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  the Software View: Linux, open sorcery. (Part IV)

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POLLY WANNA HACKER

Traditional hacker culture traces its roots back to the early academic Massachusetts Institute of Technology programmers who felt duty-bound to give their solutions away so that their peers could move on to new problems. Since good programmers are already well-paid, this mostly Unix-based, online community is motivated by the satisfaction of advancing a good idea, dispensing advice, or collectively building something superior to what any one person or entity could create. This is the community that created Unix, the Internet, Usenet, and the Web. Intertech's McCormack says, "I think hackers drive the industry forward. Microsoft Chairman Bill Gates was a hacker at one time."

The promise of an open-source operating environment is the ability to freely exchange ideas in a community based upon voluntary service. It's like having an enthusiastic information technology Peace Corps standing ready to solve the problems you've been paying vendors like Microsoft thousands of dollars to resolve - if you can get Microsoft on the phone.

And after all this, we've come to see open-source development as only the next in a series of incremental steps toward true open-standards computing. It's a trend being propelled by the success of the Internet, which itself grew out of a vibrant open-source tradition. And it's contributing to a business environment in which services and other extras are increasingly more valuable than software code. As Brian Behlendorf, the co-founder of the Apache Group (which oversees the open-source Apache HTTP Web server) suggests, in due time open-source software will be a given for the infrastructure-level technologies like platforms, programming languages, and servers that form the basis of the open-standards marketplace. "You don't have to own a platform to make money from it," says Behlendorf.

Open-source software development works like this: a programmer or a company develops a rough version of a software product and releases the source code (the underlying code as it is written in a programming language, before it is compiled into the one's and zero's that computers need to run it) for the public community of developers to use and modify. By contrast, in conventional software distribution, usually called "closed" or "proprietary source", licensees get code that has been compiled into software binaries and is not decipherable or reusable.

LICENSE TO THRILL

After the source code's release, developers obtain an open-source license from the overseer, which grants the user four rights: to possess a copy of the code and to compile, modify, and redistribute it. Unlike a traditional software license, in which a customer pays a fee to use (not to own) the code, a strict open-source license - as defined by the Open-Source International organization - may not require a royalty or other fee for sale. Usually, changes to the original source code are then sent back to the code's originator for possible incorporation into the official version of the product. (Some types of open-source code licenses do not require the return of the enhanced code.) The process continues indefinitely, until interest wanes.

The technical advantages of such a collaborative and open system are quite clear: the code is tested more rigorously, adapted to a winder variety of environments, and debugged faster and more thoroughly. The end result is software that works better and costs less to develop.

Developers have a host of incentives to work on commercial software for free. Once developers know the open version of a piece of software, they could specialize in customizing it for particular vertical markets, providing fee-based product support customers and other developers, or creating add-on products. Alternatively, with some licenses, developers could license the technology and products they derived from the open-source back to the originating company, offer to work with that company, or even start a new company around the source code. Even non-commercial developers could be persuaded to work on commercial open-source initiatives in exchange for intangible returns, like praise from their peers or the satisfaction of upholding the code-sharing ethic that is central to the open-source developer community.

Linux advocate Raymond points out that unlike proprietary vendors, Linux developers and distributors exchange ideas and information. As soon as a particular approach demonstrates viability. Raymond says it gets propagated across all the versions. "Techniques don't propagate across corporate boundaries," he says. "But in the Linux world, you have this powerful centrifugal force in which everyone wants to use the best of what everyone else is doing."

Linux's open development model is appealing. Because the software source code is freely available, anyone can create modules for Linux. Such a model promotes innovation and the development of new Linux features. Among Linux developers, a system of checks and balances is observed to make sure that bad code doesn't find its way out onto the Internet. Before a programmer posts code on the Internet, you can bet he or she will have thoroughly tested it. Otherwise, if there's a problem, that person risks his or her reputation. Also, once Linux code is posted, others are invited to tweak it, either to improve it, or to correct errors. Another advantage of the open development model is that it enables programmers to rapidly fix any problems found within Linux components.

FREE SPEECH, NOT FREE BEER

Richard M. Stallman, founder of the Free Software Foundation, dismisses any attempt to devalue the idea of free software. "Basically that's the kind of contempt that they use to back up their argument when it doesn't stand on its own," says Stallman. Stallman wants people to understand that the word "free" in free software refers to the freedom to cooperate and exchange ideas. Since free software allows users to make changes and publish the changed versions for the benefit of others, it's the freedom to be part of a community in which people voluntarily help each other. "Proprietary closed software is divide and conquer software," says Stallman. "I would like people to think in terms of giving something to your society."

Stallman reminds people that Linux Torvalds' creation, Linux, is just the kernel placed inside a free operating environment called GNU (GNU's Not Unix) - that Stallman and others began writing in 1984 when AT&T copyrighted Unix. The Linux-based GNU operating environment, as Stallman likes to call it, exists because he and others like him felt moral indignation at the idea of proprietary software. Stallman began working at the Massachusetts Institute of Technology's Artificial Intelligence Lab in the early 1970's around the same time fellow Harvard student Bill Gates was berating computer hobbyists for "stealing" the operating environment he had co-developed for the Altair 8800. While Gates charged that passing around software kept good programs from being written, Stallman was producing free versions of proprietary programs created by a company called Symbolics that hired away AI lab members.

GNU is a non-profit organization dedicated to the distribution of high-quality, free software. The group has contributed several tools and utilities to Linux distributions. Stallman says he's not adverse to businesses using the operating environment, but he doesn't judge its popular success by its adoption there. "I never make any decision as if I needed their acceptance, favor, or approval," he says. "It's foolish to think that popular success is the measure of the worth of a project, ignoring the question of what it is trying to achieve."

Raymond says, "The distinction between the open-source movement and what Stallman is doing is that we push utility arguments while he publishes moralistic ones. Stallman's basic stance is that intellectual property is evil and; therefore, source code must be open. Ours is that we want what gives the best engineering results, and that's open-source."

It's worth noting that a mere two weeks after their release, Linux developers simultaneously harnessed four Intel Xeon processors. Taking note, Intel sponsored a Bastille Day Linux discussion at the Santa Clara, California convention center where Torvalds told the audience that the Linux community would take only a few weeks to get the Merced chip up and running with their operating environment.

OPEN-SOURCE FLOOD

Ben Elgin writes, "The open-source software model is flooding new markets. For resellers playing wait-and-see, it's time to test the waters. On December 15, 1998, the Bay Area Linux Users Group (BALUG) members gathered to discuss various open-source topics, such as the community-developed Linux operating system and how much of a dent it can put into Microsoft Corporation's armor.

Systems integrator Leverage Information Systems Incorporated's executive Thede Loder was pushing the open-source envelope even further. "Why not application servers? Why not databases?"

At first glance, such conversations spell certain doom for resellers that rely upon lofty software margins to generate big profits, which seemingly will vanish as tidal waves of open-source software begin to rush in. But a closer look reveals that the movement represents a new sea of opportunities for resellers - particularly those that provide open-software services.

For example, Loder and his partners recently decided to yank the $20,000 price tag off of their homegrown application server and unlock the source code to all interested developers. Their reasoning? The open-source software model will permeate all commoditized markets, ranging from operating systems to browsers to databases.

"Software infrastructure products are all becoming open-source and free," says Loder. "We might as well open up our product's software code now, with the idea and hope that it will become the de facto open-source application server in the market."

With between ten percent and twenty percent of the integrator's revenue coming from its Locomotive application server, this is no small gamble. "I'd be lying if I said it wasn't scary. But we see the opportunity to become leaders," says Loder.

The fears of Loder and his partners may be only slightly assuaged when they learn this concept hasn't slipped unnoticeably past bigger application server vendors. Netscape Communications Corporation, itself a big open-source proponent with its Mozilla browser project and Linux server ports, has not ruled out open-source server products down the road. "It's a possibility in the longer term," says Tim Howes, chief technology officer of Netscape's server division.

This begs the question: Just how far will open-source's rising tide extend? "I would be very surprised if open-source software doesn't catch on in more markets. It is an absolutely viable model for telephony products, computer telephony integration, and databases," says Tush Nikollaj of LogicalNet Corporation. Leverage's considerable gamble trumpets the ever-expanding reach of open-source software.

BEING OPEN TO OPEN-SOURCE

Nearly thirty years old in concept, open-source software has blossomed in the late 1990's, thanks to the Internet. For the first time, software developers en masse from all over the globe can download and tinker with software source code - a software program's underlying recipe.

The improved planning and communication capabilities proffered by Usenet and Internet discussion threads have ignited a much more efficient open-source community, one very capable of eating into markets deemed critical by many of the world's biggest software vendors.

Open-source's inroads have been stunning. IDC's 1998 market studies, for example, showed that Linux server deployments jumped a whopping 212 percent and, in 1999, accounted for more than twenty-five percent of the market - more than all other flavors of Unix combined.

Even more significant for Linux is the fact that its 212 percent growth rate really doesn't reflect the recent rash of vendor support for the operating system. Indeed, while software makers from IBM Corporation to Oracle Corporation to Netscape trumpeted their support for Linux in 1998, most are just starting to port their software and will lean on resellers to sell it sometime this year.

"Linux has been pretty impressive out of the chute," says IDC's Kusnetzky. "It has definitely made its presence felt." Meanwhile, the market share estimate for the open-source Apache Web server is fifty-five percent. Open-source software also anchors the Net with programs like Sendmail, the mail-transfer agent that currently has eighty percent market share, and Mozilla, an open-source browser initiative based upon Netscape's client technology. Throw in the latest inroads into high-end Web infrastructure, and resellers and vendors alike are facing a phenomenon that is difficult to ignore.

SHRINKING THE OS MARKET

But where exactly will open-source hit next? And how big of a dent will it make when it gets there? Both are crucial questions for resellers. The Web server market, for example, has long been loyal to Apache, and the Net browser is now a strictly commodity item. Any reseller looking to make a buck in either of those markets is probably on the ropes, regardless of open-source. At the same time, commoditization of the application server and database markets is still at least a year or two away.

But the operating system server market remains ripe for an increasingly deep impact. Here's a famous quote from Young, Chairman of Red Hat: "I want to turn Microsoft, a $500 billion company, into a $50 million company." After all, the often-stated goal of Young is not to step on Microsoft's toes, but simply to shrink the overall value of the "highly over-priced" operating system market.

The open-source operating system beckons to Microsoft's Windows small and midsize users with its affordability. And, Linux is Unix, requiring less technical turmoil to jump and retrain between different flavors.

Microsoft has been chafed by the open-source phenomena, albeit by its own doing. During October of 1998, an internal company report analyzing the Linux threat was posted on the Web. Open-source commentator Raymond promptly dubbed the report Microsoft's "Halloween Document". Authored by then Microsoft employee Vinod Valloppillil, the report paints Linux as a real threat to Microsoft's server operating system business. Wrote Valloppillil: "... the intrinsic parallelism and free idea exchange in open-source software has benefits that are not replicable with our current licensing model and therefore present a long-term developer mind-share threat." Microsoft's demise is coming soon. Linux will and has already hit the company's bottom line. Linux will take some serious market share away.

MONEY FOR SOMETHING

Perhaps the biggest obstacle preventing resellers from pursuing open-source solutions is the mistaken mind-set that you can't make money from free software. After all, why ditch Windows, Unix and other operating system mainstays, when they're certain to generate at least some margins?

But abandoning that additional overhead is what usually gets these solutions providers in the door. And once they're there, the final price usually contains a thicker margin for the thrifty reseller. Open-source resellers don't have to undercut competitors completely. They can charge almost the same price and bring in a lot more money on margins.

Some of the ripest vertical markets for open-source include the educational market, government and Internet service providers. Most of all, say consultants, it's really any industry that is particularly cost-conscious.

Like many traditional resellers, open-source providers rely heavily upon service and support to generate revenue. Because the market is far from inundated with qualified Linux or Apache experts, skilled consultants can easily set themselves apart in this market. And those who go the extra miles with twenty-four hours by seven days support can really reap the rewards.

Why not build your customers a solution based upon open-source products? The money you save by not having to shell out hundreds of thousands of dollars in operating system and application products can go right into your pocket.

ISV's and VAR's who understand Linux can increase their margins substantially. They can build complete solutions much more inexpensively, thus increasing the margin per server they obtain substantially.

Resellers already earn very low margins on operating system sales, especially when they sell them as part of volume discount programs, such as Microsoft's Enterprise License Agreements or Select programs. The profits resulting from the rising cost of these software products is going to the proprietary software vendors, not the original equipment manufacturers (OEM's) or resellers.

Indeed, where resellers make most of their money these days is in selling the planning, development and support services that build on top of system and application products. So far, the Linux value added services arena is wide open.

In February of 1998, Raymond launched a plan to repackage "free software" as "open-source." Indeed, far from being deficient in comparison to Windows, Linux is especially valuable to companies who engage in electronic commerce or Web computing and worry about Windows bugs opening up security holes, or those whose servers lock up when they try to run too many applications on a Windows machine. And, of course, it's free. I run Linux on my home workstation and I appreciate the fact that I can make my buffer larger and recompile the kernel.

To be continued ...

Sincerely,
Mark Kuharich

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