The problem with disruption

May 12, 2007 Leave a comment

This is a problem that a lot of proprietary companies are having.

As Steve Hamm writes, SAP’s SaaS efforts seem destined to fail. Not because the company doesn’t have 3,000 people and $400M sunk into SaaS. It does, as I’ve written before

No, SAP’s problem is that it has billions of (dollars of) reasons to stay the same. Successful. Until it’s not.

Steve Hamm sums up the problem nicely:

What’s going on here is that SAP has to market its new product without cannibalizing its old cash-cow products. That’s going to be very difficult. It’s clear from the stellar performance of Salesforce.com that on-demand services have struck a chord with corporations of all sizes. And now Dave Duffield, founder of PeopleSoft, has a new company called Workday that’s about to release a whole range of run-the-business applications in the on-demand mode. So SAP has to be in the game. Yet most all of its revenues and profits now come from old fashioned software.

Bruce Cleveland, a venture capitalist who used to run the on-demand division for Siebel Systems, now part of Oracle, did a good job of summing up SAP’s challenges in a response to an e-mail from me today: “As long as they’re a public company, I don’t believe they can make this transformation. It’s absolutely the right strategy, but the internal DNA of the company will defy their ability to support both business models.” Cleveland should know. That’s partly what led to Siebel’s collapse, which forced it to sell out to Oracle.

Why is this a problem for many proprietary companies? It’s nearly impossible to disrupt yourself (a hat tip to Stephe for turning me on to Clayton M. Christensen a few years back at DLS). There’s just too much resistance within a company and too little willingness to cannibalize existing profitable product lines, even if it’s the right thing to do. Spinning off an autonomous wholly owned subsidiary would serve companies like this well, but they seem reluctant to even do that. It remains unclear what they will do medium term, or if they’ll even realize what’s happening until it’s too late. If you haven’t read The Innovator’s Dilemma and The Innovator’s Solution yet, you should do so immediately.

–jeremy

(A note to Matt: I really like your blog and continually find valuable information on it, but the recent move to a partial feed makes it WAY less digestible and decreases the utility greatly.)

Filed under Open Source

Open source is bad for vendors

May 12, 2007 Leave a comment

(via this post). Here’s a look at Open Source from a different perspective. From the article:

I chaired an interesting meeting the other day. It was me against senior executives of Cisco, Agilent Technologies and Novell.

The subject was: Do enterprise users really want open source? Are you strongly supporting this?

Open source is not a movement; it’s a religion. It is a set of principles and practices that let everyone share nonexistent or semi-existent intellectual property. Remember the Communist Manifesto: “From each according to his ability, to each according to his need.” It is this generation’s Woodstock.

Back to my meeting. The vendors were tripping over themselves swearing allegiance to the open source movement. It was like Republicans genuflecting at the graven image of Ronald Reagan. And they were testifying that the Really Smart Enterprise Users (RSEU) were demanding, actually demanding, lots of solutions here. And each of them was going to be first in line.

Naturally, I disagreed — partially because I am a naturally disagreeable person. Any idiot can make friends — but can you make some really serious enemies? I disagreed, however, because allegiance to open source depends on who you are.

As you may have guessed, I disagree. Open Source isn’t a religion. While there a few vocal people who are near the brink of treating it that way, for the rest of us it was a much more pragmatic decision. This is a quote from the ZDNet post that led me to the original article:

Howard Anderson has a moan out today, complaining that open source is very, very bad for vendors.

He’s right. Vendors have trod the computing world like Kings for decades. Open source changes the market’s dynamics.

Open source reduces a vendor’s power in customer relationships. Open source also reduces a vendor’s hold on key employees, who can now walk out the door and continue working on what the vendor was selling.

That’s the idea of open source.

There are two sides in every market relationship, and the boss’s side is just one of them. Customers want to reduce the control vendors have over them, which in the computer business is enormous. Employees want to enhance their bargaining power, not just to make more money but to do work they like.

You see, the computer software business is maturing. Like almost all industries before it, that means major changes for the ecosystem. Vendors have had far too much control up to this point. It was inevitable that this had to change. It always does. That had nothing to do with Open Source per se. Open Source was just a catalyst for something that was going to happen anyway. Back to the pragmatic side, Open Source produces better software. It is also much better for the consumer. Does that mean it’s bad for the vendor? Not necessarily. If you were used to being able to collect monopoly rents or hold your consumers hostage, then it does mean you’ll have to change. But for those that do change, profitable times are still ahead.

Many people are still far too focused on the gratis part of “free” software. This seems to especially be the case for some enterprise users. You need to look at the value that a vendor provides. The fact that you may not be paying for artificially shinkwrapped bits does not mean you are getting a free ride. The value proposition has just changed. I forget how hard that is to understand sometimes. It’s something we need to make clearer. Many are doing well already, but I think very good times are ahead. For some.

–jeremy

Filed under Open Source

Red Hat to build 'Global Desktop'

May 10, 2007 1 Comment

Quite a bit of news coming out of the Red Hat Summit. I really would have liked to attend this, but somehow the date slipped by me. Hopefully next year. One of the major announcements made was ‘Global Desktop’. From the article:

Red Hat is preparing to release a new ‘Global Desktop’ that over time will grow into an online desktop which integrates online services into a client desktop platform.

The platform will allow users to access online and local data in a unified way.

Red Hat has teamed up with Intel for the platform. Local PC manufacturers will build the actual systems.

The software borrows from the One Laptop Per Child (OLPC) project, with about 95 per cent of the code overlapping.

The OLPC uses an adapted version of Red Hat’s Fedora Linux. The Global Desktop won’t share the OLPC’s ‘Sugar’ user interface, but will come bundled with applications such as Firefox and OpenOffice.

The first version of the software is due out in June and will use a traditional user interface.

Subsequent updates will move to a model where traditional applications are integrated with online services, said Red Hat chief technology officer Brian Stevens.

“It will take online services and integrate them richly into a client desktop, and make them first class citizens with the traditional applications,” Stevens said in a keynote at the Red Hat Summit in San Diego.

Integrating online services with local data is required for the next-generation desktop, he argued. Data will be pulled onto the client using service oriented architectures (SOAs).

Note that this has two very specific target markets: Emerging Markets and Enterprise. This doesn’t seem like something meant to be used for mass consumer adoption. At least not yet. While the merging of online and offline seem inevitable long term, the details to getting that system to work for the average person just isn’t quite here. There are just too many times I’m in an airplane or the tube or for this to work today. However, once apps like Firefox can seamlessly give me access to apps while I’m offline and then sync when access is available, this will trickle into the mainstream quickly. By targeting markets for which this technology is good enough now, Red Hat is positioning themselves to pounce when the opportunity is right. It seems to me that a perfect partner here would be Google, but I’ve not seen any official word on that front. The official press release is available here.

–jeremy

Filed under Google, Linux, Open Source, Red Hat

Novell confirms that patent deal gave it access to Microsoft IP

May 10, 2007 1 Comment

Matthew Aslett has some more information from Novell on the patent agreement with Microsoft. From the article:

Last week I noted that a new explanation had emerged as to why Novell entered into its patent agreement with Microsoft: because Novell engineers “required sanctioned access to Microsoft’s code in order to develop open source interoperability without violating MSFT’s IP.”

I asked Novell to confirm whether this was correct and received an interesting response from Justin Steinman, director of marketing for Linux and open platforms at Novell, in which he confirmed the explanation and stated that it was not new, but had been overlooked the press and community.

The statement from Steinman was as follows:

“Since we announced the Novell-Microsoft agreement in November, we’ve always said that the intellectual property agreement provided a foundation for the interoperability between Windows and SUSE Linux Enterprise. This foundation falls into two primary categories: 1) the “covenant not to sue,” which provides customers with peace of mind when they deploy SUSE Linux Enterprise; and 2) the IP access necessary for the technical collaboration to deliver interoperability between Windows and Linux. For better or worse, the community and press at-large have focused on #1, although Novell has talked about both categories since we signed the agreement.

“As you know, engineers at Novell and Microsoft are hard at work on our technical collaboration, and we demonstrated the first results at BrainShare in March. But in order to deliver the interoperability between Novell eDirectory and Microsoft Active Directory, as well as the bidirectional virtualization between Windows and SUSE Linux Enterprise, Novell required sanctioned access to Microsoft’s code in order to develop open source interoperability without violating Microsoft’s intellectual property.

OK, that sounds a little more reasonable than some of the previously given explanations. The perplexing part here is why this is all slowly coming out in bits. Given the initial community reaction, you’d think Novell would have been crystal clear of the reasons and benefits from day one. Their actions caused people (for the most part reasonably in my opinion, given the circumstances) to assume the worst. At this point a huge amount of damage has been done to Novell, not only from an image/trust point of view but also from a staffing/recruiting point of view. Both of these are absolutely critical in the commercial Open Source world. It will be interesting to see how they attempt to recover moving forward.

–jeremy

Filed under Linux, Microsoft, Novell, Open Source

2 LQ Updates: Save 20% on CrossOver Office, Take the LQ survey

May 4, 2007 Leave a comment

2 quick (unrelated) LQ updates:

For a short time (end of May) you can save a full 20% on both CrossOver Linux Standard and CrossOver Linux Professional, while helping LQ in the process. Use the code LQCO20 when placing your CrossOver Office order and the discount will be automatically applied.

There is a survey currently running at LQ. Filling out the survey is quick/easy and the resulting information will help us better serve you.

Thanks!

–jeremy

Filed under Linux, LinuxQuestions.org, Open Source

Forrester: Open Source is everywhere, and increasingly used for mission-critical applications

May 3, 2007 Leave a comment

(via Matt). Forrester has released a report on the increasing adoption of Open Source in the enterprise. While this will likely not come as a surprise to many of you reading this blog, the PDF does contain some interesting and worthwhile information. It’s not only that adoption is increasing, but that “Mission Critical” adoption is rapidly increasing. More and more companies are trusting Open Source for bits that are critical to the companies survival. That’s hard to ignore. From the article:

Forrester has observed a pattern: Once companies start using open source software, usage expands from simple applications (e.g., file and print serving and email) to mission-critical application areas including customer-facing applications. Data from the survey on which this report is based indicates that a large majority of companies that considered open source ended up adopting it, and more than half have adopted it for mission-critical applications. Each industry has its own definition of mission-critical, of course, but the key point is that enterprises feel confident enough in the quality and security of the technology to use open source in areas that affect revenue and customers.

The report also covers why enterprises are buying into Open Source, that they don’t really want to collaborate with the Open Source communities in general (another blog post in itself), some of the perceived inhibitors to enterprise adoption and more. Worth a read if enterprise Open Source is something you’re interested in.

–jeremy

Filed under Linux, Open Source

State Open-Source Bills Get Microsoft's Attention

May 3, 2007 Leave a comment

(via Stephe) The WSJ has an article up (also at MarketWatch) about Microsoft’s battle with State governments over ODF adoption. Stephe digs into the Microsoft site to see what their opinion was in the past. From the WSJ article:

The impetus for the Texas bill was similar to that in other states — a desire to ensure access to archived and current documents regardless of which company’s application is used to open them, and lower costs. “If the state could have these companies compete against each other, it would save taxpayers millions of dollars,” Mr. Veasey said.

Dr. Homan said he first became interested in the open-document-format issue when Florida’s Department of Health requested renewal of a three-year software agreement with Microsoft at a cost of $12.4 million. “I thought, man, that’s a lot of money, and that comes up every three years.”

Dr. Homan said Florida and other states could save money with genuinely open formats, because they are designed to work with other, conceivably lower-cost document applications than what Microsoft offers, such as the open-source technology OpenOffice. The idea is that not only state workers but also constituents could use such cheaper options.

“Microsoft sees what’s coming. Things like Word and Excel are sort of like a drug now getting ready to go generic,” Dr. Homan said.

That last sentence nails it in a clearer way than I’ve seen elsewhere. Despite what Microsoft lobbying may attempt to assert, real competition here would be good for State governments from a cost perspective. Even bigger to me though is the freedom state constituents would gain for accessing information they have a right to. With Office counting for Billions in revenue though, Microsoft has a fiduciary duty to downplay that. And they are. Will they be able to make a convincing enough argument to stave off the growing ODF swell? We’ll see.

–jeremy

Filed under Microsoft, MSFT, ODF, Open Source

MySQL AB and IBM Announce Open Source Database Support for the IBM System i Platform

May 2, 2007 Leave a comment

Some pretty big news from IBM and MySQL AB at the recent MySQL Conference & Expo 2007 (which I unfortunately had to miss this year, but do plan on attending next year). From the press release:

MySQL AB and IBM (NYSE: IBM) today announced a joint technology and reseller agreement to bring support for the MySQL open source database to the IBM System i business computing platform.

The two companies will work together to offer the MySQL Server for i5/OS, the flagship operating system for System i, and plan to deliver DB2 for i5/OS as a certified MySQL storage engine on the System i platform. This will allow System i customers to implement online and transactional MySQL applications while storing all data in a single, easy-to-manage DB2 database.

In addition, MySQL Enterprise subscriptions — a comprehensive offering of MySQL database software, services and support — will be made available to IBM clients worldwide through IBM’s reseller network and System i sales team. Financial terms of the agreement were not disclosed.

For such a large company, IBM has been able to leverage Open Source extremely well. This release is great news for MySQL AB and their upcoming IPO. The reach of the IBM reseller network is absolutely massive and will surely get MySQL into places it’s not currently. The fact that is being implemented as a MySQL storage engine is a testament to how powerful that modular paradigm is. Congrats to both IBM and MySQL AB.

–jeremy

Filed under IBM, MySQL, Open Source

Dell to Offer Ubuntu 7.04

May 1, 2007 Leave a comment

It’s Official. In response to the Idea Storm feedback, Dell will be offering desktop Linux. There are not a lot of details available yet, but this isn’t the “Linux on any model” option we’re looking for yet. It may be a good first step though. Dell, however, has had some Linux-related false starts in the past. From the article:

In February when Dell launched IdeaStorm as forum for customers to contribute ideas for product offerings, we received overwhelming feedback that customers wanted Linux on desktops and notebooks.

As part of an overall effort to update our Linux program, today we are announcing a partnership with Canonical to offer Ubuntu on select consumer desktop and notebook products.

Kudos to Ubuntu and Canonical for working this out. The official Ubuntu release is available here.

–jeremy

Filed under Linux, Open Source, Ubuntu

IT 360 and LinuxWorld Canada

May 1, 2007 Leave a comment

I’ll be attending the IT 360 and LinuxWorld Canada expo in Toronto tomorrow. If you’ll be there and would like to connect, drop me a line and we can work out the details. LQ is once again a sponsor for the event. Information on how to get a discount to this, and other events that LQ sponsors, can be found here.

–jeremy

Filed under Linux, LinuxQuestions.org, LinuxWorld, Open Source

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