Savio makes a good case based on the recent launch of AWS’s Relational Database Service, based on MySQL, and Microsoft’s support for MySQL and Tomcat on Azure:

“When Amazon decided to offer MySQL via Amazon RDS, they did so without purchasing MySQL support from Sun. I’ve confirmed that Microsoft Azure is supporting MySQL on Azure without paying Sun for a MySQL Enterprise subscription.”

Clearly there is a threat to open source vendors from cloud-based services. Meanwhile I have previous argued that the cloud and open source are complementary. Can both positions be valid?

I believe so, and I think it’s important to look at the technologies involved. Certainly, the ability of cloud platform providers to provide services based on infrastructure components such as MySQL and Tomcat threatens potential support revenues for on-premise deployments, but SugarCRM’s launch of CRM Applications on Windows Azure proves that just because the code is open source, does not mean that the cloud platform provider will automatically cut the vendor out of the picture.

Perhaps the difference with SugarCRM is that it is application, rather than infrastructure. Perhaps it is also the fact that SugarCRM has been proactive about exploring on-demand and cloud delivery models.

One of the reasons AWS was able to deliver the a managed MySQL service on EC2 was, frankly, because Sun had not already done so. All the realtional database vendors made their products available as AMIs on AWS in 2008 and since then they have done almost nothing about innovating delivery options abound those AMIs.

Had Sun launched MySQL-as-a-service on EC2 it could have grabbed the market share that AWS will now grab with RDS. I’m not sure why Sun failed to do this, incidentally. FathomDB did it, although it lacked the market presence to prevent AWS stealing the limelight. I would argue that Sun/MySQL could have done so.

Savio argues that open source specialists faced with this dilemma should double-down on their investments in “proprietary features in the ‘enterprise version of the open source product, which are note available in the ‘free community’ version”.

Certainly that is one opportunity for differentiation, but I would also argue that open source specialist vendors should also be concentrating on working with cloud platform providers to bring managed service deployments to market before the platform providers beat them to it.

I think in the long-term we’ll see more vendors providing open source software for on-premise deployment while offering enterprise versions via paid managed service deployments on cloud platforms, along with services to help customers migrate their data/applications from one deployment option to the other.

And if you’re wondering why a cloud provider would bother working with an open source specialist vendor, rather than just taking their code, consider this: one of the cloud providers mentioned in this post pays for enterprise Linux support subscriptions rather than using a community Linux or supporting its Linux servers internally. And it isn’t Microsoft.

Cloud computing is undeniably a threat to the monetization of open source software, but it is also an opportunity. Be quick or be dead.

Follow 451 CAOS Links live @caostheory on Twitter and Identi.ca
“Tracking the open source news wires, so you don’t have to.”

For the latest on Oracle’s acquisition of MySQL via Sun, see Everything you always wanted to know about MySQL but were afraid to ask

# Google launched the Chromium OS open source project, a prelude to the Chrome OS, while Canonical confirmed that it is contributing to the development of Chrome OS.

# Terracotta acquired the Quartz open source job scheduling and workload management software project.

# The European Commission extended its Oracle/Sun review deadline until Jan 27 at the request of Oracle

# Mozilla revealed its 2008 revenue was $78.6m, up 5%. Expenses were $49.4m, up 48%.

# Roberto Galoppini wrote about open source value creation and consumption.

# Exadel and Actuate formed a strategic alliance to promote the use of BIRT in enterprise applications.

# Savio Rodrigues explained how Microsoft Azure, like Amazon’s Web Services, will capture open source revenue streams.

# MuleSoft released Mule Data Integrator for data mapping and transformation.

# MindTouch launched a version of its collaboration platform for the cloud.

# Tristan Renaud, on software pricing, asked to hide or not to hide?

# Mik Kersten published growing open source ecosystems: the install story.

# CodePlex Foundation announced its first gallery/project - The ASP.NET Ajax Library.

# Zenoss released version 2.5 of its commercially licensed Zenoss Enterprise product.

# ActiveState launched Firefly, a hosted project management and collaboration offering based on Trac.

# Opengear released Opengear Monitor, a new centralized monitoring system based on Nagios.

# Infobright and Talend teamed up with Jaspersoft for open source data warehousing/integration/BI appliances.

# WaveMaker launched WaveMaker 6.0, pitching it as an open source cloud development platform.

# Vyatta partnered with OpenVPN on an auto-configuring VPN offering for branch offices and remote workers.

# Matt Asay explained why pro-open source policies do not always mean more open source.

# Microsoft announced Windows Azure Tools for Eclipse and SDKs for PHP and Java.

# The European Space Agency (ESA) wants to build a repository for hosting and developing it’s open source applications.

# SugarCRM announced its CRM Applications will available be on Windows Azure.

# Linux.com published an interview with Tim Golden, Open Source Software Infrastructure Strategist at Bank of America.

# Roman Stanek raised the issue of openness in commercial open source software pricing.

# Tarus Balog raised some interesting questions about Zenoss Core/Enterprise licensing.

On the latest list, released at the Supercomputing 2009 conference in Portland, Oregon, Linux continues strength and even growth, rising from 84.6% of the Top500 OS share in November 2007 to 87.8% in November 2008 and now to 89.2% in the latest, November 2009 Top500 Supercomputer list. The share for Linux goes up above 90% when considering mixed use with other operating systems. At the same time, the shares of Windows HPC and Unix remain relatively flat and other operating systems continue to drop off the list, with less share for BSD and no Mac OS X on the latest list. The other OS that did manage growth was the open source OpenSolaris, which doubled its share from one spot a year ago to two supercomputing sites on the latest Top500 list.

Cray finally managed to unseat IBM and take the top spot on the list with its XT5 supercomputer known as Jaguar (located at
Department of Energy’s Oak Ridge Leadership Computing Facility), which runs Linux. IBM nevertheless managed a strong showing in the top 10 with four sites, all running Linux. Sun Microsystems won the 9 and 10 positions with its Ranger and Red Sky systems, both of which run, you guessed it, Linux (actually CentOS for Red Sky). While there has been some shakeup in the processors used for these super systems — four PowerPC, three AMD and three Intel-based sites — and in geography, with representation from the U.S., Germany and China, the OS remains the same: Linux.

It seems the role reversal in the Top500 and HPC for Linux and Windows continues, with differentiation in hardware and more proprietary software coming in at the interconnect and other layers. Nevertheless, even Microsoft acknowledges the need for open source software and development as it seeks to broaden its reach to a more mainstream HPC market and to support mixed use of its Visual Studio development software alongside open source pieces for developers.

However, the overall HPC ecosystem continues to focus and rely heavily on Linux, following the lead of the Top500 sites and architects that are focused on the speed, scalability, flexibility and cost advantages of the open source OS.

“Potential customers who start out as your Open Core users need to see exactly what they get and how much it costs. If they can make all the decisions by easily trying your commercial product and comparing features then you have a viable company.”

The theme was taken up this week by Roman Stanek, founder and CEO of Good Data. Roman’s post had more to do with embarrassing his competition than forwarding best practices, in my opinion, but he makes some good points nonetheless:

“COSS companies should openly publish their price list and clearly mark what’s free and open and what’s paid and closed. Otherwise OSS is just a bait-and-switch to a familiar proprietary software tactic of customer lock-in.”

I previously argued that transparency is key to the success of the open core model, noting that:

“Potential customers don’t like feeling confused or misled and it is vital that the marketing makes it clear that the community version is open source and the enterprise edition is not.”

And would agree that transparency about pricing is key to the overall success. So how do some of the highest profile open core vendors compare when it comes to transparency? I took a tour of the following companies’ web sites in search of three key pieces of information:

• a comparison of the core and enterprise features
• licensing details available in the comparison, or at least elsewhere
• details of pricing for the enterprise version

I spent no more than five minutes on each site, on the basis that if I couldn’t find the information in that time it may as well not exist. Here’s the results:

Notes:

• Intalio has a huge amount of information available, but it is very difficult to find. It only just made the five-minute deadline.
• The quickest to navigate through all three pieces of information was KnowledgeTree.

Conclusion: Most of the open core vendors in this study make it easy to find information comparing the open core and enterprise editions, and most also do a good job of providing information about the licensing as well (although in many cases there is room for improvement even when the information is available). Only about half of those involved in this straw poll provide information on pricing for the proprietary edition.

So it makes sense that SourceForge the corporation — formerly OSTG, formerly OSDN, formerly VA Software, formerly VA Linux Systems, formerly VA Research — is yet again changing its name. This time, it’s going with Geeknet. While I was sort of scratching my head at first, this also makes sense given the company, whatever you call it, is now focused less on the code and community, but more on reaching a market, in this case, a market of geeks. This is the post-Ohloh company that is now perhaps accepting that its ThinkGeek e-commerce property holds more opportunity than a code hosting service. In fact, the strong ThinkGeek property and new Geeknet name may also be indicative of a realization and departure from community focus given key community figures were recently cut by the company. We’ve also seen a steady decline in prominence for Geeknet’s Slashdot and other media sites, accompanied by tough times for online advertising. Given where open source software is today, not only in the enterprise, but increasingly across industries, devices and markets, it seems it has become difficult to impossible to house it all under one roof.

So where is all of that open source code and community? If we look at recent findings from Black Duck Software, we see that the answer is, basically everywhere. In a survey of 175 customers using open source software over the last 18 months (a variety of customers and applications in mobile, digital media, social media, financial services and enterprise software), Black Duck found that each project contained an average 22% open source software (average size of 700MB of code). Black Duck also estimated that 22% of open source software saved $26m per product or application — an idea we’ll be discussing in depth in a coming CAOS report on the cost benefits of open source software.

Although the fragmentation of open source software repositories and hosts may seem to present some challenges in finding and understanding open source software, we actually believe that the diversity and competition are driving greater collaboration and communication among developers and greater visibility and granular information about projects and developers for users and customers of open source software.

Follow 451 CAOS Links live @caostheory on Twitter and Identi.ca
“Tracking the open source news wires, so you don’t have to.”

For the latest on Oracle’s acquisition of MySQL via Sun, see Everything you always wanted to know about MySQL but were afraid to ask

# Larry Augustin was confirmed as full-time CEO of SugarCRM.

# Red Hat, by way of the Fedora Project, announced the launch of Fedora 12.

# Microsoft is to release the .NET Micro Framework under the Apache 2.0 license.

# Simon Phipps introduced the concept of his Software Freedom Scorecard. Plans to propose as joint OSI and FSF initiative.

# Microsoft admitted inadvertent GPLv2 violation in Windows download tool, plans to publish code.

# Lucid Imagination updated its LucidWorks Certified Distribution for Lucene 2.9.

# Nexenta Systems announced NexentaStor 2.2, based on the ZFS file system.

# Univa released version 5.0 of its UniCluster infrastructure and workload management software stack.

# A Canadian law firm suggested purchasers of tech companies are avoiding GPLv3 code to protect their patents.

# Fluendo updated its Codec Pack of multimedia Linux/Unix codecs.

# SGI launched the Altix UV Linux-based supercomputer.

# JetBrains announced the general availability of RubyMine 2.0, based on the open source IntelliJ Platform.

# BonitaSoft’s BPM software is being integrated into eXo Platform DMS’s document management module.

# Distributor Tech Data created Open Tech, a new program to attract open source ISVs and resellers.

# WSO2 launched Cloud Platform including Cloud Virtual Machines; Cloud Connectors; and Governance-as-a-Service.

# The QualiPSo Project released QualiPSo Factory, a SOA-based forge.

# Sourcesense partnered with Sonatype to provide training, support, and customization services for Maven, Nexus.

*Cavium-MontaVista continues embedded Linux consolidation
*Day Software’s unique open source story
*DataSync and an update on open source for SMBs
*Our Cost Conscious survey and coming report

iTunes or direct download (21:39, 4.9 MB)

Follow 451 CAOS Links live @caostheory on Twitter and Identi.ca
“Tracking the open source news wires, so you don’t have to.”

For the latest on Oracle’s acquisition of MySQL via Sun, see Everything you always wanted to know about MySQL but were afraid to ask

Symbian’s future in the balance?
The H reported that Samsung is to abandon Symbian in favour of Windows Mobile, Android and the new Samsung bada OS, while Samsung later denied that it is ditching Symbian. Meanwhile John Mark Walker asked, is the Symbian Foundation DOA?

All Go for Google Chrome OS
Google introduced Go, a new experimental open source development language, while TechCrunch reported that Google’s Chrome OS will be available within a week.

Best of the rest
# Cavium Networks signed a definitive agreement to acquire MontaVista Software for $50m.

# Microsoft asked Supreme Court to reaffirm that abstract ideas, as in Bilski case, cannot and should not be patentable.

# Ars Technica reported that Microsoft pulled its Windows 7 tool after GPL violation claims.

# MindTouch launched MindTouch Enterprise Dashboards, providing real time enterprise mash-ups.

# Three new members have been elected to the Linux Foundation’s Technical Advisory Board.

# An interesting article on community contributions and copyright assignment, from LWN.net.

# CollabNet introduced version 2.0 of open source CollabNet Desktop - Visual Studio Edition.

# Vyatta released an alpha version of Vyatta Core 6 (VC6), its open source router, firewall and VPN software.

# Savio Rodrigues doubted ZDnet’s interpretation of Black Duck figures indicating $26m saved per project due to OSS.

# Zenoss integration with Plixer’s Scrutinizer NetFlow and sFlow Analyzer products is now available with Zenoss Core.

# Mary Jo Foley reported that Microsoft’s open source Orchard CMS is the project formerly known as Oxite.

# SpringSource claimed Sky.com has improved developer productivity 400% with Groovy and Grails.

# Matt Asay explained why open source provides a platform for monetization, but not the best way to generate cash.

# Open Source magazine published Open Source Compliance: Getting Started Guide.

# Gear6 has released Gear6 Web Cache Universal Distro, a software distribution of Memcached.

# Mark Stone explained the point of the Codeplex Foundation (with a little help from Greg Stein).

In order to try and bring some order to the conversation, we have brought together some of the most referenced blog posts and news stories in chronological order. Part one took us from the announcement of the EC’s in-depth investigation up to the eve of the communication of the EC’s Statement of Objections. We will continue to update part two, below, until either the acquisition or the EC’s investigation closes.

November 9: Statement from Sun on EC’s Statement of Objections
“The Statement of Objections sets out the Commission’s preliminary assessment regarding, and is limited to, the combination of Sun’s open source MySQL database product with Oracle’s enterprise database products and its potential negative effects on competition in the market for database products.”

November 9: Statement from Oracle on EC’s Statement of Objections
“The Commission’s Statement of Objections reveals a profound misunderstanding of both database competition and open source dynamics… Oracle plans to vigorously oppose the Commission’s Statement of Objections as the evidence against the Commission’s position is overwhelming. Given the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction.”

November 9: Statement from the US DoJ on EC’s Statement of Objections
“After conducting a careful investigation of the proposed transaction between Oracle and Sun, the Department’s Antitrust Division concluded that the merger is unlikely to be anticompetitive… At this point in its process, it appears that the EC holds a different view. We remain hopeful that the parties and the EC will reach a speedy resolution that benefits consumers in the Commission’s jurisdiction.”

November 10: BusinessWeek quotes EC spokesperson on Statement of Objections
[EU spokesman Jonathan] “Todd said Tuesday that Oracle would become the exclusive holder of the copyright and trademark for MySQL code “which means that despite the fact that MySQL is open source, it could be very difficult for a competitor using MySQL code to sufficiently replace the competitive constraint” that MySQL places on database rivals. The commission is concerned that Oracle could refuse to license MySQL to some companies or for some uses in order to favor its own software. “Just because MySQL is open source, does not mean that if you want to apply it in the commercial context, that you can do what you like with it,” Todd said.”

November 10: All Things D - Morgan Stanley to EU: Whatever Larry Wants, Larry Gets, and Sun Is No Exception
“Based on our diligence, we believe the EC is likely to approve the deal with no remedies or remedies pertaining to MySQL’s licensing,” the research house said in a note to clients today. “It is highly unlikely that Oracle restructures the deal (e.g. spins MySQL) or walks away.”

November 11: eWeek - EC Schedules Sun Oracle Hearing For 25 November
“The EC and Competition Commissioner Neelie Kroes scheduled the hearing for Nov. 25 at the EC offices in Brussels, a source with knowledge of the transaction revealed.”

November 11: IOUG Supports Oracle Acquisition of Sun
“We anticipate that Oracle will continue to foster innovation and openness with MySQL following the acquisition and not hinder competition. Oracle has acquired numerous other companies in the past and has built on the strength of each to foster its growth. Oracle has previously acquired databases and has continued to support and enhance them, while providing critical business support.”

November 11: MySQL paying customer Osma Ahvenlampi - MySQL - could we please move on already?
“I’m a customer of MySQL, and I don’t really savor the idea of becoming a customer of Oracle. Even so, I’d much rather see Oracle own it, than leave it straggling, let alone see this process drag on and on. This is helping no one.”

November 11: MySQL and Wikipedia developer Domas Mituzas objects to the Statement of Objections.
“In my opinion, if you are right now in the camp of supporting objections, it is not because you’re seeing a lot now, it is mostly because you didn’t see anything before.”

November 11: ComputerWorld - SAP: Outreach to Oracle about Java, not help with Sun deal
“SAP AG said today it contacted Oracle and its CEO, Larry Ellison, in recent months over concerns about the future of the Java programming language and competition in the database market, not to offer help facilitating Oracle’s purchase of Sun Microsystems, which is being held up by a European antitrust review.”

November 12: Bloomberg - EU’s Kroes is ‘optimistic’ about Oracle settlement
“Let’s be optimistic, and let’s find out if they could take us to a point that we say, ‘OK, here we can take the result as a satisfying result for fair competition,’ ” Kroes told journalists in Brussels when asked whether a sale of MySQL would resolve competition concerns.”

November 12: Neil McAllister - Who is trying to sabotage the Oracle/Sun merger?
“If… you mistrust Oracle so much that you honestly believe it would kill the proverbial golden goose just out of spite, so be it. But when you root against Oracle, make sure you know just what — and who — you’re rooting for. Open source isn’t the whole story.”

November 12: The Economist - Merger interruptus
“It is hard to find anyone in the technology business who is prepared to argue that MySQL and Oracle really compete—or ever will. The commission is on firmer ground when it argues that the way MySQL is licensed would allow Oracle some control over commercial use of the program. Although MySQL and its underlying recipe are available free, any added code built around the open-source product must also be made open source. Most firms that develop products on top of MySQL prefer to buy a commercial licence that does not come with this obligation. This they obtain from the copyright holder, which would be Oracle. Because of the success of this “dual-licensing” set-up, a strong alternative to MySQL is unlikely to emerge.”

November 13: Internetnews.com - Should Oracle Dump Europe Before MySQL?
“When a regulator says to a company ‘prove to me that you are not hurting competition’ when there is virtually no concrete evidence to prove they are, then this no longer feels like an evidence-based proceeding, it feels like a conclusion-based proceeding.”

Similar to consolidation in mobile Linux, there have been several false starts and lots of hype for embedded Linux over the years. Nevertheless, it has now emerged as one of the main growth markets for the Linux operating system and those who use it and back it. When Microsoft sued device maker TomTom early in the year, many saw it aimed at embedded Linux and trying to derail it in embedded markets, where Microsoft has steadily lost to Linux. Regardless of whether the suit was aimed at stifling embedded Linux, I would reassert our assertion that there has been no impact on embedded Linux, which has continued to grow.

Those developing and basing business on embedded Linux point out its strength across the board, from military and aerospace (where open source may also benefit from a recent DoD memo) to telecommunications and other industrial control to consumer devices including smartphones to automotive uses, both for vehicle technology and onbaord information and entertainment systems.

The interest and investment of large players such as Intel, Mentor Graphics and Cavium is further validation that Linux, in its various forms, is the right fit for most if not all of these key embedded software markets. That also means we’re likely to see more …

In our previous discussions about business strategies we have noted that there are four elements that shape a business strategy around open source software: the open source software license; the development strategy; the end user license strategy; and the revenue trigger.

As can be seen from the slide above, I have added a fifth element: copyright control. Copyright was previously considered in our research around business strategies but was seen more as an underlying influence than a distinct strategy element.

I have recently come to the realisation that copyright control is not just a part of each of the four elements, and not just a fifth additional element, but should perhaps be considered the central element which profoundly influences the other four.

Copyright control has a symbiotic relationship with both the open source software license (I’ll leave the copyright/left discussion for another day) and the development strategy, and is influential in determining both the end user license strategy and therefore the choice of revenue trigger.

This has become abundantly clear thanks to the discussion surrounding Oracle’s acquisition of Sun and MySQL.

Back in September I speculated that it was copyright, and not licensing or market share, that was at the centre of the European Commission’s concern about Oracle’s future ownership of MySQL:

“I would argue, that Oracle’s potential control over MySQL is not about licensing, but copyright… copyright ownership does not just impact the ability to license code, it also provides control over potential commercial uses of that code. This is where it could be argued that the EC could be right to have anti-competitive concerns over Oracle’s future ownership of MySQL.”

This week’s comments from EC spokesperson Jonathan Todd confirmed my suspicions:

Todd said Tuesday that Oracle would become the exclusive holder of the copyright and trademark for MySQL code “which means that despite the fact that MySQL is open source, it could be very difficult for a competitor using MySQL code to sufficiently replace the competitive constraint” that MySQL places on database rivals. The commission is concerned that Oracle could refuse to license MySQL to some companies or for some uses in order to favor its own software. “Just because MySQL is open source, does not mean that if you want to apply it in the commercial context, that you can do what you like with it,” Todd said.

Which is not to say that I agree that there is enough competitive threat to block the deal. But it has highlighted the importance of copyright control in terms of business strategies around open source. As John Mark Walker noted recently:

“The remarkable thing about the Oracle - MySQL case is that it forces us to put up or shut up in a realistic, fact-based way not clad in ideological robes. Whatever your opinions, you now have a test case against which to apply them.”

Follow 451 CAOS Links live @caostheory on Twitter and Identi.ca
“Tracking the open source news wires, so you don’t have to.”

Objectional statements
The European Commission communicated its Statement of Objections to Oracle’s proposed acquisition of Sun Microsystems to those involved, prompting Oracle to claim the EC has a profound misunderstanding of database competition and open source, the US DoJ to reiterate its position that Oracle’s acquisition of Sun is unlikely to be anticompetitive and an EC spokesperson to explain that concern over Oracle owning MySQL is all about copyright and control.

Incidentally, Sun reported a net loss of $120m in Q3 on revenue of $2.24bn from $2.99bn, blamed uncertainty associated with Oracle deal.

For the latest on Oracle’s acquisition of MySQL via Sun, see Everything you always wanted to know about MySQL but were afraid to ask

Best of the rest
# LWN.net published an article explaining how Google uses Linux.

# David Skok explained how JBoss built a sales and marketing machine around open source.

# SAP’s Vishal Sikka called for Java to be handed to an independent foundation.

# Microsoft acquired the Teamprise Eclipse IDE-related assets of SourceGear LLC.

# A Black Duck survey suggested 22% of average applixation is OSS, saving developing company $26m per application.

# Liferay hired Paul Hinz from Sun Microsystems as CMO.

# Android and Me reported that Android is a little less open that it used to be.

# Microsoft marked the three-year anniversary of its interoperability agreement with Novell.

# Henrik Ingo provided an update on the Open Database Alliance.

# People Power Company launched to develop open source home area network.

# Intalio released Jetty 7, first Intalio release of Java app server and first developed with Eclipse.org.

# Oracle has released Berkeley DB Java Edition 4.0.

# Bradley M Kuhn offered some guidelines for dealing with GPL violations, starting with “don’t jump to conclusions”.

# Zend and Varien partnered to bring Zend Server to Varien’s Magento eCommerce software.

# NetworkWorld presented 11 open source start up companies to watch.

# Continuent delivered Continuent Tungsten Community Edition for MySQL database replication software.

# Gorilla Logic released Open Gorilla X-ecution Engine, an open source application simulation tool.

# Broadcom released its BroadVoice family of voice codecs royalty-free under the LGPL.

Essentially, while Day contributes to a number of Apache open source projects such as Jackrabbit, Sling, Felix, Chemistry, Solr, Lucene and Tika, its CQ5 web content management platform is based on a proprietary license, while it also offers CRX, a commercially-packaged version of Jackrabbit and Sling.

Today I had the chance to catch up with Day’s CMO Kevin Cochrane who revealed that Day might have arrived at its current business strategy more by luck than judgment, but is now putting a business model in place to build on the company’s technical investment in open source projects.

Here’s the key points:

• Day’s technology strategy is based on a ten-year plan hatched in 2000 by CTO, David Nuescheler and Chief Scientist Roy Fielding to create a ubiquitous Java content repository project.

• The four steps in the plan were to create a standard for content repositories; build a community around a reference implementation; create a framework to build applications based on that repository; create a framework for infrastructure around this repository.

• This plan has been executed via the creation of the JSR 170 Content Repository for Java Technology API via the Java Community Process; the incorporation of the Apache Jackrabbit project; the incorporation of the Apache Felix OSGi framework and standard services project; and the incorporation of the Apache Sling REST-based web framework project.

• Somewhat missing from the plan was a business strategy to commercialize this investment. Indeed until relatively recently the R&D and commercial arms of Day were fragmented and the company was failing to exploit interest in the open source projects its employees had created.

• The business side of the company did not know what to do with this investment in open source and an early business plan - support subscription offerings for Jackrabbit - went largely ignored.

• Erik Hansen joined the company as CEO in June 2008 and has brought in new senior financial and marketing staff, as well as rebuilding the company’s sales team and approach.

• Released in late 2008, CQ5 is the latest version of Day’s Communique content management software and rolls up Jackrabbit, Felix and Sling, as well as the numerous other Apache projects Day contributes to, into a commercially licensed platform targeting web content management (WCM), Digitial Asset Management (DAM) and Social Collaboration.

• CQ5 is targeted at senior-level marketeers via a direct sales force and interactive content partners using a traditional proprietary license. The sales effort is therefore not focused on converting developers but targeting business users.

• However, developer downloads are part of a user’s decision making process. Kevin notes that if two or more developers within a prospect have independently downloaded the open source version there is a good chance the commercial deal will be signed.

• Day also offers CRX, a commercially packaged version of the Apache Jackrabbit and Sling projects. This has a 100% online distribution model with Day reacting to in-bound requests for subscriptions rather than attempting to up-sell users of the open source projects.

• 95% of Day’s CRX code base is open source, with the company offering integration and interfaces that are not available in the individual projects. There would be nothing to stop a user or rival from replicating this integration, other than investment in R&D

• Despite offering CRX, Day’s entire commercial business is based on CQ5. While the company will follow-up opportunities that arrive via CRX with its direct sales staff, it does not try to force the issue by either attempting to up-sell Jackrabbit users to CRX or CRX users to CQ5. Any revenue delivered via CRX is seen as a bonus.

• Where the company previously lacked marketing strategy to build upon the success of projects like Jackrabbit, it has now invested in growing its sales teams in the UK, Italy, France and Asia-Pac and restructured its sales globally with much more of a focus on lead generation.

• The early results are encouraging. In July the company reported total revenue for the first half of 2009 of CHF 17.0m ($16.8m today), up 33% on the first half of 2008. More recently the company boasted 70% license growth in Q3 and a 37% increase in license revenue in the first three quarters of 2009, compared to last year.

There is plenty more to the Day story, as covered in our formal analysis, but it was fascinating to hear how the company’s strategy materialised. While many other vendors have chosen to retain control over their open source projects for commercial reasons, Day opted to relinquish control with the aim of ubiquity.

This might initially have been a technical strategy rather than a business strategy (in fact it could be argued that the current model is the direct result of the lack of initial business strategy) but it created an opportunity that is now being commercially exploited.

It would be fascinating to see if such a strategy could be successfully deliberately replicated. I have a feeling that, for both technical and business strategy reasons, we’re likely to see a few companies try.

Follow 451 CAOS Links live @caostheory on Twitter and Identi.ca
“Tracking the open source news wires, so you don’t have to.”

For the latest on Oracle’s acquisition of MySQL via Sun, see Everything you always wanted to know about MySQL but were afraid to ask

# Funambol acquired Zapatec, an AJAX web 2.0 frameworks vendor.

# The top ten issues facing open source users, according to Mark Radcliffe.

# Google open sourced its Closure JavaScript tools.

# Sam Ramji explained why open source still matters in the cloud.

# Likewise Software launched Enterprise Starter Packs for integration with Active Directory.

# Eucalyptus Systems updated its open source cloud computing software.

# RiverMuse hired a new CEO released Enterprise Subscription version.

# Jaspersoft joined the Open Source Software Institute.

# Hitachi joined Red Hat’s Advanced Mission-Critical Program.

# SourceForge became GeekNet, reported third quarter results.

# Mark Fidelman supplied six laws for expanding an open source business strategy into Europe.

# Eric Raymond launched ForgePlucker, for extracting project-state from forges for backup and offline analysis.

# Versant relicensed its db4o database from GPLv2 to the GPLv3.

# Hippo and Sonatype announced a distribution and technology partnership.

# Mandriva released Mandriva Linux 2010.

# Mary Jo Foley reported on Microsoft’s Orchard open source content management app.

# Zend Technologies is working with Oracle to deliver an integrated Unbreakable Linux and PHP offering.

# Subversion was submitted to become an Apache incubator project.

# Pentaho released Pentaho Analyzer and unveiled an “Agile BI” initiative.

# Red Hat CEO said open source needs champions - such as Red Hat and Google.

# eWeek reported that Microsoft has recommitted another $100K to Apache.

# Stephen O’Grady speculated on Amazon, RDS and the Future of MySQL.

One consistency among all of these different groups who produce, invest in, provide and use open source software is that while the typical open source advantages of cost and flexibility are still very significant, the biggest driver at the moment appears to be speed.

I think I first began noticing the importance and prominence of development and deployment speed in mobile open source software. As discussed at our client conference panel on the topic, we see hardware manufacturers, device players, wireless carriers and others all looking to mobile Linux and open source software to respond to Apple’s iPhone, which has also served to prove that a ‘non-mobile’ vendor can quickly and effectively stake a claim in the mobile market. These organizations realize that producing their own new operating system from scratch is neither realistic nor pragmatic, given the time and investment it would take. These companies are, however, looking to mobile Linux and open source software as a way to use existing, stable software as the basis for their own branded software and services. Examples include Google and Android, Palm’s WebOS, LiMO and Symbian, which is now being open sourced by Nokia and other backers that are part of the Symbian Foundation. The fact that we have gone from bascially one single Android smartphone in the market a year ago to the cavalcade of Android devices now arriving in various forms from different vendors is indicative of the speed at which open source software can move.

Throughout my conversations with folks attending our event, I’ve heard the speed theme again in other sectors and segments. Of course, application development is a fast-moving proposition, so again, we see vendors looking to open source software as a tool that can shorten their time to market. Again, cost of development, flexibility, customization, lock-in all loom as factors in favor of open source, but the single biggest driver again comes down to speed.

We’ve also seen speed as a factor for building and providing cloud computing infrastructure. Vendors report that Linux is ideal for cloud construction since the availability of source code means that unecessary pieces can be relatively easily and quickly cut out of the OS. In addition, we continue to see a blending of roles between software developer and system administrator/operations. The rise of the devops is also indicative of the need for speed. Developers are pushing to get software released and vetted. Administrators that might otherwise resist cloud computing or other models that may cause some concern about keeping their jobs are being forced to embrace cloud computing anyway. Why? The answer, again, is speed.

Open source is obviously often viewed as a part of agile development and more effective software development, as well as distribution. As the pressure to keep up in mobile, cloud computing and elsewhere continues to build, it will be interesting to see how far open source software’s speed advantages will take it.

Follow 451 CAOS Links live @caostheory on Twitter and Identi.ca
“Tracking the open source news wires, so you don’t have to.”

For the latest on Oracle’s acquisition of MySQL via Sun, see Everything you always wanted to know about MySQL but were afraid to ask

# Yahoo! Open! Sourced! Traffic! Server!

# Red Hat launched Enterprise Virtualization for Servers for managing Linux and Microsoft Windows servers.

# 10gen, the company behind MongoDB, has raised $3.4m in a second round of funding.

# Talend updated its Open Profiler and Data Quality products.

# Tata Communications partnered with SugarCRM to provide on-demand CRM to customers in India.

# eZ Systems has appointed former IBM and BEA executive Christoph Rau as CEO.

# Bob Sutor offered his preliminary thoughts on starting an open source business.

# REvolution R Enterprise 3.0 is now available featuring R productivity environment for Windows.

# Skype confirmed it is creating an open-source Linux client.

# Monty Widenius claimed that MySQL’s main rivals has always been Oracle.

# Scalix has delivered Scalix Starter Packs, providing email and calendaring for home and small office use.

# Open source ad server vendor OpenX announced a partnership with Microsoft.

# Glyn Moody reported that the EU wants to re-define “closed” as “nearly open”.

# Munich’s use of Mozilla software surpassed Mozilla’s expectations.

# Matt Asay reported on why open source, like football/soccer is about big value, not big money.

# Mike Hogan examined how to protect FOSS -related revenues in an era of cloud services, focusing on Amazon RDS/MySQL.

*-DoD memo and official use and consideration of open source
*EnterpriseDB updates its Postgres Plus Server, gets Red Hat investment
*Latest in Linux from Canonical’s Ubuntu and Red Hat Enterprise Linux, Deltacloud
*Roundup of Oracle-Sun-MySQL developments and perspectives

iTunes or direct download (25:30, 5.8 MB)

Follow 451 CAOS Links live @caostheory on Twitter and Identi.ca
“Tracking the open source news wires, so you don’t have to.”

For the latest on Oracle’s acquisition of MySQL via Sun, see Everything you always wanted to know about MySQL but were afraid to ask

Government approval
The US Department of Defense issued guidance on the adoption of open source software, while ComputerWorld reported that the U.S Department of Defense has open-sourced an enterprise human resources application.

Meanwhile, The French Government’s public finance department will switch 130,000 desktop’s to Mozilla’s Thunderbird and Lightning.

Financial results
Sourcefire announced Q3 revenue of $27.4m, up 35% on 2008, while Actuate reported BIRT-related revenue of $4.7m in Q3 on total revenue of $29.4m, down from $33.7m.

Funding
Neo Technology, developer of Neo4j, an open source graph database, raised $2.5m in seed funding. SnapLogic raised $2.3m in its first round of institutional funding. Open source micro-blogging vendor StatusNet closed an $875,000 seed financing round.

Best of the rest
# Oracle updated its Sun acquisition FAQ to include plans for Glassfish, Netbeans, MySQL and Openoffice.org, while the H reported that Oracle has clarified its plans for Java tools and OpenOffice.

# SAP announced plans to contribute to several Apache projects, including Maven, VXQuery, Tomcat, OpenEJB and ActiveMQ.

# Savio Rodrigues speculated that Amazon RDS is out to eat open source vendor lunches with MySQL.

# OpenLogic reported a 41% increase in revenue in Q3 versus 2008, while OpenLogic data suggests more people are using OSS, and more are also choosing to pay for support or governance.

# Qualcomm Innovation Center and Fujitsu joined the board of the Symbian Foundation.

# Virtualization Review noted that Citrix is about to fully open-source XenServer.

# Calpont launched InfiniDB Community Edition, an open source data warehouse for MySQL, and OEM agreement with Sun.

# Zenoss released Zenoss Core version 2.5 including cloud monitoring capabilities.

# Tasktop is working with Microsoft to improve Eclipse on Windows 7.

# Silicon.com: Why CIOs say no and yes to open source software.

# Novell planned to take SCO Group case to the Supreme Court.

# Bloomberg.com reported on open source ERP with the headline of the week: “‘Bill Gates of Belgium’ Fights SAP as Free Software Use Expands”.

# Misys Open Source Solutions made available the software source code for its Carbon Planning Toolkit.

# Open source advocate calls for Microsoft version of Linux. He has a book out, incidentally.

# Rob Bearden joined Black Duck Software’s board of directors.

# WANdisco presented two new initiatives, SubversionJ and Obliterate, for the Subversion open source project.

# Ingres gets realtime data integration software via reseller agreement with HVR Software.

# Tarus Balog compared the OpenNMS and Nagios open source monitoring projects, while Nagios Enterprises launched Nagios XI.

# Matt Asay noted that the question is no longer “why” to use open source, but rather “how.”

Given current economic conditions there is considerable interest in open source software with many people wondering whether open source licensing can help users lower the cost of enterprise computing compared to traditional proprietary licensing.

The Open Source Adoption survey seeks to answer this question, as well as update the survey we initially conducted in 2006 for our second CAOS Report - ‘Cost Conscious - A practical guide for understanding and calculating the financial benefits of open source for enterprise IT projects.’

In order to reach as wide a sample of open source users as possible, for this year’s survey we asked a number of vendors to send the survey to their customers on our behalf. Nearly 30 vendors agreed to do so and the response has been tremendous, with over 1,250 users completing the survey in the first 24 hours.

To be clear, and to correct some confusion that has arisen in a report about the survey published by The VAR Guy - which incorrectly states that it is a Digium survey being conducted by The 451 Group - this is not sponsored research.

Digium is indeed one of the vendors that agreed to send our survey to its customers. However, as noted above, it was one of almost 30 vendors (both clients and non-clients) that did so. No vendors were involved in drafting the questions for the survey, no vendors will be involved in the analysis performed on the results, and no vendors will see the results before they are published.

It is important for us to clarify this point because one of the core principles of The 451 Group is that 451 research is never sponsored, nor is it produced to promote a particular vendor’s agenda. For more on the scope of the 451 Group’s research see our Scope of Research.

That said, we are extremely grateful to the vendors concerned for enabling us to reach such a substantial survey sample, and they, like the users completing the survey, will be receiving a copy of the research results for their trouble. Among the questions addressed by the survey are:

• the primary benefits of open source software (pre- and post-adoption)

• the level of importance of cost savings in selecting open source

• the extent to which cost savings were met and where they came from

• the use (or lack) of IT project financial analysis

• the use (or lack) of open source software adoption policies

• the use (or lack) of open source software contribution policies

• the impact of the current economic climate on open source software adoption

We look forward to sharing some of its findings with you in the coming weeks and months, not least in the forthcoming update to Cost Conscious.

If you are a vendor interested in distributing the survey or a user interested in contributing to it, please send an email to Matt Aslett and/or Jay Lyman and we will send you the details.

The DoD memo wisely lays out the idea that open source software should be considered not alongside traditional, commercial offerings, but basically as traditional, commercial software offerings, so that the evaluation process is truly fair. Open source doesn’t fit in all circumstances, but it certainly does afford potential cost savings, flexibility and freedom in some situations, as noted in the memo.

I would agree with Simon Phipps, who called the memo an end to FUDsters seeking to limit open source at the DoD and described it as ‘a landmark moment for the FOSS movement.’ Here’s why. I believe this is a model for government and enterprise end users to use for determining where open source software best fits into their organizations.

That’s not to say the memo or the model should favor or offers special treatment or placement for open source, which I believe is a good thing. We’ve seen elsewhere how other interests and politics can play into lobbying either for or against open source software in government, impeding a fair debate. That seems all the more reason to be encouraged by a sensible approach we see from the U.S. DoD.

I believe the memo and reaction to it represent something larger in adoption of open source software, not only by the U.S. DoD and among other governments around the globe, but also including enterprises and even SMB users: the official embrace of open source. Anyone who knows open source software and Linux should be aware that governments, military, aerospace and many other industries already rely heavily on open source software. The reason this might come as a surprise to some is that open source software, in typical fashion, has krept into these organizations, corporations and yes, communities, whether it’s embedded engineers, aerospace scientists, pharmaceutical researchers and the list goes on. Many of these various field experts and their IT partners and teams have relied heavily on Linux and open source for their projects and tests. Thanks to free availability, these smart people did not have to ask anyone whether they could use, procure or spend money on this open source software — they just did it.

And now as the U.S. DoD sets out its guidelines for considering and adopting open source software — making open source software official, approved and part of the institutional guidelines. This also comes as the White House web site shows its own affection for open source.

As we’ve found in our research and conversations, open source has two ways of getting into the market and users’ hands: unofficially through downloading, using and accelling with freely available software under the radar; and following company or organizational guidelines that govern consideration and use of open source software. The latter is bound to drive broader and greater adoption of open source software and it appears the official route has officially arrived.

First came the formation of Dynamo Business Intelligence Corp, (aka Dynamo BI), a new commercially supported distribution, and sponsor, of LucidDB. Then came the launch of InfiniDB Community Edition, a new open source analytic database based on MySQL from Calpont.

Read the rest of this post on our Too Much Information blog.

Follow 451 CAOS Links live @caostheory on Twitter and Identi.ca
“Tracking the open source news wires, so you don’t have to.”

For the latest on Oracle’s acquisition of MySQL via Sun, see Everything you always wanted to know about MySQL but were afraid to ask

In other news…

# EnterpriseDB confirmed Red Hat investment, partnership.

# Whitehouse.gov migrated to Drupal, as well as Linux, Apache, MySQL and Solr.

# Amazon Web Services introduced Amazon Relational Database Service (Amazon RDS), based on MySQL.

# Canonical announced Ubuntu 9.10 Server Edition including Ubuntu Enterprise Cloud (UEC), which is powered by software from Eucalyptus Systems.

# Qualcomm established a wholly-owned subsidiary, QuIC, focused on mobile open source platforms.

# John Sichi announced the formation of Dynamo Business Intelligence Corp, (aka Dynamo BI), a new commercially supported distribution, and sponsor, of LucidDB, while Nicholas Goodman revealed that the company has acquired the commercial rights to LucidDB.

# Apple closed its open source ZFS project.

# SCO Group’s trustee said the company should pursue IBM, Novell lawsuits.

# Actuate announced the results of the fourth annual Actuate open source survey.

# Andrew Aitken said long live the freeriders.

# Varien announced version 1.6 Release of Magento Enterprise Edition eCommerce software.

# H Online reported on why Adobe likes open source,

# Marc Fleury asked, Open source - a modern day Marxist utopia?

# InformationWeek asked, Can Open Source Software Save Democracy?

# MindTouch presented a list of the most influential executives in open source, as ranked by their peers.

# Messaging Architects became an Open Invention Network licensee.

# A Harvard Business School paper on open source and proprietary business models.

# Linux Journal asked, is cloud computing good or bad for open source?

# Mitch Kapoor declared Microsoft’s war with open source over.

# MaxiScale introduced Generator, an open source file staging test tool.

In order to try and bring some order to the conversation, we have brought together some of the most referenced blog posts and news stories in chronological order. Part one, below, takes us from the announcement of the EC’s in-depth investigation up to the eve of the communication of the EC’s Statement of Objections. We will continue to update part two until either the acquisition or the EC’s investigation closes.

September 3: The European Commission announces that it has opened in-depth investigation into proposed takeover of Sun Microsystems by Oracle with a focus on MySQL.
“The Commission’s investigation has also shown that the open source nature of Sun’s MySQL might not eliminate fully the potential for anti-competitive effects. In its in-depth investigation, the Commission will therefore address a number of issues, including Oracle’s incentive to further develop MySQL as an open source database.”

September 4: 451 CAOS Theory - The EC is mostly, but not entirely, wrong about Oracle/MySQL.
“Copyright ownership does not just impact the ability to license code, it also provides control over potential commercial uses of that code. This is where it could be argued that the EC could be right to have anti-competitive concerns over Oracle’s future ownership of MySQL.”

September 4: Monty Program Ab Chief Community and Communications Officer Kurt von Finck tells Ars Technica that that copyright and dual licensing is a significant concern.
“If Oracle were to release MySQL under a different license, say the Apache license, this issue would be mitigated to an extent. But for now, Oracle has many more avenues of [MySQL-related] business and revenue than do others.”

September 15 451 CAOS Theory - Oracle *could* kill off MySQL as a commercial product, but probably won’t
“It is impossible to create a fork that can be integrated with non-GPL code (or at least it appears to be.)”

September 17: Bill Schneider - Would MySQL survive without Oracle?
“MySQL is almost impossible to be monetized. More than 98 percent of the customer base is DIY, and they don’t see any value in paying for support.”

September 22: Oracle CEO Larry Ellison reportedly says Oracle will not spin off MySQL.
“Ellison asserted that Oracle and MySQL do not compete - and he said Oracle has no intention of spinning off MySQL.”

September 30: The Wall Street Journal reported that documents indicate that Oracle intends to use MySQL to compete with Microsoft SQL Server.
“Oracle’s position is that in the market for small to medium-sized business databases, Sun’s MySQL database product, enables the company to compete against Microsoft.”

October 1: Matt Asay reiterates that MySQL’s value to Oracle is about competing with Microsoft.
“Open source is simply a means to an end, and in the case of MySQL, a means to denting Microsoft’s rising strength in emerging markets where Oracle’s expensive database technology doesn’t resonate.”

October 1: Carlo Piana explains why he is assisting Oracle’s legal team to get the acquisition approved.
“It must be passed through as soon as possible, or the company will die. And with it, some of the good development teams that have considerably contributed to the success of Free Software.”

October 8: Former MySQL CEO Marten Mickos urges the EC to approve Oracle’s acquisition of Sun.
“I believe that Oracle’s acquisition of Sun (and MySQL) will increase competition in the database market. And I also believe that if, on the other hand, it becomes difficult or impossible for large companies to acquire open-source assets, then venture investments in open-source companies will slow down, harming the evolution of and innovation in open source, which would result in decreased competition.”

October 11: Oracle CEO Larry Ellison reportedly says Oracle will invest in MySQL.
“He added a new line to the previously four-point list, this one promising MySQL would also receive more money for development and research.”

October 19: MySQL creator and Monty Program CEO Monty Widenius urged Oracle to give up on MySQL in order to land Sun.
“MySQL needs a different home than Oracle, a home where there will be no conflicts of interest concerning how, or if, MySQL should be developed further.”

October 19: Richard Stallman, Knowledge Ecology International (KEI) and the Open Rights Group sent a letter to the EC urging it to block Oracle’s acquisition of MySQL.
“If Oracle is allowed to acquire MySQL, it will predictably limit the development of the functionality and performance of the MySQL software platform, leading to profound harm to those who use MySQL software to power applications.”

October 19: Matt Asay argued that EU’s MySQL inquiry may backfire for open source.
“Why should commercial entities bother fostering community–the very community that makes them less susceptible to hostile takeover and anticompetitive forces–if doing so simply ends up ruining financial returns?”

October 20: Matt Asay and Simon Phipps note Stallman’s apparent admission that the GPL alone doesn’t guarantee software freedom.
“The GPL, which is supposed to be the ultimate guarantor of software freedom, may deliver the opposite.”

October 20: Sun Microsystems announced that it will lay off up to 3,000 people.
“The Board of Directors of Sun Microsystems, Inc. (the “Company”), in light of the delay in the closing of the acquisition of the Company, approved a plan to better align the Company’s resources with its strategic business objectives.”

October 20: 451 CAOS Theory - Closing Oracle out of open source?
“Although it might not be tasteful to all supporters of free and open source software, their very mantras and doctrines dictate their software and communities are open to all equally. Anything less is a contradiction of the core ideology of free and open source software.”

October 20: Carlo Piana - Apache what?
“I don’t see any suitable prospect investor which would be able both to pay the bill for this and to safeguard MySQL as Free Software more than Oracle is.”

October 21: 451 CAOS Theory - What about Woman’s Hour? Free speech, free markets and the future of MySQL
“The only possible argument in favour of the EC blocking Oracle’s acquisition of MySQL is that it is damaging to competition, not that it is damaging to MySQL itself. Otherwise we are asking the EC to rule on whether Oracle is open source-friendly enough to own MySQL, and that is neither something that an organisation like the EC is equipped to answer nor something that it should be asked to decide.”

October 21: Groklaw - Reasons I Believe the Community Should Support the Oracle-Sun Deal
“The most important reason is that opponents are trashing the GPL and calling it a source of “infection” in their FUD submission to the EU Commission.”

October 21: Kirk Wylie - Monty, Stallman, MySQL, Oracle, and Sun: Open Letter Wars
“Unfortunately, saying that you personally dislike something doesn’t provide a valid reason to block an acquisition on competition grounds. Saying that you don’t trust Oracle doesn’t alter the marketplace in a way that disadvantages customers as a whole. Saying that nobody else could make money by selling commercial licenses for MySQL doesn’t mean someone else must be allowed to.”

October 21: An EC spokesperson told The BBC that Oracle has not produced any evidence to ease its concerns.
“Oracle had failed to produce, despite repeated requests, either hard evidence that there were no competition problems or, alternatively, proposals for a remedy to the competition problems identified by the Commission.”

October 21: Tim Bray - The EU and MySQL
“If, in a merger or acquisition, partial control over a financially-insignificant Open-Source project can now be expected to result in many months of anti-trust review, that’s going to have a massive negative effect on the viability of M&A transactions all over the technology landscape.”

October 21: Jeremy Zawodny - Oracle and MySQL
“I haven’t yet seen anyone explain what motivation Oracle has for pouring resources into MySQL, especially if it eats away at their DBMS business on the low end.”

October 22: Ed Burnette - Stallman admits GPL flawed, proprietary licensing needed to pay for MySQL development
“Even if MySQL were owned by Oracle because of its purchase of Sun, the database would still be Free Software. Anyone could use the source code, build their own version, and distribute it to others. But finally Stallman has recognized that may not be good enough because somebody has to pay for this stuff.”

October 22: Brian “Krow” Aker - RMS, GPL, The Peculiar Institution of Dual Licensing
“Dual licensing forces any developer who wishes to contribute into a position of either giving up their rights and allowing their work to end up in commercial software, or creating a fork of the software with their changes. In essence it creates monopolies which can only be broken via forking the software.”

October 22: New York Times - Weak Points of Sun Deal Come Out in Europe
“The Sun/Oracle acquisition agreement includes no requirement that Oracle make any asset sales or agreements on its business to assuage regulators… Oracle is not required to complete the transaction unless it specifically obtains the European Union’s antitrust approval.”

October 23: Stephen O’Grady - Oracle, MySQL and the EU: The Q&A
“Given that Oracle has a negligible presence in the markets that Microsoft has been successful in, then, I think they’ll be the primary target. Meaning that competition shouldn’t be much of an issue.”

October 23: Karsten Garloff - The case for independence - Oracle, Sun and what to do with MySQL
“The present danger for MySQL shows how dependence on a single company (brought about by a dual-licensing strategy) puts even the most successful projects at risk.”

October 24: Monty Widenius - The importance of the license model of MySQL or Can MySQL be killed?
“It’s possible to create companies doing support for MySQL, but without the economics, there will not be enough money and incentive to pay enough for the development of MySQL to satisfy the requirement of all the MySQL users.”

October 24: JavaWorld - Who Should Oracle Sell MySQL To?
“It’s easy to suggest that Oracle should sell to a “suitable third party?” That’s just talk. The potentially significantly more difficult thing might be to actually find a buyer that meets the definition of “suitable” to all involved.”

October 25: Sacha Labourey - SUN vs./and ORCL: the failure of the dual licensing model?
“Some of the ex-MySQL co-founders who now ask for ORCL to let MySQL go are responsible for the current situation: their choice of a dual license business model years ago is what led to the current situation … but also what led MySQL to a 1B valuation. You cannot have it both ways I guess.”

October 25: Brian Aker asks Richard Stallman about MySQL and the GPL at foss.my 2009

October 26: eWeek - EU Strategist Claims an Oracle-owned MySQL Cannot Be Competitive
“It is legally possible but not viable [for Oracle] to be an innovative competitive force [by owning MySQL].”

October 28: Kirk Wylie - Monty’s Almost Certainly Looking for Investment
“I think… Florian is attempting to drum up a capital raise to acquire the MySQL IP to make the problem go away for Oracle, and to convince Oracle and Sun shareholders that Monty and Florian will do whatever it takes to block the acquisition so that they’ll tell Larry to let go.”

October 28: Carlo Piana - Send the GNU GPL to the Amazonia
“Amazon [Relational Database Service] gives us the best evidence that MySQL can be “monetized” by offering it in a Software As a Service setting. This can happen with GNU GPL licensed software and without receiving any special permission from the copyright holder, contradicting all claims that there is no viable way to fund development of a Free Software project without a dual license.”

October 29: Oracle updated its its Sun acquisition FAQ to include plans for Glassfish, Netbeans, MySQL and Openoffice.org
“Oracle plans to spend more money developing MySQL than Sun does now. Oracle expects to continue to develop and provide the open source MySQL database after the transaction closes. Oracle plans to add MySQL to Oracle’s existing suite of database products, which already includes Berkeley DB, an open source database. Oracle also currently offers InnoDB, an open source transactional storage engine and the most important and popular transaction engine under MySQL. Oracle already distributes MySQL as part of our Enterprise Linux offering.”

November 2: MySQL rival was Oracle not Microsoft-Widenius
“The largest and the most common rival was Oracle. In every deal we were competing against Oracle… there is very little money to be made on the Windows side for MySQL. They are not going to make a profit there. The big money is on the Linux side where MySQL already successfully competes with Oracle, and where MySQL has put all their efforts during the last 10 years.”

November 4: Financial Times - Oracle braced for EU objection on Sun deal
“The US software company has refused to offer any concessions to European regulators to meet their concerns about the deal, according to one person close to the process. That has left Brussels close to issuing an official statement of objections, the first step on the path to blocking it, this person added… Some suggest that Oracle has little to lose by waiting to see Brussels’ precise concerns. It would then still have time to offer concessions or try to mount a legal fight.”

November 4: Matt Asay - Amazon’s move mocks EU’s fear of Oracle
“Amazon’s RDS proves that strong, viable competitors to MySQL can arise from within the MySQL community, which disproves the EC’s argument that Oracle’s control of MySQL will somehow crush competition.”

November 4: Forbes - What If Larry Leaves Sun At The Altar?
“The main deal protection for Sun shareholders is a breakup fee of $260 million, plus up to $45 million in expenses. By way of comparison, that’s about how much Oracle earns every 20 days.”

November 5: John Mark Walker - Open Source: More than a License
“The remarkable thing about the Oracle - MySQL case is that it forces us to put up or shut up in a realistic, fact-based way not clad in ideological robes. Whatever your opinions, you now have a test case against which to apply them. In the past, I decried the software freedom debate as much ado about nothing - the 21st century equivalent of how many angels can dance on the head of a pin. But now we see it in real-world terms where something tangible is at stake.”

November 5: New York Times - E.U. Faces Tricky Decision on Oracle Deal
“The dilemma has prompted speculation that the best outcome for Ms. Kroes would be for Oracle to drop its interest in buying Sun, relieving the regulators of the need to make a choice.”

November 5: Wall Street Journal - SAP’s ‘Invitation’ to Oracle
“On September 15, less than two weeks after the Commission launched its extended probe, SAP CEO Leo Apotheker wrote a letter to Oracle’s Larry Ellison. The letter, which we have seen and hasn’t previously been reported on, reads in full: “As you know, we have significant concerns about Oracle’s proposed takeover of Sun. We renew our invitation to meet to attempt to resolve our concerns and other open issues between our companies. Please let us know if and when you would like to meet.”"

November 6: eWeek - Former CEO: MySQL’s Installed Base Will Keep it Independent
“”MySQL most certainly competes with Oracle,” Mickos said. “And successfully so. But what must be remembered in terms of dollars in that competition, it is not significant enough to warrant an antitrust consideration… “I don’t specifically have an opinion on where it should be,” Mickos told eWEEK. “I’m just saying that there’s no rational argument for not letting the company who’s buying Sun, have all of Sun.”"

Continue to part two.

You see, it has less to do with the the user interface and more to do with the user. Instead of focusing on Windows familiarity, the latest strategy takes advantage of users in a position, whether by trade or preference or chance, to use Linux, provide some savings and maybe even go further in supporting themselves. These are the new Linux desktop users in enterprise and business. While Windows 7 and Microsoft’s dominance will likely continue to hold most of the desktop, there are a handful of significant differences this time around:

1.) The IBM-Canonical Client for Smart Work — a package of Ubuntu Linux, Eclipse, and IBM Lotus and other collaboration and productivity software — was originally rolled out and intended for emerging markets, initially Africa. However, based on customer queries and demand, it is now being offered in the U.S. I believe this may indicate that America, while still behind Europe and other parts of the world in adopting desktop Linux, is keeping up with desktop Linux growth, progress and demand.

2.) Economic conditions are driving reassessments of all enterprise and smaller business IT and planning, including desktop, laptop, netbook and other PCs. This does not mean that desktop Linux will necessarily benefit, but if the server side is any indication, it will gain considerably more interest and use.

3.) New models are changing the way enterprise and other users use a PC. Virtual appliances, virtual desktops and cloud computing all usher in radically new desktop models and make Linux more likely to enter the picture (whether or not customers are aware of it). The movement of the desktop support from the IT helpdesk to the datacenter also bodes well for Linux, which has a strong foothold and following on the server. Furthermore, consistency of Linux across PCs, netbooks, datacenters and networks may also make desktop Linux hardware, efficiency, energy and support savings more dramatic and appealing.

4.) New vendors (non-Linux vendors) will be offering more Linux. We see a range of IT players — service providers, hosters, system integrators, VARs and others — increasingly using Linux and delivering Linux to their customers, who may or may not be aware they are running Linux. This is where there may be most opportunity for desktop Linux among SMBs.

5.) Finally, Windows 7 and the need to upgrade hardware and continue to license OS software and pay for upgrades arrives at a time when it is no longer the norm to refresh desktops every two or three years, and it is increasingly attractive to find a Linux alternative to push licensing costs over to support, where there is great need. This may be one of the last efforts with this older model, particularly considering all of the trends mentioned above with Linux.

The future of MySQL
Monty Widenius urged Oracle to give up on MySQL in order to land Sun while Richard Stallman, Knowledge Ecology International (KEI) and the Open Rights Group sent a letter to the EC urging it to block Oracle’s acquisition of MySQL. All of which prompted Florian Mueller, who it should be noted is working with Widenius as part of his campaign, to claim that there is growing public opposition to Oracle owning Sun’s MySQL.

Meanwhile The VAR Guy reported on rumours that Oracle is to combine Unbreakable Linux and the MySQL database following the completion of its acquisition of Sun, Carlo Piana explained why he offered to help Oracle’s legal team in its attempts to acquire Sun/MySQL, and Matt Asay argued that EU’s MySQL inquiry may backfire for open source.

In the interim, Sun Microsystems is to lay off up to 3,000 people.

Incidentally, one of the implications of Stallman’s letter, as pointed out by Matt Asay and Simon Phipps is Stallman’s admission that the GPL alone doesn’t guarantee software freedom

Best of the rest
# SpringSource released version 3,0 of its Spring Java development framework and also announced tc Server Developer Edition.

# The SCO Group eliminated the positions of CEO and president, waving goodbye to Darl McBride, while announcing a new restructuring plan and the desire to raise funding and sell non-core assets.

# Jive Software announced that it has received $12m from Sequoia Capital in its Series B round of funding.

# REvolution Computing announced $9m in new funding and named Norman Nie CEO.

# The Symbian Foundation announced the release of the platform microkernel (EKA2) and supporting development kit under the Eclipse Public License (EPL). http://www.symbian.org/media/news/pr2009_10.php

# Infobright has appointed Mark Burton Interim CEO.

# Talend launched Talend Integration Suite 3.2.

# BonitaSoft unveiled Bonita Open Solution 5.0 BPM software.

# Open-Xchange and SugarCRM partnered to combine their open source collaboration and CRM software.

# Rapid7 acquired Metasploit, the organization behind the open source penetration testing framework.

# SplendidCRM 4.0 Community Edition runs on Microsoft’s Azure platform.

# Zend Technologies has released a public beta of Zend Server 5.0, the new version of the company’s PHP Web application server.

# IBM and Canonical are teaming up on a Ubuntu Linux-based hybrid cloud computing and desktop product for businesses.

# As Red Hat passed Microsoft’s stock price, CIO.com asked, now what?

# Zmanda teamed up with ParaScale to launch a Disk-to-Cloud (D2C) backup product.

# Sandro Groganz listed the top commercial reasons why open source communities matter.

# The Open Database Alliance entered phase two, with the involvement of Georg Greve.

# A graphical representation of six different models of co-creation/open innovation.

# Bradley M. Kuhn: “Open core is the new shareware“.

# Andrew Aitken: Open Source and The Geographic Divide – Europe and North America.

# Glyn Moody presented the reasons why open source companies need to give up control.

# Savio Rodrigues noted that with open core, the question is when to give up control.

# Sandro Groganz reported on marketing “At the Edge of Open Source Communities and Companies”

# Carlo Daffara argued that COMmunity+COMpany is a winning COMbination.

# James Dixon claimed that the Free Software movement limits its own future.

# IPwatchdog reported that open source success must embrace proprietary features.

# Mark Logic released its open source MarkLogic Toolkit for PowerPoint to integrate Microsoft Office PowerPoint 2007 with MarkLogic Server.

# Savio Rodrigues argued that open source vendors should focus on value and price.

# TechWorld reported that IBM is to offer open source VoIP for small businesses.

Critics fear that the move will legitimise the BNP’s far-right views, while the BBC has defended the invitation on the grounds that its role as a politically neutral public service broadcaster would be undermined if it excluded the BNP - which won its first European Parliament seats this year with an estimated million votes.

To me it is clear that no matter how abhorrent the BNP’s policies on certain issues may be the BBC has a duty to invite it to participate as it is a legitimately recognised political party. We live in a society that protects and promotes free speech with the only limit being when the speech in question goes beyond what is deemed to be legally acceptable.

Many would argue that the BNP’s policies have already overstepped that mark, and I personally have a lot of sympathy for that view, but the illogical nature of the argument against the BNP appearing on Question Time is that campaigners are not seeking to prevent the BNP appearing on the BBC at all, but only from appearing on Question Time.

MP for Neath Peter Hain has stated that the BBC’s “obligation to respect the right of a minority who have voted for the BNP… is already adequately upheld in BNP party election broadcasts, and when they are interviewed on political programmes such as Today or Newsnight.”

On Monday night Hain appeared on Newsnight (UK residents only) to attempt to explain to an incredulous Jeremy Paxman why it was okay for the BNP to appear on some BBC programmes but not others, prompting Paxman to ask facetiously; “what about Woman’s Hour?”

I was reminded of this discussion while reading the open letter to the European Competition Commission by Richard Stallman, Knowledge Ecology International (KEI) and the Open Rights Group arguing that the EC should block Oracle’s acquisition of MySQL via Sun. It followed shortly behind the press release sent out by Monty Widenius which explained why he believes Oracle should sell off MySQL to ensure that it is in a position to acquire Sun.

The overall tone of both documents imply that it would be okay for some vendors to acquire MySQL but not others, and that Oracle is not a suitable candidate. The Stallman/KEI/ORG letter explicitly states: “MySQL was acquired by Sun in February 2008, in a transaction welcomed by many users because of Sun’s good reputation among advocates of FLOSS software, and a belief that Sun would position MySQL as a strong competitor.”

Meanwhile Monty Widenius’ press release states: “Oracle should resolve antitrust concerns over its US$7.4 billion acquisition of Sun by committing to sell MySQL to a suitable third party.”

So it was okay for MySQL to be acquired by Sun and it would be okay for MySQL to be acquired by a “suitable third party” but it is not okay for MySQL to be acquired by Oracle.

The “What about Women’s Hour?” response to this letter is “What about IBM?” Would Big Blue be considered friendly enough to FOSS to be allowed to acquire Sun and MySQL had it gone ahead with its plans? What about SAP? Or EMC? Or HP? While we’re asking questions, where were these campaigners when Yahoo was buying Zimbra? Or Citrix was buying XenSource? Or VMware was buying SpringSource?

The answer, of course, is that those acquisitions were not seen to be potentially anti-competitive. We live in a society that protects and promotes free markets with the only limit being when the impact on competition goes beyond what is deemed to be legally acceptable.

It would be understandable if the complaints focused on the negative impact on competition. However, the Stallman/KEI/ORG letter only mentions competitiveness in passing, and Monty Widenius’s press release doesn’t refer to it at all.

Instead they have resorted to spreading what can only be described as fear, uncertainty and doubt.

“If Oracle is allowed to acquire MySQL, it will predictably limit the development of the functionality and performance of the MySQL software platform,” begins the Stallman/KEI/ORG letter.

Florian Mueller, quoted in Monty Widenius’s press release, took things a step further: “every day that passes without Oracle excluding MySQL from the deal is further evidence that Oracle just wants to get rid of its open source challenger.”

It is a claim that borders on the absurd. Could it not be that every day that passes without Oracle excluding MySQL from the deal is further evidence that Oracle just wants to keep MySQL and use it to its advantage? Not least since Larry Ellison said Oracle has no intention of spinning off MySQL and further promised that MySQL will receive more money for research and development.

The Stallman/KEI/ORG letter further describes Ellison’s statement that MySQL does not compete directly with the Oracle Database as “outlandish” despite the fact that it reinforces the competitive history of MySQL, as confirmed recently by former MySQL CEO Marten Mickos.

We have previously noted that Oracle could kill off MySQL as a commercial product if it wanted to, but probably won’t, but that the acquisition does pose a potential threat to the the competition.

The only possible argument in favour of the EC blocking Oracle’s acquisition of MySQL is that it is damaging to competition, not that it is damaging to MySQL itself. Otherwise we are asking the EC to rule on whether Oracle is open source-friendly enough to own MySQL, and that is neither something that an organisation like the EC is equipped to answer nor something that it should be asked to decide.

The most interesting response, for me, came from Savio Rodrigues since he questioned whether the theory would work in reality. specifically Savio questioned whether commercial software vendors would join a community development project created by an established open core vendor. Using an example of a middleware vendor called ABC as the company giving up control Savio wrote:

“XYZ would not have the established user base or associated brand that ABC does; two key elements needed to sell the proprietary extensions. Also, since ABC has a head start on the proprietary extensions, and has likely chosen to develop higher value extensions first, XYZ has little opportunity to differentiate by delivering valuable proprietary extensions. It’s hard to envision the business case for XYZ to enter the community around ABC’s community edition project.”

This is a valid point, and clearly not all projects are going to be suitable for the transition I have suggested but I do think that Savio’s example is limited by an assumption that there is only one way to monetize an open source project. Consider another example involving a database vendor called - I don’t know - MyXYZ.

MyXYZ managed to create a new market opportunity with its open source database by differentiating from the established proprietary vendors. The company started off with a dual license model but once the open source version became ubiquitous shifted its strategy to providing additional features via a managed service to paying customers only, and has flirted with proprietary extensions. The company has continued to differentiate its database from proprietary rivals allowing an ecosystem of vendors to emerge building their own extensions to the core database products to take it into new areas not targeted by MyXYZ itself. At the same time the core open source database has become so ubiquitous that an ecosystem of support providers and consultants has also emerged. Because MyXYZ continues to dominate the development of the core database as well as its own extensions there is an amount of duplicated effort while the ecosystem around the core database has also begun to fragment based on frustration about the progress of the database under MyXYZ’s control (we will ignore for a moment the rumour that MyXYZ might even be acquired by a larger rival).

It would be better, I would argue, for MyXYZ to open up the process of contributing to the core database as this would avoid duplication of effort, and enable the database to evolve in response to the multiple interested parties. MyXYZ could continue to contribute to, and in all likelihood lead, the project, while focusing its development effort on the features that best suit its paying customers.

Now that’s an isolated example, clearly, and undoubtedly it’s a lot easier in theory than it is in practice but I believe in certain circumstances the opportunity to take the community route remains even after a vendor has established itself.
———————————————————————————————————————
One of the issues I didn’t cover in my post is the impact such a shift would have on users of the open core version. I had intended to tackle that in a second post, but Carlo Daffara beat me to it with his explanation of why COMmunity+COMpany is a winning COMbination. Rather than repeat what Carlo had to say I shall simply point you in the direction of his post with the following excerpt:

“the current structure is not the most efficient to enable participation from outside groups- if you look at the various open core offerings, the majority of the code is developed from in-house developers, while on community-managed consortia the code may be originated by a single company, but is taken up by more entities… Having then a pure proprietary company that sells services or add-ons also removes any possibility of misunderstanding about what is offered to the customer.”

———————————————————————————————————————
The issue of customer satisfaction was at the heart of Bradley M Kuhn’s response, which was entitled. “Open Core Is the New Shareware”. With regard to the title, I disagree that open core equals shareware. I agree, however, that open core done badly might equal shareware. Done properly open core enables a full and complete core open source project that is of value to its users, as well as proprietary extensions that are of value to users that are prepared to pay for additional features. If the core is “crippleware” then the strategy is wrong.

That said, Bradley makes some interesting points, including the suggestion that the current venture capital model is unsuited to monetizing open source. This is an issue I nearly deviated into in my previous post, and is a subject that we addressed in our report into VC investment for open source earlier this year. Arguably, though, is not unique to open source as the costs of starting up and running a company - whether it is based on open source or SaaS have dropped rapidly in recent years while the demands of VCs for levels of investment and returns have increased.

Bradley may well be right that “the best Free Software companies are the small ones, 5-10 employees, that do consulting work and license all their improvements back to a shared codebase” but his suggestion that this should be the vision of future monetization of FOSS is completely detached from commercial reality and would actually limit the adoption of free and open source software. Even if it were possible to somehow block proprietary and open core vendors from commercializing free and open source software the move would effectively isolate FOSS from making any further commercial impact.

Funny how we were contemplating similar concerns about MySQL’s open source fate when Sun acquired MySQL for $1 billion in 2008. Sun ended up having minimal impact on the open source nature of MySQL, thanks in part to the force and direction of the MySQL community.

Still, would we expect Oracle to do any worse than Sun in terms of supporting integration and continued progress for their new product? I think we would actually expect quite a bit more from Oracle, which has illustrated its ability to both execute and integrate numerous times in the past.

The argument to keep Oracle from acquiring MySQL is reminiscent of the loud calls to keep Microsoft from getting some of its software licenses approved as open source by the OSI. It also has parallels to the restriction of open source software from military and weapons uses. Although it might not be tasteful to all supporters of free and open source software, their very mantras and doctrines dictate their software and communites are open to all equally. Anything less is a contradiction of the core ideology of free and open source software.

We’ve expressed our own concerns about Oracle taking over MySQL, including the idea that Oracle may have a somewhat limited appreciation of open source community. However, in the end, and with reinforcement at last week’s Oracle OpenWorld, the company appears to realize the value and purpose of MySQL and its community. Whatever Oracle does not know or understand about MySQL, its community, its customers or open source, the vendor will most likely learn quickly if history is precedent.

*Our take on Q3 and current funding for open source
*OSI part of renewed definition discussion, status suspended
*Our latest special report – Warehouse Optimization
*Get ready for The 451 Group’s 4th Annual Client Conference

iTunes or direct download (23:21, 5.3 MB)

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“Tracking the open source news wires, so you don’t have to.”

# JetBrains announced the free Community Edition of its Java IDE, IntelliJ IDEA under the Apache license.

# Jeremy Allison provided his views on Mono, Samba, Microsoft and patents.

# Joe ‘Zonker’ Brockmeier raised the question: open source marketing - lead with Free or benefits?

# Mark Radcliffe clarified his view that the GPLv2 is not legally unsound, but it has challenges.

# Alfresco launched its Records Management Module for governance and retention, certified by the US DoD.

# Oracle updated its Xen-based VM Server virtualization software.

# Nuxeo updated its document management software with Nuxeo DM 5.3.

# Carlo Daffara argued that COMmunity+COMpany is a winning COMbination.

# Lina Software released the beta version of LINA 1.0, its software to run Linux apps on any operating system.

# The VAR Guy reported that open source IP PBX vendor Digium is profitable and growing.

# A UK education partnership was launched with the intention to save £60m a year using open source software.

# Matt Asay reported on the logic of balancing proprietary and open source software.

# Brian Prentice reported on open source’s dying romantic narrative.

# Seth Gottlieb provided his views on open core.

# Nicholas Goodman asked What if Hot Dog vendors sold you Power Tools?

# Clustercorp created Rocks+Hybrid, a commercial Rocks Cluster distribution for dual-boot Linux and Windows systems.

# Engine Yard released the source code that runs its Rails Development Directory.

# Pharmaceutical distributor, 3A Pharma, is replacing its legacy ERP system with Compiere ERP.

# Banca IFIS adopted open source database software and 24-hour support services from Ingres.

# The Apache Software Foundation’s president dissected the “Apache Way”.

# Olliance pondered open source software’s lack of success in the SMB market.

# The VAR Guy reported on how the channel is fueling Compiere’s 50% growth rate.

The idea has been the subject of some interesting conversation on Twitter this week, not least since Sun’s Simpn Phipps asked the very pertinent question “But if your strategy is open core, why would you do that?”

As I’d previously noted, the main reason for making this step would be “in order to benefit from and encourage a collaborative development community” - something that is often (although not always) lacking from vendor-controlled open source development projects.

Matt Asay also came up with a nice summary of why this move might make sense this week when he noted that “vendors that have proprietary selling points elsewhere don’t need to control open-source code.”

In fact I would go so far as to say that vendors that have proprietary selling points elsewhere are wasting resources and energy trying to control open source code. The argument in favour of control is that it enables the vendor to drive the development direction of a project and reduce the potential for forking.

This is a very glass-half-empty view of open source development, however. Wouldn’t it be better to take the glass-half-full view that a true open source community adds more value in terms of expanding the ecosystem and potential uses for the code?

If the open source core has value it will attract a true community that will expand its development, with the ongoing contribution of the original vendor of course, while if the proprietary extensions are valuable enough the original vendor ought to be able to compete with proprietary rivals even if they are using the same code to build rival products.

Of course, giving up control of a project is easier said than done, and as Daniel Chalef noted “With investors interested in IP ownership & governance, giving up control can be challenging to do”.

It is often said that one of the reasons that the open core model has proved popular in recent years is that it is the chosen open source monetization strategy of venture capital investors. Our survey of VCs as part of our Open to Investment report appeared to back that theory up.

We also asked investors to choose from between five different licensing strategies for an imaginary startup. 19.7% said they would be more inclined to invest in a vendor mixing open source and proprietary licensed software and 6.6% chose a vendor with 100% proprietary licensing. Not one investor was more likely to invest in a vendor with 100% open source licensing.

However VCs have invested in vendors that do not control the open source code they are monetizing (the various Linux distributors, EnterpriseDB, OpenLogic and Acquia spring to mind) and there are investors out there that really understand that open source can provide a development benefit, rather than simply acting as a market disruptor. The issue in this context would be to convince investors that there is more value in giving up control of the development of the open core than there is in controlling it.

Conceptually this is not that different from persuading investors in a proprietary company to open up the source code to a particular project in order to fuel interest in proprietary products - in fact it ought to be easier given that the code is already open source. In that context it was interesting to see JetBrains announce the open source Community Edition of its Java IDE, IntelliJ IDEA this week.

In particular it was interesting to see that JetBrains chose the Apache license. This is not the same thing as handing the code over to the Apache community, to be sure, but it does demonstrate an acceptance that trying to control what others can do with the code is not necessarily in the best interests of JetBrains and its Ultimate Edition customers.

JetBrains has the confidence to do this because it retains the profile of the IntelliJ company as well as the proprietary Ultimate Edition, which will continue to be the revenue generation vehicle.

We have previously discussed the theory that the GPL is a better licensing choice than a more permissive license such as the BSD license for vendors establishing commercial dominance around an open source project.

That remains true today. What I now believe is that for vendors that have used the GPL to control a project and establish commercial dominance with proprietary extensions, a more permissive license is likely to act as a better method of expanding the development opportunities for that underlying project as well as the commercial opportunities for those proprietary extensions.

In other words, control will only get you so far in terms of exploiting open source as a distribution mechanism. To get the full benefits of open source as a development model, you have to be prepared to get out of control.

See also:

The shift is related to, although not dependent upon, a predicted move away from vendor-dominated open source projects towards vendor-dominated open source communities.

I wondered if we might have some data at hand that proves or disproves the theory that the balance has shifted back towards open source communities rather than vendor-controlled projects and turned to our database of investments in open source-related vendors.

The results are pretty interesting. Below is a chart showing the proportion of series A investment deals in each year for open source-related vendors depending on whether the underlying open source development project is controlled by a community or a vendor.

What the chart indicates is that while vendor-controlled projects remain the preferred approach for VC-backed open source-related vendors, the vendor-controlled approach has declined in the past two years.

Meanwhile following the early dominance of community-controlled projects (a result of the early Linux start-ups), the popularity of community-controlled projects has been rejuvenated in the last couple of years.

Of course, those communities are now dominated by vendors, but they are built on a foundation of collaboration and (there’s no other word for it) community - that is often lacking in many vendor-dominated projects.

Of course, this chart only includes VC-backed open source related vendors so two major constituents of the commercial open source ecosystem are missing: previously proprietary vendors using and contributing open source code, and bootstrapped start-ups.

I’ll return to this subject to take a look at those projects in another post.

I haven’t spoken to GroundWork in a while (although Jay has) so I don’t have any particular insight into its financial performance, but I would make the following observations:

1/ I would be more concerned if GroundWork was raising tens of millions in series D funding.

2/ I don’t know if anyone’s noticed but we are in the middle of an economic crisis.

With regards to the first point, in our CAOS 11 report, Open to Investment, we noted that the biggest benefits of open source software, according to investors are: lower development costs (78.7% of respondents), followed by lower distribution costs (60.7%), reduced sales cycle (34.4%), and better-quality software (32.8%). Given that, we should expect to see open source-related vendors raising less funding than proprietary counterparts (particularly those like GroundWork that are partially based on community developed software).

For example, figures from ChubbyBrain indicate that $6.1bn in venture capital funding was invested in 680 deals in Q3, giving an average deal size of just under $9m. Our figures for open source-related vendors showed an average deal size of $7.7m in Q3.

With this in mind, I would actually be concerned if we saw a company like GroundWork - which had already raised $24m in its previous rounds - raising a significant later-stage round. That, to me, would be a warning sign that something was not necessarily working.

Bear in mind that the more money a company raises the more the shareholding of its founders and executives is diluted, and any company looking to raise a large sum in the current climate is likely to have to give up a lot in return. Sometimes a significant late stage deal just smacks of a last throw of the dice.

Consider, for example, Virtual Iron, which raised a $13m series D round in November 2007 followed by a $20m in equity capital in January 2008. Unfortunately the company only generated revenue of $3.4m in 2008 and was acquired by Oracle in May 2009. We don’t know how much Oracle paid for Virtual Iron, but we assume its investors were not retiring on multiples of its $64.5m total funding.

With regards to the second point, the reduction in average deal sizes for VC deals tracked by CAOS this year has been entirely predictable. Venture funding is available for both early and later stage deals if the business opportunities are right, but we have seen a number of vendors being acquired for cents on the dollar where we would have expected them to be in a position to raise more funding in more favourable economic conditions.

Additionally, we’ve seen a number of examples of modest later stage deals being done by vendors to see them through the current economic malaise with a view to considering their options once the economic situation calms down.

Which is not to say that vendors raising small later-stage rounds right now are guaranteed success, or those raising larger later-stage rounds are throwing good money after bad - but sometimes there is more (or less) to these deals than meets the eye.

Follow 451 CAOS Links live @caostheory on Twitter and Identi.ca
“Tracking the open source news wires, so you don’t have to.”

# Larry Ellison promised MySQL will receive more money for development and research, while Oracle maintained that it is committed to Java and open source developer communities.

# GroundWork raised $5m series D funding from Canaan Partners, Mayfield, JAFCO Ventures and SAP Ventures.

# InformationWeek reported that Motorola has vacated its seat on the LiMo Foundation board and will focus on Android.

# EnterpriseDB updated its Postgres Plus Standard Server open source database to version 8.4.

# Eric Raymond doesn’t like existing forges, and offered some advice on how not to solve them.

# Sandro Groganz argued that the longer someone uses FOSS, the more important the “freedom” aspects become.

# Matt Asay asked Is it Postgres’ time to shine?

# Sun announced the release of GlassFish Communications Server 2.0, designed for telecoms service delivery platforms.

# JitterBit released version 3.0 of its commercially licensed Enterprise MX edition.

The “open source vendor” debate in a nutshell
This week John Mark Walker asked for companies to be more transparent about where they fall on the openness spectrum. Evidence for why this is important came from Seth Grimes, who argued that you have to understand code words to decipher Pentaho’s commercial open source strategy, prompting James Dixon to argue that Pentaho is no less an open source vendor now that it is offering ClearView under a proprietary license than it was before it licensed the ClearView IP.

Simon Phipps argued that the problem Seth identifies is symptomatic of the fact that it has an open core licensing model. However, what Seth points out is that Pentaho is using the term “open source” liberally to apply to both open source and proprietary code. That is not actually an issue of the licensing model, but a related issue of branding and communication. If Pentaho were more explicit in its explanation, as John Mark Walker advises, the the problem Seth identifies diminishes. As I previously argued, being absolutely transparent about licensing is one of the key strategies that could be used to ensure a sustainable implementation of the Open Core model.

However, Pedro Alves does highlight one of the problems open core creates from a user’s perspective, again using Pentaho as an example. Meanwhile Sander Marechal argued that Open Core offers the worst of both worlds.

We’re seeing signs and hearing that previously NA-centric vendors, such as Red Hat, are aggressively expanding their presence in foreign markets such as Europe, South America, Asia-Pacific and elsewhere. Similarly, previously European vendors are moving more numerously and aggressively over to North America and other markets, including Novell and its SUSE Linux. Another good example is the wave of CMS vendors coming to America.

I have no doubt that we will see the same thing among other cross-markets, with Asia, India, South America, Australia, Eastern Europe, the Middle East and Africa all involved.

We’ve also previously discussed how open source software development and business only perpetuates the global nature of the Internet and participation and collaboration from all around the world. The OSA-OW2, other consolidation and other partnerships - among open source, traditional and mixed vendors, SIs, VARs and others — should continue, with more customer prospects and competition in all markets, which I believe is good for customers and for open source.

Follow 451 CAOS Links live @caostheory on Twitter and Identi.ca
“Tracking the open source news wires, so you don’t have to.”

# Engine Yard raised $19m in Series C funding from the likes of Benchmark, DAG, Presidio and Amazon.

# Red Hat and Microsoft are now providing joint support for virtualization interoperability options.

# DataSync raised $1.2m and announced a partnership with SugarCRM.

# Simon Phipps began building a scorecard to assess “open source businesses”.

# Marten Mickos urged the EU to approve Oracle’s acquisition of Sun, and therefore MySQL.

# Compiere released an Enterprise Edition of its open source ERP for multi-server configurations.

# Ingres targetted MySQL, proprietary rivals with version 9.3 of open source database.

# Lessons learned from a service-based business model. An excellent and very timely post from OpenLogic.

# Red Hat claimed 75% of the paid Linux market, prompting Novell to dispute Red Hat’s claim to (total) domination of the Linux market.

# Richard Stallman’s take on the CodePlex Foundation prompted Sam Ramji to maintain that free software is not the opposite of commercial software, in the eyes of CodePlex.

# eXo Platform expanded to North America, hires Bob Bickel, Edwin Khodabakchian and Sacha Labourey as advisors.

# Sparxent updated its XAware open source data integration software to version 5.4.

# Terracotta released Terracotta for Caching, a distributed cache product based on the Ehcache caching API.

# John Mark Walker explained the importance of open source as a development model in establishing a market presence.

# PrismTech released an OpenSplice DDS Connector for Apache Camel for systems integration and SOA connectivity.

# Only here for the beer. Paul Rubens reported on the adoption trends indicated by Actuate’s latest open source survey.

# Praxis and AdaCore released a GPL version of the SPARK high assurance software development product.

# Mckoi Software released MckoiDDB, an open source distributed database system.

# Jason Perlow reported on the future of open source thought leadership.

# MuleSoft announced the general availability of Tcat Server, Apache Tomcat distribution.

# GroundWork announced a new pricing structure and entry level monitoring product.

# Funambol released an open source 4G mobile cloud platform for device management and synchronization.

# Misys Open Source Solutions unveiled a new carbon trading product for UK.

# Bright Computing was launched to manage HPC Linux clusters.

# The IT head of London Borough of Camden in the UK explained how government needs to become expert member of communities rather than expert at governing them.

# Vyatta updated its open source router, firewall and VPN software.

# Take James Dixon’s quiz to work out if you are aligned with free software, open source, or proprietary.

# Open-Xchange Server Edition for Univention Corporate Server is targetted education, public admins and SMBs.

# ReadWriteWeb profiled Pachube, an open source platform for creating applications related to the Internet of Things.

# OrangeHRM updated its open source human resources management software to version 2.5.

To put it another way, this is an attempt to create a definition of “open source vendor”. We have discussed this issue before, and I have expressed our willingness to help out if we can.

At the same time, if I am honest, I am in two minds about whether this is a valuable exercise, and I think it is worth considering why we should want to do this, as well as how. The question, to me, is: should the OSI (or any other body for that matter) be approving open source development and business strategies?

NO
Any attempt to approve certain business practices is, by definition, also going to involve disapproving of certain business practices. I would question whether doing so is counter to one of the reasons for the creation of the open source movement - specifically, as Eric Raymond explained there was: “a pragmatic interest in converting these people [corporate types] rather than thumbing our noses at them”. To put it another way, the plan to approve certain business practices is, ‘a bit free software’ for my liking (and that, I am aware, is precisely the point for some involved in this - returning the conversation to software freedom). I would agree with Jason Perlow, who wrote this week, that the open source movement should “continue as a culture of inclusion and.. not be the arbiter of behavior or demonize those who cannot yet or refuse to join us”.

YES
The open source movement is made up of many differing views and debates about freedom and openness are an important part of a lively ecosystem. At the same time, these debates are confusing for outsiders and do not present a good image of open source, especially when they result in ad hominem attacks and name calling. If these debates are inevitable, then I believe that it is better that they are focused and have a chance of generating in a meaningful result. The conversation that Simon is starting would appear to offer both that focus, and have a chance of producing a meaningful result (although it will not be easy - the phrase ‘can of worms’ springs to mind). Also, from a purely selfish practical perspective, sometimes in the course of our CAOS research we do want to draw a line around which vendors we want to consider “open source vendors” for particular research (such as measuring venture capital investment in open source vendors). I would much rather we were able to use scorecard that had been agreed industry-wide than our own definition.

Clearly, since I have expressed our willingness to help this scorecard process the positive aspects of this exercise outweigh the negative aspects in my mind. However I do think it is important to approach this effort in a spirit of inclusion, rather than exclusion, and to make an effort to explain why the approved business practices are seen as beneficial in terms of both software freedom and commercial interests.

Even if we look only at the traditional desktop and notebook PC market, I was given renewed optimism for ‘desktop Linux’ last week when Dell rolled out its latest Latitude notebook computers. Sure, the laptops ship with Windows as the primary OS, but they also feature an instant-on Linux option, based on Linux and Firefox browser software, that is booted and run off a separate system-on-chip with ARM processor.

I’ve written before about how big I believe this opportunity is for desktop Linux, and I believe these new computers are another sign that many, if not most PCs, will ship with these instant browsing, media-playing and communicating operating systems as options and on the side. Dell continues to lead the way in changing desktop Linux from a farce to a force, though there is certainly more for it and other manufacturers to do. Still, these growing auxiliary OS options will be almost all Linux, and believe me, when users have the option of instant Linux or wait for Windows, they’ll almost always choose the former. This may even be a place where desktop Linux will effectively compete and perform against Apple.

When users must have Windows for special applications, devices or media that are not supported on Linux, they will only be reminded of the wait, hassle and frustration that a few more seconds can bring. In the meantime, Linux application and driver support continues to broaden out to cover most common tasks and activities.

In short, the quick-boot auxiliary Linux is among the free operating system’s fastest and most direct routes to desktop respectability and market share.

The OSI’s corporate status is suspended?
According to the website of California Secretary of State, Debra Bowen, yes.

When did this happen?
We’re not sure at this stage. We were alerted to the news via a comment left by Thomas Lord on the Simon Phipps’ blog. Wikipedia indicates that the status has been suspended since at least September 2, 2009.

How did this happen?
Thomas Lord has claimed to be at least partially responsible, having filed a compliant with the state attorney general office following a dispute with the OSI board. See his comment below.

What does the Open Source Initiative have to say about it?
We asked OSI president, Michael Tiemann, and general counsel, Mark Radcliffe, a number of questions related to the suspension. We received the following response from Michael:

“Like many non profits that are staffed by volunteers we have not always gotten our paperwork into the state on time. We have been working with our counsel and accountants to satisfy the state’s requirements for several months, but have not been able to make the submissions as swiftly as the state wanted. Consequently, they have suspended our corporate status. We are working hard to satisfy their requirements and anticipate that we will be able to do so in the near term. Since OSI does not conduct business in a conventional manner, i.e. we are not selling products, we believe that the suspension will have a minimal effect on our mission.”

That doesn’t sound so bad.
No, it doesn’t. With respect, however, we believe the situation is more serious than that statement suggests.

How so?
Regardless of whether the OSI sells products in a conventional manner, the suspension appears to legally prevent the OSI from actively going about its business of approving licenses and stewarding the Open Source Definition.

According to the State of California’s Franchise Tax Board website:

“Suspension or forfeiture affects a business in many ways:
• The business loses its rights, powers, and privileges to conduct business in California.
• The business loses the right to use its business name in California. In turn, another business could register with the suspended or forfeited business’ name, and the name would then belong to the other business.
• The business cannot initiate lawsuits, defend itself against lawsuits, or enforce its legal contracts. But other parties can enforce their terms in these contracts.
• If the business enters contracts while suspended or forfeited, it can never enforce those contracts unless it obtains relief of contract voidability.
• Suspensions and forfeitures are public information.
• The business loses the right to get an extension to file a tax return.”

So the Open Source Initiative could lose it name?
Yes it would appear so. In fact, it may already have done. If that were the case we believe it would impact the OSI’s ability to enforce its trademarks related to “OSI”, “Open Source Initiative”, and the OSI logo.

What about the open source trademark?
There isn’t one (for an explanation of why, see this 1999 announcement by Eric Raymond). The OSI does not have any trademark related to the term “open source”. However, the respect in which the OSI is held, combined with the trademarks that it does hold, has enabled the OSI to discourage the use of the term “open source” with software that does not use OSI-approved licenses. Since the the corporate status of the OSI is suspended its ability to do so in the future is in doubt.

What does this mean for open source?
It means that the organisation responsible for stewarding the Open Source Definition and approving open source licenses is not currently legally allowed to operate in the state of California, or defend itself against legal claims, and may lose its name. Beyond that, we do not know at this stage.

Why is The 451 Group making this information public?
As noted above, suspensions and forfeitures are public information and the bare facts are already available.

We are concerned about the impact that the suspension of the Open Source Initiative could have on open source developers, users, projects, and associated investors and vendors. The 451 Group has clients in all of the above categories so we believe it is appropriate to inform them of the suspension of the Open Source Initiative’s legal status and how it might impact them. We are in the process of creating a formal analysis of the situation for 451 Group clients.

We also believe that the potential impact is significant enough that, while the bare facts are already public, the issue deserves to be brought to the attention of the wider open source community. We will let the members of that community come to their own conclusions about what it means to them.

How can a company be suspended in California?
According to the website of California Secretary of State, Debra Bowen, a Californian company can be suspended:

“1) by the Franchise Tax Board for failure to file a return and/or failure to pay taxes, penalties, or interest; and/or 2) by the Secretary of State for failure to file the required Statement of Information and, if applicable, the required Statement by Common Interest Development Association.”

It is not clear which body suspended the OSI.

Can the company be revived?
Yes, if it was suspended by the Secretary of State then it must file a current Statement of Information.

If it was suspended by the Franchise Tax Board then it must:

“File any delinquent tax returns. Pay any delinquent tax balance, including penalties, fees, and interest. File a revivor request form.”

If it was suspended by both it must:

“first file a current Statement of Information with the Secretary of State and obtain a letter of proposed relief from suspension or forfeiture. Upon receipt of the proposed relief letter from the Secretary of State, the business entity should complete an Application for Certificate of Revivor (Form FTB 3557) and submit the application along with a copy of the proposed relief letter to the Franchise Tax Board.”

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“Tracking the open source news wires, so you don’t have to.”

This bumper edition of 451 CAOS Links is brought to you courtesy of the Open World Forum’s temperamental wireless connection.

Patents
# Red Hat urged the Supreme Court to to make clear that it excludes software from patentability, while the SFLC and the FSF also filed briefs with the US Supreme Court arguing against software patents.

Investment and M&A
# The WSJ reported that EC document suggests Oracle intends to keep MySQL to compete against Microsoft, prompting Matt Asay to report that Oracle’s interest in MySQL has been misread.

# The OW2 Consortium and the Open Solutions Alliance have merged.

# Pentaho acquired LucidEra’s Clearview, will be packaged as Pentaho Analyzer Enterprise Edition, while Julian Hyde explained how it will fit into Pentaho’s business model.

# Intalio raised $1.5 million in equity and debt.

# Ruby-on-Rails startup FiveRuns has been acquired by WorkThink.

# OpenLogic explored what has happened to OpenProj following its acquisition by Serena Software. Its questioning had the desired effect.

# Benchmark Capital hired former MySQL CEO Marten Mickos as an Entrepreneur in Residence.

Adoption
# The London Stock Exchange confirmed that it will replace its TradElect platform with a Linux-based alternative.

# The European Parliament selected Mule ESB as the backbone for its service-oriented architecture (SOA).

# BT and Unisys implemented the Jaspersoft Business Intelligence Suite to support their Statistical Data Warehouse.

# Portland has unanimously approved a resolution to open governmentt data and encourage the use of OSS.

# Peru’s Ministry of Housing, Construction and Sanitation is now using Red Hat, Alfresco and Zimbra.

# A survey indicated that 96% of French public sector agencies are using open source.

Business strategies
# Truth in labelling: Simon Phipps called for OSI definitions for development and business models.

# John Mark Walker asked Open-Core or open snore?

# The real issue is who controls your software. Good, reasoned argument by Carlo Daffara.

# Tarus Balog weighed in on the free/open source victory debate.

# James Dixon published Misunderstanding open source #3: applying ‘Free Software’ religion to open source business models.

# Eric Barroca explained why open source platforms are likely to succeed against proprietary platforms.

Products and services
# Cloudera launched Cloudera Desktop including a monitoring client for Hadoop applications, while GigaOM asked, Is Hadoop champion Cloudera the next Red Hat?

# Funambol launched version 8 of its mobile sync and email software, including new Ajax MyFUNAMBOL portal, while Roberto Galoppini reported on how Funambol is walking a tightrope with its new proprietary approach.

# Pentaho extended its unlimited usage deal for start-ups to its entire BI suite.

# Talend updated Talend On Demand, its SaaS data integration platform.

# Untangle updated its Internet security technology to version 7.0.

# Zmanda released version 2.0 of its Zmanda Cloud Backup (ZCB) product as well as aversion compliant with the EU Data Protection Directive.

# Open-Xchange released OXtender for Business Mobility, which connects with Android, BlackBerry, iPhone, Nokia, Windows Mobile devices.

# Yahoo’s Zimbra division launched Zimbra Collaboration Suite (ZCS) 6.0.

# Microsoft Research unveiled a snapshot of Barrelfish, its multi-core operating system, under the BSD license.

# AMD and Pixelux announced a joint development agreement around the open source Bullet Physics engine.

# Objectivity launched an open source developer network to dive interest in Objectivity/DB.

# The New York Times will release the next version of its Document Viewer under an open source license.

# Six Apart opened up TypePad API, launches TypePad Motion microblogging application.

Trends
# Andy Updegrove took a second, glass-half full, look at the Codeplex Foundation.

# Cyanogen developer, Steve Kondik, declared himself sympathetic to Google’s position on Android.

# OSS Watch reported that software sustainability is the result of a combination of openness and strong leadership.

# Daniel Chalef reported on how language and cultural diversity is driving open source SI growth in Europe.

# Savio Rodrigues warned against confusing open source with open standards in the context of exit costs.

# The FSF offered a bounty for finding non-free software in free software distributions.

# Somewhat inevitably: http://boycott-boycottnovel.com.

# MonitoringForge.org claimed 1,000 registered members in the first six days.

Open Source Think Tank attendees were split into teams and asked to come up with a list of the three biggest issues facing open source; pick the biggest priority; and suggest a potential solution. Looking around the room, several groups had business models somewhere in their top three*.

It was also clear during the session that there was considerable concern amongst those involved about the dilution of the open source brand, with a couple of groups naming it as the biggest issue (their solutions: a coordinated campaign of education; and an OSI-led effort to define approved development and business strategies – which is precisely what Simon Phipps is advocating for).

Concern over the dilution of the open source brand and confusion over the best way to make money from open source are two issues with a common thread: the Open-Core licensing model (an open source project combined with proprietary extensions for paying customers).

Those that wish to protect the open source brand see Open-Core as a dilution of the meaning of open source that is spreading confusion; while those that wish to build sustainable businesses around open source are aware that many vendors and VCs see Open-Core as the solution to their problem. Can the two be reconciled?

During his speech to the Open World Forum, Michael Tiemann commented that the move to free eradicates the traditional concept of product, and shifts the value that a company can provide to customers to services.

In this context it is possible to see that pure open source software approaches to making money from open source are service-led, while the Open-Core approach remains product-led.

Or, as Mark Shuttleworth put it at today’s BT Accelerating Enterprise adoption of Open Source Software event in London, “the move to services is not being led by open source companies themselves - they have modeled themselves on the companies they are trying to dislodge.”

This is perhaps understandable since, as Mark also explained, it takes time for user companies to create strategies around consuming technology as a service, rather than as a product.

Either way, if Michael Tiemann is correct, the Open-Core model is likely to be short-lived, since it mistakenly continues to focus on product, rather than service as the main way to deliver value.

I would agree with my CAOS colleague Jay Lyman’s assessment that we may be starting to see a return to support and other services, rather than commercial code and licensing, as the preferred mode to directly monetize open source.

However, we are also seeing the increased use of open source within the development of proprietary products by companies like IBM, Day Software and Oracle. The theory that free necessitates a services approach assumes that the vendor is trying to directly monetize open source software. Clearly this is not always the case, and there is still a market for products – proprietary products – that benefit from components developed by collaborative open source communities.

I have also previously questioned whether Open-Core is sustainable in the long-term, although for me the issue is that if it is used with GPL software and vendor-dominated development models (which it typically is, under the vendor-controlled Open-Core model as defined by Andrew Lampitt) then the vendor does not enjoy the benefits of a true collaborative open source development community.

Or, as John Mark Walker recently put it, by failing to enable the community to flourish, vendors are “putting a cap on the possible success and losing the innovation opportunity that comes with a wildly successful community.”

If that is the case, then what is the future of the vendor-controlled Open-Core model? Before considering the options, I want to make four quick statements:

a) Regardless of whether you consider it to be true to “open source” or not, the Open-Core model clearly does work for some companies that are succeeding in generating revenue and fostering community. Balancing the two is hard, but it can be done, and there are examples of companies that are making it work.

b) By “services” we are not simply referring to support services, training, implementation services and consulting. The term also includes software delivered as a service, and features delivered as a managed service – such as via Red Hat Network. It includes anything you can think of, in fact, that can be considered a service, rather than a product.

c) Vendors using the GPL to prevent potential rivals building proprietary products from their code are also often (though not always) locking out potential contributors and missing out on the benefits of a collaborative development community.

d) I’m assuming that any company following the Open-Core model has already worked out which features are appropriate to community users and which are appropriate to paying customers, and has a clear idea of the difference between the two. If not, the community will likely build open source projects that rival the proprietary features. Sorting that out is the priority.

That said, what are the options for vendor-controlled Open-Core vendors faced with trying to build a sustainable business while growing and serving a community, and (potentially) staying true to the definitions of the Open Source Initiative?

To my mind there are three options:

Option 1: Open-Core but not necessarily OSI™-approved
Companies that are successfully executing an Open-Core model by growing revenue and building community have no need to change what they are doing. However, they should be prepared that any attempt to refer to themselves as an “open source vendor” is going to elicit disapproval, or be prepared to fight the plans to use the OSI to define open source development models and business strategies.

Option 2: The open source core should be released under a more permissive license, or better still via an existing community/foundation in order to benefit from and encourage a collaborative development community. This requires a shift to the community-controlled Open-Core model, as defined by Andrew Lampitt. There are two potential options for monetizing this approach:

Option 2a: Open-Core, paid services
Features currently delivered via proprietary licensing are delivered as a managed service to paying customers. This might sound like a giant step, and it does require something of a leap of faith from both the executives and investors, but I spoke to the CEO of one Open-Core company during OWF which is actively considering shifting its strategy in this way. Remember, you’re not competing on product anymore, you’re competing on service. If you’re good enough you ought to be able to compete with proprietary rivals even if they are using what was your code to build rival products.
.
Option 2b: Open code, proprietary products
Stop kidding yourself that you are an open source vendor and focus your attention on developing the proprietary extensions as a complete product that complements and builds on the open source code. If the proprietary extensions are valuable enough you ought to be able to compete with proprietary rivals even if they are using what was your code to build rival products.

For more discussion on the benefits and challenges of Vendor-controlled and Community-controlled Open-Core, see Andew Lampitt’s post. For more discussion on Option 2b, see this post on the patron model of open source commericalisation

*The group I was in certainly rated business models as a key issue as the vendors present wondered how it was possible to build a sustainable business around open source that could grow at a rate that could support a public offering without also involving VCs that would likely sell the company to a proprietary rival if the offer was right. (An impossible dream? We certainly couldn’t think of a solution, although we did manage to “solve” the issues of license confusion and the lack of a single lobbying effort to represent all open source constituents, so the time wasn’t completely wasted.)

For a good, fresh perspective on open core without running through the baggage of the term’s definition and implications, see John Mark Walker’s latest take on open core. While we at 451 Group have remarked on a trending preference for open core models among vendors and VCs — simply reporting what we see and hear and not advocating for any business or development model or license, etc. — I’m beginning to think we may be starting to see a return to support and other services, rather than commercial code and licensing, as the preferred mode to monetize open source.

While we began 2009 indicating that there appeared to be a preference among vendors, VCs and others for open core models, John Mark sets out a good challenge in asking which open core vendor owns its market? While it may indeed be too soon to tell, Red Hat has ridden the supposedly tough economy to healthy gains recently, all on its simple model of supporting free software for fees. While we often talk about different models, it is hard to argue against one that is working in the market.

In fact, at the end of last year and beginning of this year, when we did see a prevalence of attention and strategy around open core models, we began hearing less the common phrase ‘we have a Red Hat model.’ Instead, organizations were looking to monetize enhancements, extensions and wholesale different parts of code and products on top of, alongside or as the nougat center of proprietary products. Speaking to vendors, channel players and end users today, there are signs we’re seeing a return to the ‘we’re like Red Hat’ mantra of explaining and running an open source business. Red Hat has shown an ability to sustain and grow using its model, and even when it might be questioned or prodded or advised by an analyst to change slightly or dramatically, it has stuck with its model and established itself in the S&P 500 as a major enterprise IT player in the process.

Next, I wanted to address the free software and freedom versus open source and business debate. While this is, similar to open source versus proprietary, also viewed often as a ‘war’ that must have a winner and loser, it is my fundamental belief what without freedom, the ideology of free software and organizations such as the Free Software Foundation, commercial open source would be nothing more than some big vendor’s or big consortium’s latest buzzword, campaign, strategy, etc. Conversely, without the billions and billions of dollars that vendors, channel players and others are making and the costs that customers and users are saving thanks to open source software, the ideology would most likely be relegated to academia and philosophy books. Thus, the two — that is free software and the ideology and open source software and the commercial use of it — are symbiotic.

For either side to say the other doesn’t matter or that they have won is also somewhat antithetical to the reality of the situation. The ideology matters because of the business. The business is disruptive and effective because of the ideology. In true symbiotic fashion, they need one another and make each other stronger.

According to our preliminary figures, there were 13 announced funding deals in the third quarter of 2009 worth $99.9m, compared to 16 in the third quarter of 2008, worth $144.8m.

All 13 deals announced in the third quarter of 2009 had a disclosed size, resulting in an average deal size of $7.7m. In the same quarter of 2008 there were 15 deals with a disclosed size and an average deal size of $9.7m.

(For more on the history and future of venture capital investment in open source vendors, see our recent CAOS report, and look out for a follow-up report in 2010).

The one early stage deals disclosed in the first quarter was Jolicloud’s $4.2m series A, while Gear6 raised $4m following its evolution from a storage caching vendor to a Memcached support and product provider.

Later stage deals included $17.4m series B for Borqs, Medsphere’s $12m series D and Acquia’s $8m series B.

War is over (if you want it)
Aside from the ongoing adoption of open source, one of the trends that has defined FOSS in 2009 has been the numerous declarations that the war between open source and proprietary software is over - and moreover that open source has won.

Perhaps the highest profile of these came from The Economist’s article published in May which stated:

“The argument has been won. It is now generally accepted that the future will involve a blend of both proprietary and open-source software.”

This was a clear indication that the acceptance of free and open source licensing had reached the mainstream, but if open source has “won”, how has victory been achieved?

• Open source software is ubiquitous

Gartner’s assessment that by 2012, 90% of enterprises will use open source has now almost become a mantra among FOSS advocates. If anything we at The 451 Group would see that figure as a conservative estimate, but whether the figure is 90% or 92% or 95% is really picking hairs - it is clear that the overwhelming majority of enterprises and government agencies are now using FOSS somewhere within their infrastructure.

• End user adoption is increasing

The recent decision by IDC to increase its prediction of the size of the open source software market in 2013 to $8.1bn from $5.8bn similarly gained a lot of attention among FOSS enthusiasts. While we would not dispute the figures, we would point out how that compares to the size of the overall software market. An educated guess suggests that it could be in the region of 2%, maybe 3% or 4%.

Again though we are picking at hairs and the key message is that while FOSS has gained a tremendous reach, it has a long way to go in terms of penetration - although the silver lining in that is that there is a huge opportunity for growth.

• Open source software is pervasive

One area that FOSS has seen much more penetration is amongst proprietary software and hardware vendors. The likes of IBM, Oracle, Microsoft, SAP and Adobe are all now using and contributing to open source software, indeed you would be hard pushed to find a technology vendor that isn’t making use of open source software development and licensing strategies, or building on open source code.

Each of these vendors is using FOSS to its advantage and on its own terms, and we have seen “mixed models” that combine FOSS and proprietary software come to dominate.

• Mixed models

At the 451 Group we’ve done a lot of research into how vendors make money from FOSS and one of the key findings is that the line between FOSS and proprietary software has blurred as FOSS has been embedded in proprietary products and vendors following the Open-Core model have added proprietary extensions to FOSS.

We have also noted that while individual developers still have a key role to play in open source communities, modern communities like Eclipse are now dominated by vendor interests.

There has also been a lot of M&A activity involving open source, with some of the highest profile deals resulting in Oracle (almost owning MySQL) as well as Java and OpenSolaris, VMware owning SpringSource and Citrix owning Xen.

As well as buying into FOSS, proprietary vendors are also increasing their contributions to FOSS, with the highest profile example of that being that Microsoft is now a contributor to Linux and recently created the CodePlex Foundation to encourage wider contributions to open source - two developments that would have been unthinkable this time last year.

• Accepting the inevitable?

For years Microsoft was seen as a King Cnut figure, attempting to hold back the open source waves - and not just commanding the waves to retreat but actively building walls and barriers to hold back the waves.

What happened is that overtime those waves slowly eroded those defenses until it became obvious that the company needed to stop building barriers and start building a boat in which it could ride the open source waves and find a way to co-exist with FOSS.

Microsoft is no different from any other proprietary vendor in this regard. The like sof IBM and Oracle and SAP have all had to find their own ways of coexisting with FOSS.

As a side-note, some people have been critical of Microsoft’s strategy here - pointing out that it is only interested in encouraging open source developers to promote its proprietary platform. On that I defer to Linus Torvalds and his view that “the ability to make the code better for your particular needs” is the point of open source.

And of course it is true that Microsoft has not invested $1bn in open source in the way that IBM did in Linux, but then less than a year later IBM was able to claim that it had recouped most of that $1bn in sales of proprietary software and services.

The result of all this, as Matt Asay put it, is that:

“Open source has won. Open source increasingly finds itself in virtually all software, open source or proprietary.”

If you want it, war is over
Of course, not everyone will see that as any kind of victory at all. As Andrew Oliver recently stated, “The only war is maintaining a distinction” between open source and proprietary.

In 2009 we have seen signs of push back from FOSS advocates in resistance to what they see as dilution of the open source brand. We are seeing increasing demands for the Open Source Definition, which defines open source licenses, to be applied also to development models and business and end user licensing strategies.

A software project might be licensed under an OSI-approved license, but if 98% of the developers are employees of a single company there is a valid question as to whether that is truly an open source development project. Equally if a user needs to acquire a proprietary license for key features and functionality, there is a valid question as to whether the overall software can be considered open source.

There has been growing debate on this issue and we would agree that the time to act is now given the rise of these mixed models and the increasing influence of proprietary vendors in open source projects.

This is especially true as mixed models are not inevitable. Red Hat is the most successful FOSS vendor and does not mix open source and proprietary licenses, and there are plenty of other example of vendors and users that take a pure approach to FOSS at Open World Forum.

Of course it must be remembered that even if you choose not to mix FOSS and proprietary licensing, FOSS must co-exist with proprietary software - if not within your own data centres then with the systems of your partners and customers, and it is important to note that isolationism could be just as damaging to the perception of FOSS as the dilution of the open source brand.

• Accepting the inevitable?

Which brings us back to the image of Cnut, commanding the waves to go back, only this time we have FOSS advocates potentially battling the waves of mixed models.

So the question FOSS developers or users need to ask themselves is whether you are going to build barriers, or build boats, and find a way to co-exist on your own terms.

Is war over?
All of which begs the question of whether the war between FOSS and proprietary software is truly over. It’s worth returning to the declarations of victory again. The Economist also said:

“Open-source software has won the argument. Now a new threat to openness looms.”

While Mark Taylor from Sirius noted that:

“Open source may have won the argument, but that does not mean the world will now change.”

What Mark was referring to were the procurement policies that enable FOSS to be considered alongside proprietary software. We’ve seen multiple countries adopting polices that encourage the use of open source by government and enterprises, and the UK has just caught up with this, but it must be remembered that the procurement procedures for most organisations were set up specifically to deal with proprietary licensing. It will take time for that procedures to change and for FOSS to compete on a truly level playing field.

That’s one of the trends we expect to see emerging as a new battleground for FOSS in 2010 and beyond and another, that the Economist was referring to, is cloud computing, open data and the threat of platform lock-in.

In fact we have argued that we see open source as complementary to cloud computing and that open source has a role to play in reducing that lock-in, although that is perhaps the subject for another presentation entirely.

Other issues that are too important to simply be glossed over now but that will be discussed in the sessions at Open World Forum and in other blog posts include patents, open standards, open access and open government.

Two issues that I did want to conclude on though are those of FOSS as civic participation and FOSS as a public resource.

Since the Obama administration was elected in the US we’ve seen a massive move towards openness. That hasn’t, yet, resulted in a formal policy on FOSS, but we have seen White House director of new media, Macon Phillips, talking about open source as the “best form of civic participation” - of governments using open source to connect with citizens and encourage collaboration.

And I think we see that this is one of the reasons behind the European Commission’s interest in FOSS, alongside the closely-related issue of FOSS as a public resource. Recently we’ve seen The European Agency for Safety and Health at Work, saying that it sees it has a duty, as a publicly funded organisation, to invest public funds in open source.

And its in that context that we have seen the recommendation added to the 2020 FLOSS Roadmap, that FOSS should be recognised as a public knowledge asset. I think that this, as well as the other issues mentioned above, will represent some of the emerging battlegrounds for FOSS in the next decade as the movement moves from a position of acceptance to a position where collaboration and sharing is recognised as a key driver in the promotion of the European software industry, and in enabling the digital recovery.

We wrote last year about how openness was emerging as a significant factor, differentiator and disruptor in the mobile software market, with Apple enjoying success with its closed, controlled approached, but also getting pressure from more open plays, such as Google’s Android.

Now we see it is Android that is feeling the pressure. I believe new and different players, as well as venerable mobile vendors, all have tremendous opportunity around Linux and open source software in mobile and consumer devices. However, the more strings, NDAs, licenses and developer agreements they add, the more they close development, the process and applications, the more they curtail the opportunity.

We can understand and appreciate the need for carriers and handset makers to control certain aspects of how a mobile device behaves, communicates and interfaces with the user. However, on the other end of the line, where we have ISVs, software developers and other members of this market and community, real openness and transparency is critical. Here, the hooks and controls don’t make as much sense and, frankly, don’t cut it with developers.

While this is not the first time I’ve questioned Google’s approach and Matt has illustrated the problem with half-open, I do believe it is among the key stakeholders in the open mobile opportunity. Still, it is now being put to the test and will have to respond appropriately if it is to retain widespread respect among developers. And Google and Apple are not alone. Any vendor that is picking its fruit from the open source tree must be wary of the line between being open and not.

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Winning and losing
Matt Asay stirred things up with his declaration that free software has lost and open source has won. Responding to Matt Asay, Glyn Moody argued that without free software, open source would lose its meaning, while Mark Stone explained that free versus open source is not black and white - it’s more complex than that.

Matt Asay later declared open source the winner again, this time as a platform.

Paranoid Android?
Linux Magazine reported on Google’s cease & desist letter to an Android developer. The move prompted the formation of the Open Android Alliance to replace proprietary applications included in OEM Android installations with open source alternatives.

Best of the rest
# OSnews published The Difference Between EULAs and Open Source Licenses. An important distinction that is often not made.

# Talend acquired Amalto’s master data management software.

# Michael Tiemann published a preview of his speech on open source and the recovery at Open World Forum, prompting James Dixon to argue that the acquisition and exist costs of open source are not ‘zero’.

# Microsoft contributed a Windows Communication Foundation (WCF) Channel for AMQP to the Apache Qpid project.

# Protecode launched version 3.0 of its Software Lifecycle IP Management software.

# Zack Urlocker provided some insight into open source adoption by SMBs in Europe.

# Jan Stedehouder provided a summary of the ongoing debate about FOSS, sexism and feminism.

# Matt Asay reported on the importance of a strong foundation for open source dominance.

# Savio Rodrigues noted that the quality of open source code can go down, as well as up, depending on how you count it.

# Red Hat appointed a new board member, Donald Livingstone, Professor at BYU’s Marriott School of Business.

# DotNetNuke formed a board of advisors to help shape product development and technology adoption issues.

There have been a number of responses picking apart Matt’s claim, of which I would recommend Glyn Moody’s.

To my mind, there is actually a lot to agree with in Matt’s post but where it falls down is in its generalisation of the Free Software movement. Like many others Matt has long since stopped seeing the difference between proprietary and open source as black and white so it is unfortunate that he chose to describe the difference between free software and open source in such terms. (I should point out, by the way, that this is something that a lot of people, myself included, are often guilty of).

Mark Stone points out that historically there are three camps on the FOSS side: Berkeley Unix, Linux and GNU. It is also true to say that that there are differences of opinion within the Free Software movement itself.

For example while Free Software Foundation sometimes appears to be more concerned with attacking Microsoft than it is promoting freedom, a recent article in Free Software Magazine demonstrates total opposition to proprietary software is not universal.

“A policy of promoting free software and opposing proprietary software no matter what the production consequences are is unethical,” wrote Terry Hancock. “The real world is a big place with lots of different people who think in lots of different ways. Trying to convert them all to your own way of thinking is probably a lost cause.”

For some people that remains a cause worth fighting for while others have elected to move on. Many others have simply chosen to pick their battles. The difference between Free Software on one side and proprietary software on the other is not black and white - it is much more complicated than that.

At the Open World Forum event in Paris on Thursday I will be discussing whether the the open source/proprietary war is over, including the fact that we are seeing an increasing amount of push back from free and open source advocates attempting to prevent what they see as the dilution of not just free software philosophies but also the open source brand as a result of increased involvement of proprietary vendors, licensing and development strategies.

I will therefore return to this issue later in the week but for now I wanted to make the point that the FOSS movement is not a community as much as it is a loose coalition of communities, parties and individuals all of which have shared interests, but also significant differences.

The biggest threat to the success of FOSS is arguably not proprietary software or isolationism but in-fighting and Balkanization.

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“Tracking the open source news wires, so you don’t have to.”

# Red Hat announced Q2 net income of $28.9m on revenue up 12% to $184m, although Matt Asay maintained that the company needs more JBoss focus if it is to improve its revenue growth.

# The Paris Court of Appeals found that the GPL is valid in and enforceable in France.

# Sam Ramji provided some insight into the creation of the CodePlex Foundation and rolled with the punches following the inevitable criticism.

# Stephen Walli continued the debate on open source business models (or the lack thereof), while Simon Phipps declared Mind Your Own Business (Model).

# Free Software Magazine asked: “Is free software major league or minor?” An interesting article on ethics and free software vs open source.

# Allied Security Trust CEO said Microsoft probably knew its “open source patents” would end up with the OIN.

# Brian Gentile said the open source movement is really nothing less than a renaissance.

# The Register reported that the UK government ignoring own rules on open source, although arguably the problem is not that the rules are not being followed but that the policy has no rules.

# Microsoft was unimpressed with Google’s Chrome Frame plug-in for IE.

# “Let’s keep the eye on the ball.” Carlo Piana warned about the EU and Microsoft.

# Accenture’s Tony Roby on the second wave in open source.

# LiMo Foundation announced the first LiMo Release 2 (R2) handset and more planned for 09/10.

# Intel ported its Moblin Linux netbook OS to desktops and announced that you can now purchase a Dell Netbook running the Ubuntu Moblin Remix Developer Edition. .

# ElementRiver launched Potomac, an open source framework for Flex developers.

# HP created CommunityLinux.org to support community Linux distrbutions on HP servers.

# Rivet Logic launched Crafter rivet - an open source Web content delivery framework.

# Coverity released its 2009 report on the integrity of open source software.

# Jahia in the Cloud is now available on Amazon EC2.

# MuleSoft updated its Tcat Server release including iBeans integration software.

# Internetnews.com published: Why Linux succeeds while other open source projects fail.

# Mikel Maron provided details of open source social networking at the United Nations.

# Germany’s minister of the Interior said open source helps avoid lock-in and IT monopolies.

# Air traffic control radar display published as open source on OSOR Forge.

Of course, LinuxCon and the accompanying Linux Plumbers Conference (held for the second time since last year are primarily a gathering of Linux kernel hackers and the developers that push the open source OS forward. So it was fitting to have some of the most significant contributors and maintainers gathered to discuss the state of Linux in front of the Linux faithful.

A highlight of the conference for many was a kernel panel featuring Linux creator Linus Torvalds himself, Jonathan Corbet, Chris Wright, Ted Ts’o and Greg Kroah-Hartman, moderated by James Bottomley.

The panel began with some discussion of improvements and efficiences in kernel development and incorporation of new branches and code, with Torvalds indicating his kernel life had gotten a bit more manageable. However, the discussion soon turned to some significant issues, particularly the size and fitness of Linux. What began as a lightweight OS (which is still stripped of parts and used for lightweight embedded and other uses) has grown dramatically over the last 10 years. In fact, in just the last year, 2.7m more lines of code were added to the kernel. Although there is certainly a great sense of vitality around Linux and the kernel, there was also agreement that Linux may be getting too fat. While there was no real solution that emerged, at least it’s clear kernel developers and Linux leaders are aware of the situation.

Another interesting topic and perhaps dilemma for the Linux kernel and its backers: the aging team of core contributors. Also, as highlighted by Linux Foundation Executive Director Jim Zemlin to open the conference, the Linux community needs to do a better job of reaching out and including women. I would add that there is also a need for greater diversity and geographic representation among kernel hackers, even though we already see a global Linux community with LinuxCon visitors from across Europe, Asia, South America, Australia and elsewhere.

The unmasking of the fake LT was fun, mostly for the rap music video with dancing penguin suit guy, but once again we saw Matt Asay take the prize (this after winning the open source license debate recently). I guess this open source advocate is on a roll.

For my part at LinuxCon, I gave a talk on community Linux — that is unpaid, self-supported Linux — and its impact on the enterprise, with a particular focus on cloud computing. This coincides with a 451 Group report on the same topic. When we wrote our report on community Linux a year ago, we highlighted how community distributions such as CentOS, Debian and Ubuntu are putting competitive pressure on commercial, subscription Linux, such as RHEL and SUSE. We see the presence of community Linux and its impact increasing, though we must point out there are also complimentary effects from community Linux, which grows users, support and the overall Linux ecosystem. Still, we see enterprise organizations using community Linux for some of the same reasons they look to Linux in general: cost savings, flexibility and greater utilization of developers and teams that are capable of supporting themselves.

We had indicated that technology trends such as virtualization and cloud computing tend to favor the established, paid Linux distributions and vendors. In fact, virtualization, cloud and interoperability are key areas where Linux vendors differentiate their paid versions. This continues to be the case, and there is ample room for Linux vendors to continue and deepen that differentiation. However, there will be more community Linux pressure coming from these ‘other’ distributions, and much of it appears to be coming from cloud computing.

We are hearing from vendors and end users that community Linux makes sense for cloud computing. Obviously cost is a big factor, and perhaps bigger give current economic conditions. Also, enterprise organizations are finding that they can support themselves in many situations. Technically, community Linux distributions may also be easier to strip of messaging and other parts for use in cloud building. Community Linux may be growing its presence in cloud computing, with vendors such as Convirture, rPath, RightScale and others incorporating it into their technologies and strategies. However, when it comes to offering Linux in the cloud, we again see this favoring the more established, more accepted commercial distributions of Linux.

He may have a point, but I’m somewhat surprised that this issue has raised its head now. We noted when Oracle launched Oracle VM at OpenWorld in 2007 that “the company will not be certifying its database and applications on other virtualization software”.

Perhaps the impending combination of Oracle/Sun has got EMC worried. Funnily enough, a typo in our post from 2006 suggests why:

“With Oracle VM and Unbreakable Linux Oracle can now claim to provide customers with everything that sits on top of its server hardware.”

I was actually referring to the customer’s server, but the mistake appears prescient given Oracle’s impending ownership of Sun and Larry Ellison’s declaration that Oracle will become a systems company. As does the following statement:

“At OpenWorld it became increasingly clear that Oracle’s strategy is to own as many customer ‘touch points” as it can. The company will tell you this is so it can provide customers with more value and increased services, but locking out the competition is a nice little side win.”

Oracle’s virtualization strategy might not be good for VMware, and Chuck Hollis makes a good case in arguing that it might not be good for the customer, but at you can’t say you weren’t warned.