Tim O'Reilly [07.19.06 08:03 AM]

A friendly neighbor - That's why I linked to the three essays at the end, which lay out my thinking in much greater detail. I didn't repeat it, because I've already written it. See The Open Source Paradigm Shift in particular.

But specifically as to why I question whether open source companies completely get the new model, here are a couple of things to chew on:

1. Given that web 2.0 is deeply about software as a service, in which operations is a core competency, the fact that open source companies keep their various deployment and operations tool as part of their proprietary value add is probably wise from a business point of view, but at the very least shows that their point of leverage is not necessarily what they claim that it is.

2. A big part of the new model is lightweight, rapid development, and services that are always changing, it concerns me that companies embracing the enterprise market are working to manage user expectations by slowing down the pace of development and creating the enterprise fork (cf RHEL vs. Fedora), rather than by building next generation tools to keep up with what is ultimately an internet-era software supply chain.

In short, I still see a lot of the open source companies acting like early PC companies (pre-Dell). That is, they were born in this new open world, but as they grew up, they emulated the practices of the world that went before. Eventually a company (in the PC case, Dell) came along, and more fully embraced the commodity world by building smarter, more agile processes, and got its advantage not from trying to add back in what was previously proprietary, but in discovering a proprietary advantage that was really new.

Compare Red Hat and Google, for example. Both are great companies. I believe both were born from the same vortex of possibilities. But as Red Hat has matured as a software company, it has taken on the business models of previous generations of software companies, while Google and other Web 2.0 companies took a different fork in the road.

It's tough to really embrace new models -- heck, we really struggle with that at O'Reilly as well, and don't have easy answers. But I can still see what I can't necessarily achieve. As Robert Browning said, "A man's reach must exceed his grasp, or what's a heaven for?"

  Tim O'Reilly [07.19.06 09:48 AM]

Sid, you completely miss my point. RMS got all fired up about free software because as software became proprietary, he discovered that he could no longer fix problems with the software he was using. My prediction is that the proprietary, closed data problem will eventually hit users the same way, and an "RMS of the future" will start an equivalent movement about the rights of users to their data. (In some ways, these things are already bubbling up. See for example MoveMyData.org.

  Tim O'Reilly [07.19.06 10:50 AM]

Sid -- you wrote: "I also wonder how much free software folks care about cutting edge web 2.0 services. Talking to one free software adept about my web co-op idea, he replied: 'I've read that web 2.0 is about tagging ... tell me: what is tagging?'" My point exactly. I'm trying to get Web 2.0 on the radar of people who *ought* to be right in the middle of it, but who really aren't.

Regarding the consumer vs. geek edge comments -- important movements often start on the fringe, and hit the mainstream only indirectly. But that doesn't mean they are unimportant.

  Tim O'Reilly [07.19.06 11:26 AM]

Roman --

I think the scale of success of Web 2.0 companies definitely shows that delivering services rather than selling services to support software is a better business model. And I'm not just talking about companies like Google, who've delivered a higher level set of software as a service. But consider even the open source infrastructure that fuels the web hosting market. The real PHP play wasn't Zend, it was rackspace and their peers -- any hosting provider who effectively sells access to PHP as part of their offering.

For years, I used to point to Uunet as the first great open source success story. Rick Adams, the founder, was the author of B News, the dominant usenet news package at the time, and SLIP, the predecessor to PPP, as well as the hostmaster of the best-connected usenet and mail hub of the day (1988-1989). Uunet was one of the first ISPs -- originally a non-profit funded by Usenix -- but soon one of the main instigators of the commercial internet. And what were most ISPs and hosting providers selling? Subscription access to free software stacks, as a monthly service. (Microsoft later entered that market.) As for Rick, he retired a billionaire.

The SaaS story has been central to open source from the beginning. That model took hold for some programs, but not for others. And it became the dominant model for people who went further up the stack.

I hope this doesn't come across as ragging on Red Hat. They are a great company. But I still think there's a lot more to think about in how the internet can change the economic models for how we do business with free software.

  Tim O'Reilly [07.19.06 04:01 PM]

Stormy, you are very much on my wavelength with your comments. It's tough to figure out how the open source/web 2.0 model applies in every case, but it's often easier to see where it's NOT being followed. (That was the point of my levels of the game post a few days ago.) Open source is more rooted in the internet than many people in the open source community realize, and so their companies move away from or under-emphasize things that should be central to their strategy.