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Why do Companies Write Open Source Software
The document discusses the rationale for for-profit companies to engage in open-source software projects, emphasizing that it can often be a strategic move to commoditize complementary products and reduce development costs. Examples such as Google's Android and Red Hat illustrate how companies can benefit from open-source by fostering collaboration and lowering expenses while enhancing product accessibility. Ultimately, the decision to open-source software should align with the company's business strategy and consider potential risks and rewards.
Why do Companies Write Open Source Software
- 1. Why Do CompaniesWrite Nadav Har'El, Cloudius Systems, Ltd. October 22, 2013
- 2. For-profit companies write open-source. ●They start new open-source projects. ● They open-source software they already wrote. ● They contribute to existing open-source projects. ● They cooperate with competitors on this software. ● But why? – Are they crazy? – Are they communists? – Or are they actually being smart? – Does this make business sense?
- 3. The first goodanswer ● June 2002, Joel Spolsky. ● Entrepreneur & Blogger. ● http://www.joelonsoftware.com/articles/Strategy LetterV.html ● http://hebrew.joelonsoftware.com/Articles/Strate gyLetterV.html “Smart companies try to commoditize their products' complements.”
- 4. Complement product ● Aproduct that you usually buy together with another product. – Gas and cars. – Computer hardware and computer software. – Flight and hotel room. – DVD player and DVDs.
- 5. Complement product ● Demandfor a product increases when the price of its complements decreases. – If hotels in certain area become cheaper, more people fly there. And vice versa. – As DVD players become cheaper more people buy DVDs. – If gas was cheaper, more people would buy cars. ● So demand for your product will increase if its complements are cheap.
- 6. Demand for yourproduct will increase if its complements are cheap. So a company's best interest is: ● For its complements to be come commodities (many competing manufacturers). ● For its complements to be as cheap as possible. ● When free is possible, it is cheapest :-)
- 7. When software isyour complement ● If you have a product which needs additional software, and ● If this software is not your competitive advantage. ● Then you have a software complement. ● You want it to be open source: – It will be cheap/free for your product's users. – If no such open source projects exists yet, by starting one you may share the costs of developing in-house.
- 8. Google's Android ● Goodexample to free-software complement: Google Android. Why did Google do Android? Why open-source? They didn't have to go open-source (could have used BSD instead of Linux, like Apple did).
- 9. Google's strategy ● ACMSIGIR, July 2008 Keynote by Kai-Fu Lee, Google VP Engineering, and President, Google Greater China. ● Talked about increasing Google's use in China (and the rest of the world).
- 10. Google's strategy ● Google'smain problem in China wasn't market share, it was market size. ● You need a computer to use Google's products. Only a minority of Chinese had them. ● In the developed world, more new users had smartphones (iPhones, Blackberry) than computers. ● But these were too expensive for most Chinese. ● Google would benefit from Internet-capable mobile phones becoming a commodity!
- 11. Google's strategy ● SoGoogle: – Bought Android (2005) and open sourced in 2007. – Convinced hardware makers to take Android to create more smartphones (Open Handset Alliance, 2007). – October 2008 – first Android phone (HTC Dream) ● As of 2013 – strategy was successful: ● 1 Billion Android devices activated – all can use Google. ● 75% of smartphones, 90% in China. ● New Android-specific revenues for Google (market, ads...) – Even if everyone switched to Bing, new review streams.
- 12. Example #2 -Netscape ● Netscape Navigator came out in 1994. Not free for businesses. ● Threatened to commoditize the OS. Microsoft retaliates with IE in 1995. ● Netscape cannot compete. Tries to save its server products and websites by open- sourcing Mozilla in 1998. ● AOL buys Netscape. Incoherent strategy. Crash.
- 13. How to runthe open-source project ● Two styles of open source projects: Centralized: One person, group, or company, develops the code. Accept bug reports and patches, but outside contributors always remain outside. Company keeps control. Distributed: Encourage other companies and individuals to join the discussions, decisions, and become equal contributors. Company gives up control.
- 14. How to runthe open-source project ● And a whole spectrum between the extremes. ● E.g., Android: – Based on Linux, on which Google has no control. – Google does control rest of Android's development, – ...but through “Open Handset Alliance”. – Other companies (e.g., Samsung) have Android for today's products, but rely on Google for its continuing development (beyond Linux).
- 15. Why give upcontrol? ● Reduce your development costs. – Let other companies with the same complement help you. – They won't help you if they feel a conflict of interests. ● Faster development than a single company can ever do. – Linux grew faster than BSD because it encouraged many more people to contribute.
- 16. How to giveup control? ● Open the source-code through a well-known impartial organization. E.g., Apache Software Foundation. ● Create a new organization. Open Handset Alliance. ● Use source-code repositories, domain names, etc., not associated with your company. E.g., – java.com, not java.sun.com – Use github.com for the source code.
- 17. How to giveup control? (cont.) ● Avoid in-house mailing lists, bug trackers, etc., ● Have commit rights for non-employees. ● Do not require copyright assignment. ● Do not patent parts of the code – or offer royalty-free license.
- 18. Before giving upcontrol... ● Is the code really your complement or your product? Netscape wasn't sure... ● Have you chosen the right license? – Afraid you'll want to turn this into a product: ● Use BSD-like license, dual license, copyright-assignment. ● Keep submarine patents... – Afraid this will turn into a competitor's product: ● Use GPL license.
- 19. Example #3 –Red Hat ● Red Hat is a services company: You don't pay it for the software (OS, Virtualization, Middleware), you pay for: – Support – Integration – Packaging of well-QAed software ● More than $1 billion revenue in 2012. ● Red Hat services need good open-source software to exist. A complement? More like raw materials...
- 20. Corollary Smart companies tryto build on an open- source infrastructure. ● Complement – infrastructure the users have. ● Raw material – infrastructure the company has. Anything which isn't the company's competitive advantage.
- 21. Red Hat ● SoRed Hat works on dozens of open-source projects: Linux, KVM, WildFly (Jboss), Fedora, ... ● Uses all “give up control” techniques, even in projects it originated (e.g., Fedora, KVM), so: – Millions help Red Hat do QA (Fedora). – Companies like IBM participate in development. – Reduced development cost (compare: Unix).
- 22. The Unix Story ●In the end of the 20th century, many companies sold Unix-based workstations: Sun, DEC, SGI, HP, IBM, DG, AT&T, ... ● All started with 1980 7th Edition Unix or BSD. ● Each continued Unix development alone. ● Was never a competitive advantage: Nobody bought Sun just for SunOS. ● Today, such companies would adopt GNU/Linux.
- 23. Example #4 –Qumranet ● Small Israeli startup making a remote desktop platform. ● Needed to use a hypervisor, existing one (Xen) wasn't good enough, so wrote a new one: KVM. ● 2006: Decided to open-source KVM (into Linux): – Wasn't Qumranet intended product, but a complement: Qumranet's software needs a host with a good hypervisor. – Get more Linux developers to help with KVM. Qumranet was too small to continue on its own. – Get noticed.
- 24. Qumranet A success story? ●Nice exit - bought by Red Hat in 2008, $107M. ● The “complement” KVM is much more popular than the original remote-desktop product.
- 25. “Contributing back” Companies useexisting open-source projects and contribute code back to the project. Why? ● The license requires them to (GPL). ● To avoid maintaining your patches. ● To show goodwill to other developers – and maybe get help or agreement from them later on.
- 26. Example #5 –Sun Microsystems ● Sun was a hardware company. ● Their best interest: make software a commodity. ● Opening Star Office (later Open Office) – good. – Though didn't really commoditize word-processor. – People still differentiate MS Office and Open Office. ● Opening Java – business mistake!
- 27. Example #5 –Sun Microsystems ● Sun was a hardware company. ● Opening Java – business mistake? – Java runs the same program on any computers. – Java commoditizes hardware! ● Sun hoped Java will increase the market for all servers, including Suns. ● It increased the market for all servers, but made it increasingly easier to switch to x86...
- 28. Example #6 –Cloudius Systems ● The company I work for. ● Small Israeli start-up. ● Developed OSv (http://osv.io/), – New operating system for VMs on the cloud. – Compatible with Linux, but smaller, faster, easier to configure. ● Open Sourced OSv.
- 29. Other reasons towrite open source ● Small company wishing to create new software and get it accepted by customers. – “Don't be afraid the company will vanish, it's open source” – “It's free, try it!” ● How to profit? – Services or support? (you have the experts) – Proprietary product? – Dual license GPL/proprietary? (e.g, MySQL) – Your company gets bought? (Why?)
- 30. Other reasons towrite open source ● Employee satisfaction – Programmers get world fame, not just company-wide fame. – Similar to publishing in the academic world. ● Peer review – Improve quality by having others outside the company review the code. ● Employee hiring – Attract open-source programmers. You know who to hire, because you've seen their code!
- 31. Legal issues toconsider Very little has been tested in a court... ● Copyright & copyright assignment ● Copyright infringement suits (SCO vs. IBM) ● Licenses ● Patents – What happens if you patent something you open-source? – What if a contributor patented his addition? ● Anti-trust laws. (careful when cooperating with competitors). ● Anti-dumping laws. (Fairsearch vs. Android)
- 32. Summary ● There aregood reasons why your company should start an open-source project, or join an existing one. ● But there are also cases when this does not make business sense. ● So do consider your business case. ● Is this software your product? A complement to your main product? Infrastructure your product is built on? What will be your product a year from now? What can you lose by open-sourcing? What can you lose by not open-sourcing?