Second Day OSBC Wrap up

The OSBC is now officially over and here’s my second day wrap up. The opening keynote consisted of Rob Curley, Marten Mickos and Lee Thompson. I had never seen Rob speak before, but he is extremely entertaining and had some very good information. He maintained that what him and his team were able to accomplish in Kansas would not have been possible without Open Source. Marten gave an update on where MySQL is and the variety of models he thinks can be successful in OSS. Lee gave a very good overview of how Open Source is being utilized at E*Trade. During the recent February market dip, they were one of the only brokers to not suffer performance problems. He attributed that to the use of Open Source directly.

How Big is the Exit? What is an Open Source Business Worth in 2007 and Beyond?
* There was a consensus that the public markets for Open Source companies are highly dependent on Red Hat. This is from a perspective that if Red Hat were to falter, the Open Source image would be sufficiently tarnished that other OSS companies would not receive new funding and valuations in general would suffer. I wrote about this a couple years ago. I think as time passes, this becomes less and less the case.
* Investors and VCs really seem to like to “subscription” model in OSS companies. I think it’s a very good model, but am less convinced it’s the one true path (one insinuated that OSS companies that tried something different were pretty much idiots for instance).
* With OSS you need to think about your customers with razor sharp focus. Find their pain points, solve their problems and you will be handsomely rewarded.

Is the Novell-Microsoft deal good for open source?
As you can imagine, this session was standing room only. Not hard to guess what the participants opinions were. LWN editor Jon – Bad. Novell rep Justin and Microsoft rep Sam – Good. The one surprise may have been Allison (if you don’t read her blog), who said it would probably be irrelevant. Some notes:
* Ballmer’s comments were definitely detrimental to the acceptance of the deal.
* If the deal would have been with someone else besides Microsoft, say IBM, it would barely have been news.
* Microsoft was the number one channel for SLES in Q1 2007.
* Microsoft has only gone on the offensive in patent litigation 2 times in its history. They are the defendant in about 30 cases or so in any one given point in time.
* Is Microsoft now a Linux distributor?
* AIG and BoA reps both seemed uninterested in the deal, saying it did not impact their buying decision.
* Would Microsoft consider joining the OIN?
* Customers are almost universally telling Microsoft that they want heterogeneous environments. 100%-anything seems to be a thing of the past

Community Development: Business Development for the 21st Century
* Open Source in a large way was started by disenfranchised developers
* For OSS companies, community management is about facilitation.
* Google lawyers actually have an SLA requirement for responding internally in some cases. Developers are that important.
* Many OSS communities are going from developers only to developers and users.
* The time and cost in fostering a community is easy to underestimate.

Overall a very good show, one in which I learned a good deal.

Note: For all these OSBC updates, items with * are not necessarily my opinions, just a summary of things that were said by various panelists.


Closing notes on the first day of OSBC

Overall I have to say I’ve really enjoyed the first day of OSBC. I’m getting an entirely different perspective on many things, which is good. It’s easy to get a bit insular when you are only exposed to a single side of an argument. After my last post, I noticed many more “community” members too, which is great. It’s amazing how often a few general themes have been brought up, even in sessions with widely disparate topics. A few notes from attended sessions:

What’s Next: Emerging Opportunities + Strategies
* It’s interesting that many Open Source projects do very little or no marketing, but have extremely powerful and well known brands. That’s one of the power of ubiquity.
* The value that can be derived from non-paying users should not be underestimated.
* Transparency, at all levels, is critical in an Open Source community. So is respecting user privacy and data.
* One reason cost per customer acquisition is less expensive is due to customer self-selection through quality experiences via gratis downloads.

A New Breed of P&L: The Open Source Business Financial Model
Larry gave an interesting look at the current state of Open Source software in relation to what he calls the golden age of software (mid80’s through late 90’s). His assertion is that things, such as the percentage of revenue spent on sales and marketing, have gotten way out of whack in the software industry. Open Source may be bringing us back to that golden age. Red Hat was one of his primary examples. More data will be available in the coming years, as the current crop of Open Source companies have a chance to mature.

Copyleft Business Models: Why it’s Good Not to Be Your Competitor’s Free Lunch
Eben is such a phenomenal speaker that I really can’t do this talk justice with a simple summary. However, here are some highlights:

* When he worked at IBM, software was a free lunch… used to sell hardware. Customers often submitted patches with their bug reports. For a variety of reasons this has changed in the current day and age, much to the determent of general software quality.
* An example of this is the comparison of how far hardware has comes since 1979. When IBM had 29G is took massive space and was very expensive. Now it takes up 2.5″ and is $40. Software on the other hand has almost become worse. He describes the situation as deplorable.
* An analogy for what the lack of standards can do. During the civil war, the north had a standard gauge for railroad ties. The south did not. This meant items often had to be unloaded just to be reloaded in the south. This became crippling and is an example of how much work can be wasted when there are no open and available standards.
* In his opinion, community adds a huge amount of value to a project, for a variety of reasons.
* The next draft of the GPLv3 should be Apache license compatible.
* With regard to the recent speculation about Microsoft, the GPLv3 and the fact that the Novell coupons do not expire; he can not say as much as he’d like, due to an NDA (one he thought would have expired by now, but hasn’t due to a Novell SEC filing delay). What he did say was that you need look no further than his actions and the actions of Microsoft to see what the Microsoft opinion on the matter is. He asserts they are quite concerned.

More to come tomorrow. Now to partake in the very nice spread that has been offered to all attendees.


More OSBC Coverage

So far the OSBC has been interesting. It’s definitely much different than most shows I’ve attended. A much more business focus, with the number of people literally wearing suits at > 40%. For a while, I thought I was probably one of the only “community” type people here. So what were the odds when Jonathan Corbet, LWN executive editor, sat at the same table as me during lunch :)

A few takeaways from the sessions I attended:

Downloads to Dollars: Building a Revenue Stream from Free Product Traction

* People in proprietary companies are very surprised at how much less revenue per commissioned sales rep Open Source companies need. Since leads are pre-qualified in a much better manner (…at near zero cost) and people can actually get your software into production without you, when they do call it’s much easier to convert them to a paid customer. “Cold calls are a thing of the past”
* As Open Source crosses the chasm in a particular industry, being “Open Source” can be less of an advantage in that industry. At that point, being Open Source isn’t enough. You need to compete on features, scalability, ROI and all the other traditional competition points.
* Downloads is not the best statistic for commercial Open Source, but what the “right” statistic is realistically varies widely.
* Finding out how much information to gather and how to segment is absolutely critical, but also very dynamic.

Open Source in the Channel
* Your industry and role (VAR, ISV, vendor,partner, etc.) has a huge impact on your perspective on Open Source.
* Open Source puts much more importance on creating value for your clients. Building relationships becomes critical as up front revenue is not the same as in other models. The subscription model comes into play here.
* The only people that seem to care about patents are lawyers and the press. It’s not something business units seem to care about and none of the Open Source vendors on the panel had lost a major deal because of it. They did indicate that the main driver here was proprietary companies, whose business they were potentially taking, spreading FUD.
* Microsoft is really in a defensive mode. At one point in the panel, Sam Ramji (Microsoft Director of Platform Strategy) interjected from the crowd. While I thought he took the moderators comment out of context, I guess it’s possible that if you weren’t familiar with the facts you may have been confused (she was referring to SCO and not Microsoft), so clarification may well have been called for. The tone, wording and way it was done is what was interesting to me.

More to come later…


OSBC Underway

The OSBC is officially underway. The opening keynote was the always interesting Matthew Szulik. I’m not sure who does the Red Hat short videos, but they are consistently both entertaining and compelling (even if some of the themes are reused quite a bit). Some interesting tidbits from the keynote:

* Open Source no longer needs to be validated
* Open Source has the ability to change IT from a cost to a value
* A long while back, while trying to get VC for Red Hat, someone asked Matt when he was going to “give up on this gimmick”
* In his opinion he feels that Open Source also has a social responsibility component. He gives as an example a research institute that had to ditch a decade of breast cancer research due to data incompatibilities
* He welcomes the competition from the likes of Oracle, and sees it as a management responsibility to compete…and not a technical issue
* He often feels in sales meetings that the crowd is divided – the 40+ crowd dislikes him (not personally, of course) and the 25-ish crowd thinks he’s pretty cool
* We are only at the beginning of the Open Source cycle… and cycles in this industry are the norm


In San Francisco for OSBC

Landed in San Francisco earlier today and spent most of the day walking around. The OSBC starts tomorrow morning. My recent post on Dell and Ubuntu seems to have gotten a fair bit of attention while I was traveling. If I get any further information I’ll be sure to sure it.


Linux Foundation Collaboration Summit

I’m happy to announce that I’ll be attending the Linux Foundation Collaboration Summit at Google’s Mountain View Campus. It looks to be a great event to discuss the future direction of Linux and Open Source. If you’ll be attending, I’ll see you there. Trying to work out a decent flight schedule now, but it looks like it’ll be challenging. BTW, I’ll also be in the Bay Area next week for OSBC. If you’ll be attending (or in the area) and would like to connect, drop me a line.