait!

    I also love the Hyundai & Lamborghini "interface standard" comparison. Tres drole that one.
  • The information age is doing for information services exactly what the industrial revolution did for production.

    However in this analogy Microsoft is like the plantation masters who thought that the industrial revolution was all about leveraging inventions like the cotton gin to expand their plantations for unlimited growth and profit.

    Back then they relied on a false property construct, slavery, to impose this vision while stupidly missing out on the entire industrial revolution.

    Today Microsoft relies on a f
  • I love his chart showing the price increase of Actuate(ACTU) showing the wonderful world of Open Source. Claiming it's risen in value 200% in the last two years. Then claiming the rest of the industry has only averaged 50% gain.

    He doesn't mention that ACTU is nowhere near it's 2000 bubble price.

    he also doesn't tell us which players he's averaging together. The two largest players in BI are Hyperion and Microsoft. Hyperion's stock has gone up at a rate faster than Actuate, but more importantly they're bac
    • 1. The stocks compared were pure play business intelligence vendors: BOBJ, COGN, HYSL, INFA, SPSS, on an equal weighted basis. I excluded MSTR because their small share count plays hob with their trading patterns. I excluded Microsoft because it is not a pure play in business intelligence, and they often consider Excel to be a business intelligence tool, which most business intelligence experts wouldn't necessarily agree with, and which distorts their market share. Also, BOBJ drives considerably more re

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