Why Open Always Trumps Closed?

WHY OPEN
ALWAYS
TRUMPS
CLOSED?
Janne Kalliola
Exove

About Myself
§  CEO of Exove
§  Chairman of Finnish DrupalAssociation
§  Board Member of Estonian DrupalAssociation
§  I've been working with open source from '90s
§  Currently rooting for Node.js, WordPress, and
Drupal

About Exove
Exove is a leading digital services design and development
company focusing on open technologies.
We help companies to grow their digital business.
Quick facts:
§  Founded 2006
§  Over 70 people
§  Served more than 190 clients
§  Offices in Finland, Estonia, and the UK
§  AAAcredit rating
§  CEO Janne Kalliola

…And We Are Hiring!
§  Join us to experience the open source
goodness I'm about to talk with you
§  Numerous technical positions open, for
example, Node.js dev, Drupal dev, WordPress
dev
§  Go to exove.com/careers
Follow us on Twitter @exove

Back in 1999
Sun Microsystems CEO Scott McNealy said
"Linux is like Windows: it's too fat for the client, for
the appliance ... it's not scalable for the server ...
Now why in the world would anybody ever write
another cheque to Microsoft? I don't know. But
why would you do Linux either? That's the wrong
answer." 1)
1) http://readwrite.com/2014/07/01/linux-world-domination-complete-why-its-foolish-to-bet-
against-open-source-communities

2) http://fortboise.org/top100-history.html
In 1999
§  Back then UNIX powered around 50% of
world's supercomputer market 1)
§  Five of ten the most powerful supercomputers
ran UNIX 1)
§  SUN Microsystems was 69th biggest company
in the USA
§  Value $54B2)

How About Now?
§  UNIX powers 2% of top 500 supercomputers,
and Windows 1% 1)
§  The rest – 97% – is powered by Linux 1)
§  SUN was bought by Oracle with $5.6B in 2009
3)
3) http://en.wikipedia.org/wiki/Sun_acquisition_by_Oracle

What Happened?
§  Both Scott McNealy and SUN Microsystems
were surprised by the power of the community
§  SUN had an exceptional history of engineering
innovations, but it was still a single company
§  That needed to pay salaries to its employees
§  And thus was constrained by the amount of the staff
it could hire

Why Linux Succeeded?
§  Linux was the first viable open source operating
system
§  Had enough features and applications to be adopted
§  Linux overpassed its competition – commercial
UNIX systems, Windows NT, etc. – in speed of
innovation
§  Linux gained numerous corporate sponsors that
donated developers to work on the project

Community Does Matter
§  Community makes it cool to adopt an open-
source project
§  Community makes it safe to adopt an open-
source project
§  Community creates a larger total addressable
market
§  Community makes it hard for rivals to compete

Perspective Through
Numbers
§  Surveys have found that developers expend on
average 11 hours a week on open source efforts
(a median of 7 hours), more than 25% of a
standard work week4)
§  This is 0.29 FTE (full time equivalent)
§  Thus 3.4 part time open source developers lumped
together work as much as one full time paid
developer
4) http://www.health-policy-systems.com/content/9/1/36

Perspective Through
Numbers
§  Drupal Community has over 1.167M users and
over 37,000 developers5)
§  The estimate of full time equivalent of Drupal
community development is thus
37,000 x 0.29 = 10 370
5) http://en.wikipedia.org/wiki/Drupal

Show me a company that can
invest over 10,000 people to
develop a complex server side
platform.

Or a company that has more than
million registered users.

SUN Microsystems were not one
of them.
(Ifsuchcompaniesdoevenexist)

However, Every Community
Is Not a Winning One
§  The median length of project participation is 1.2
years4)
§  80% of open source software projects fade
away due to insufficient long-term participation 4)
So choose wisely!

Define a Winning
Community?
§  Winning or sustained communities typically are very
active
§  Lots of developers and other people in various roles
§  People working actively to keep the community together
§  Clear vision and people pushing it forward
§  No major arguments inside the community
§  Conferences, books or other tangible items related
to the project or the community

Participation, Participation
§  Open source projects are driven forward with
participation
§  People donate their time to commit new code to the
project
§  New feature
§  Bug fix
§  The commits move the project from release to
release
Participation > Commits > Progress

Why to Participate?
§  Being in a community is an act of working
together for a shared goal
§  The community must attract people that collaborate
§  The project leader has a significant role in
attracting highly skilled people
§  Demand is high, supply is scarce
§  People have different motivations for
participating in the community

Motivational Factors6)
Economic Developer earns money from contributions
Fun Developer enjoys contributing
Identity Developer identifies himself as an open source
programmer and maintains that identity
Learning Developer wants to learn more
Networking Developer gains a peer network
Own use Developer uses the software himself
Political Developer thinks that all software should be
free
Signaling Developer wants to show his skills.
6) Årdal et al. Health Research Policy and Systems 2011

YOU LOVE  
IT
YOU ARE
PAID FOR IT
YOU  
ARE  
GREAT  
AT IT
THE  
WORLD  
NEEDS  
IT
@Frank_Giustra

YOU LOVE  
IT
YOU ARE
PAID FOR IT
YOU  
ARE  
GREAT  
AT IT
THE  
WORLD  
NEEDS  
IT
@Frank_Giustra
Purpose.

Motivations Over Time
§  Motives change during time
§  People that learn through participation or identify
themselves with the community continue much
more likely in the community
§  People needing the software for their own use
typically leave when their needs are met

Companies as Desired
Partners
§  Companies have more long-term goals than
individuals
§  They also offer more considerable and stable
resources
§  Companies are also interested in non-development
activities, such as testing and documentation
§  Companies are motivated by economics
§  They complement their portfolio with open source
§  They use the system for their own use

How to Participate as a
Company?
§  Allow your vendors to commit fixes and new
features on the open source systems you are
using
§  Participate in conferences
§  Sponsor feature requests
§  Donate developer time, full-time or part-time
§  Donate money or become a sponsor

Apache Project
§  Numerous systems and libraries, such as
§  Apache web server
§  Hadoop
§  Lucene + SOLR
§  Subversion
§  Tomcat
§  Licensed underApache 2 license that maximises
the freedom of the users / developers
§  www.apache.org

Results
§  All web servers are nowadays free
§  People used to pay for Netscape web servers etc.
§  Tomcat & JBoss – not anApache project,
though – caused licensing of J2EE containers
to cease
§  There are no commercial search engine servers
sold
§  SAAS search model is thriving, however

WordPress
§  The world's most used content management
and blogging system
§  Has extensive commercial ecosystem powered
by individual developers and small companies
worldwide
§  Project managed byAutomattic Inc.
§  Licensed under GPL2 that maximises the
freedom of the code
§  www.wordpress.org

Results
§  Web publishing used to be limited to people
having a) money or b) technical skills
§  WordPress has democratized publishing and
created blogging business
§  There used to be commercial blogging
platforms that have mostly disappeared

Drupal
§  The world's third biggest content management
system and application development platform
§  Has probably the biggest open source
community (and a very fierce one, too)
§  Project managed by DrupalAssociation
§  Licensed under GPL2 that maximises the
freedom of the code
§  www.drupal.org

Results
§  Drupal (and other high-end open CM systems)
have pushed commercial CM systems into
niches
§  There are exceptions, for example, EPiServer is
doing quite strongly – for now
§  Drupal has made inroads to enterprise content
management

Node.js
§  Blazing fast JavaScript based server system built on top of
Google V8 JavaScript engine
§  V8 is also open source, licensed under BSD license
§  Has sprung a lot of libraries and a lot of participation in a
short time – albeit a lot of things are still in early phases
§  Project managed by Joyent
§  Recently forked to io.js
§  Licensed under MITthat maximises the freedom of the
users / developers
§  www.nodejs.org

Results
§  Node.js is moving high-end server development
from Java and PHP to JavaScript
§  It is eating market share from other open source
systems – as the commercial options were
made obsolete by the previous generation of
open source

Other Interesting Ones
§  Android
§  The most prevalent mobile phone operating system
§  MySQL, MariaDB
§  The de facto standard for databases nowadays
§  MongoDB
§  The most thriving NoSQLdatabase
§  Also all other relevant NoSQLDBs are based on
open source
§  Eclipse

HOW TO
SUCCEED
WITH OPEN
SOURCE?

Don't Fight, Adopt
§  There is no point fighting against open source
§  Except in exceptional cases, a company cannot
win a battle against open source
§  Open source is like a slow tsunami – you better surf
on it than drown in it
You need to have a viable strategy to work
with open source

Questions for Your Open
Source Strategy
§  Do you get benefits by switching to open
source?
§  Would it make sense to embed open source
inside your services or products?
§  Can you add value on top of an open source
product?
§  Is your market being consumed by open source
products?

It's Tough, Though
§  The market has not yet found an excellent open source
monetisation mechanism
§  Open source based business models yield less value than
closed source ones
§  Red Hat's market cap is around $13.56B (Apr 20, 2015)
§  Compare to Oracle $187.78B, Microsoft $341.40B, SAP
$85.73B
§  Red Hat's yearly revenue is less than half of quarterly revenues
of the aforementioned companies
§  On the other hand, very profitable businesses – such as
Google orApple – base part of their technology stack on
open source components

It's Easier for Customers
§  Compared to vendors, customers have a less
rocky road
§  Open source brings down the total cost of
ownership and eliminates vendor locks
§  On the other hand, you are fully responsible for
the solution you own – it is very hard to get
someone contractually liable for open source
systems

Open Source Benefits
§  Security – no hidden stuff
§  Quality – way more people looking at the code
§  Freedom – little bindings for you, if any
§  Flexibility and customisability – have it your way
§  Cost – no license and support fees
§  Try before you buy – no monetary costs to try
something before taking it into use

Wrap-Up
§  You cannot fight against open source
communities
§  It is better to join them and reap the benefits
§  When planning open source based business
models, scaling is harder
§  As a customer / buyer, open technology
provides numerous benefits

QUESTIONS?
COMMENTS?
Nailed it? Follow us on
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@exove

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