Business of software: metamorphosis
January 7th, 2006 by Jean Sini
My friend Omar posted a short note on the transformations he sees in the software industry. Great stuff, as usual. But here’s a question his comments prompted: I fail to see the necessary open source part in the business model he’s describing. Can you, can he help me? He’s making a very valid point on the strong shift toward a subscription model, reflecting maintenance and support costs much more accurately than the hard-to-swallow upfront payments that were the norm until recently. I agree wholeheartedly, but don’t see how that business model directly implies an open source paradigm. That is, aside from the obvious hype wave (that everyone is all too happy to ride), optimistically and sometimes unduly equating subscription-based to open-source.
Sure, we are moving to a subscription model. But first, how are the software giants Omar refers to, those being cannibalized successfully by subscription-based businesses, less apt at selling this way? Perhaps because they’re too fat. Probably, but that has nothing to do with their source code being closed or open. I don’t think selling subscriptions for service, maintenance and support is a quintessentially open-source trait. (…)
Second, and more importantly, I have a feeling that, for the sake of building or riding the hot open-source momentum, folks, and smart folks at that, are associating, in a hurry, every positive evolution about software development (e.g. nobody would conceive or building their software without a source control and versioning tool) or business (e.g. subscription models) to the now ubiquitous open source approach, while the very essence of the movement, the fact that the source is, well, open, is taking a back seat in the equation.
I would love to either see that generalization dispelled as myth, or hear arguments that strongly make the case for true open source, as opposed to poster-child businesses that only leverage their source being open for the sheer attention it gets these days from VCs and antsy CIOs eager to follow the herd wherever it goes.
Instead, I hear a lot of the following hand-waving these days (most recently in a panel at GSB with executives from JBoss and MySQL). It usually goes like this:
- “Open source is not marketed as cheaper any longer, it’s marketed as safer and better. Why? Because you can take your destiny into your own hands, and if we were to ever go out of business, you could, undisturbed, continue self-maintaining and self-coding.”
Sounds good to me, but in the very next sentence (usually prompted by a question in the audience about stealing the massive development effort invested by the lead engineers, and selling services for the same software):
- “Oh, no, you couldn’t replicate our business and sell maintenance or support instead of us, because you’d be lacking our expertise: it’s tough as hell making sense of our very advanced code; in fact, we understand this phenomenon so well that we went ahead and hired 95% of the [insert JBoss or MySql here] project developers in-house.”
And suddenly, it lands on the audience that nobody cares if the code is open or not. This is what I call riding the hype wave: using the appeal of open source even when nobody is supposed to look at the source. This smells a lot like a closed source project to me. And it’s fine! If I’m running a bank, I don’t want to get in the business of developing software. So I don’t really care if the code is open, the last thing I want is look at it. Now, of course, I want it cheap, I want it sold to me on a subscription-based model and, why not, I want to get to try the thing for free (as in gratis) until I need support, too. But whether the code wants to be free (as in freedom) or not isn’t really my top concern.
All in all, I agree with Omar’s take on the transformation toward subscription-based charging. I just don’t buy the way open-source is seemingly appropriating that model.