Open Source – EUCAP Capital Partners

Open Source Browser Firefox Upgrade Released

Mozilla foundation has just released a major update to Firefox, Microsoft’s biggest browser competitor.

The new firefox version is available for free here. The speed at which it displays pages has increased, and it improves the tabs used to view many web pages in one browser window. Microsoft has copied the tab feature in its latest release of Internet Explorer.

The open license Firefox is claimed to have close to 15% of the browser market, while Microsoft’s market share has declined by 10% in the last year, as shown in the Google Trend graph below Microsoft Internet Explorer, Firefox

Microsoft Loosing its Lock on the Office Software Market

The Open Document movement, from the OASIS industry consortium, is slowly but surely wresting Microsoft’s market dominance in word and spreadsheet applications. The Oasis consortium is formed by government and public institutions around the world, as well as software vendors that commit to public licenses.

Governments all over the world are starting to demand a common open standard for their documents, such that they are no longer limited to using Microsoft’s Word and Excel applications. The idea is that documents are stored in an open public domain format, such that anybody can write a program to process the document; all software vendors can compete in providing a word and spreadsheet applications.

Best of all, the open source openoffice.org suite of office applications, are free to use. The office suite includes word processor, spreadsheet, presentation, vector drawing, and database components. It is available for any platform, including Linux and Microsoft.

The commonwealth of Massachusetts leads the push to make an open document format obligatory. WIth so much pressure Microsoft has had to respond and open its proprietary binary document formats. The first step has been to set up its own XML-based file formats, and granting a conditional public license for its use; its Office Open-XML standard. The downside of the standard is that it is taylored for Microsoft Office Suite, in addition to a license prohibiting some competitors from using it.

In the most recent breakthrough, Microsoft has announced it will also support the Open Document Format (ODF). Thus Microsoft Office documents will be open to other applications, like the free openoffice.org free editors and spreadsheet software, opening Microsoft up to huge market pressure.

Open Document Standard Fight Continues

The development of the document standards has been accompanied by strong debate. One the one hand figureheads from Microsoft, like Brian Jones, who is a leading player in the Microsoft Office team, and developers at IBM and SUN who are part of the Oasis and openoffice partners.

In spite of the continuing debate over the pros and cons of the two standards, the fact is that Microsoft is having to embrace a public domain format based on the XML, which is the bedrock for the long term commons vision of the web.

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Business Advantages of Giving Your Software Away – The Open Source Business Model

Ross Mayfield, the otherwise astute CEO of Social Text has chosen to give away his enterprise wiki code for free. Another of a long line of businesses to choose the Open Source route. In a world of proprietary commercial software vendors, where copyright is the default, why are these companies giving away their software?

Folly or Genius?

Firstly, use of the open source (OS) software comes with certain obligations. Under the one of the more common licences used, COMMON DEVELOPMENT AND DISTRIBUTION LICENSE (CDDL), when using the OS software you are obliged to:

Redistribute any modified code in turn, under the same licence as the original code
You may consume but not resell, i.e. you may not exploit the whole or part of the software commercially

Open sourcing companies benefit by:

1. Sharing development cost The open source development model, responsible for creating software like Linux, has proven to be very efficient. Eric Raymond, who helped Netscape exploit open source development in its fight against Microsoft, has documented how and why distributed development produces such quality results in his Cathedral and the Bazaar.

2. Marketing Open source promotes better communications with clients, more customer awareness and faster adoption. Like Linux or Apache (web server) software, if the application is better than other software, word of mouth marketing can provide a dominant maket position.

The question for businesses is whether the remainder of their value-added to their customers and their value chain will generate an adequate return on investment. Open Source business models leverage many different types of value-added. For example:

Dual Licence Business Model, consists in providing a fee based licence for commercial use of the software. MySQL AB is a leading example of this business model. The ease with which MySQL clients can develop, test and prototype is an obvious advantage of the dual license.

Service Business Model, consists in providing the software for free, and charging for consultancy and service for implementation and maintenance. Although the Open Source community is becoming more corporate friendly in its responsiveness and support, dedicated commercial support has definate value-added to many clients. In fact, many companies work just by providing integration, implementation and maintenance services for popular Open Source software like MySql, Apache, JBoss, Tomcat, Eclipse.

No Guarantees

Open Sourcing does not guarantee success though. Larry McVoy, a long time Open Source activist and key contributor to Linux, had to widthdraw the open source license on future developments of his widely used Bitkeeper code-control software. He stated that

“Open source as a business model, in isolation, is pretty much unsustainable. We believe if we open sourced our product, we would be out of business in six months. The bottom line is you have to build a financially sound company with a well-trained staff. And those staffers like their salaries. If everything is free, how can I make enough money to keep building that product for you and supporting you?”

Strong Vision

Using Open Source Model can provide great leverage, but it places a lot of pressure on management. Success requires a very clear vision of the core value-added of the company relative to its customers and suppliers.