Once More unto the Breach

Sun's Changing of the Guard and Open Source Software

I've been interviewed several times in the past couple of days for my opinions on Sun's changing of the guard from McNealy to Schwartz (CNet article), and what that means for open source.

First, Jonathan Schwartz has been running point on executive announcements from Sun on open source participation and initiatives for some time now, so I wouldn't expect his support for such initiatives to change as he takes the helm.  Indeed, Sun has a long history of involvement with collaborative development since long before we called it open source software.  SunOS was a BSD derivative.  They've participated in Apache, the Mozilla project, and made substantial contributions to the Gnome desktop with respect to accessibility. This was all before the creation of their own projects and the release of OpenSolaris. 

Second, Linux has certainly caused Sun no end of grief over the past 5-6 years as customers moved from Big Iron UNIX systems as represented by large multiprocessor SPARC systems running Solaris to scalable server farms of less expensive Intel-based systems running Linux.  Customers wanted to support adding compute power by the slice at marginal extra cost.  Sun dabbled with Solaris on Intel and that failed because no customer wanted it.  Solaris was synonymous with Big Iron UNIX.  Customers that wanted Intel server based "UNIX" weren't going to call Sun, and Sun's field probably wasn't getting compensated properly on small margin sales of Intel Solaris.  This was as brilliant as DEC trying to sell PCs (on several separate occasions). 

Third, while Linux was the competition, Sun didn't think open source software was the competition.  Creating the OpenSolaris community earlier, however, wouldn't have helped. The entire company was still tooled up around its high margin big iron business.  The creation of the OpenSolaris community is the right answer as the company moves forward with the new hardware lines, designed specifically for web-centric compute loads.  The OpenSolaris community has been highly successful by all accounts (March newsletter, Redmonk analysis).  It doesn't compete with the Linux community, and was never intended to be that sort of play.  It is a direct conversation, however, between Sun and its customers and partners as they develop the next interesting architecture play.  (The Network is the Computer from the customer's perspective — and Sun will have the next computer to support specific sorts of Network workloads.)

Sun has the opportunity to reinvent itself around the new hardware line.  They have made such changes in the past: they started as the desktop UNIX workstation company.  As the Internet boomed, they became the big iron UNIX server company.  McNealy was around through that transition and is still certainly engaged with the company's daily operations as head of Sun Federal.  That's not to say there aren't big challenges ahead and some of them will no doubt be painful. 

But really, it's all good news.

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Oracle Linux: Novell or Red Hat? (Hopefully neither!)

Updated 18-Apr-2006, 13:30: Added the postscript on the Boston Globe quote. 

This morning saw reports in the Financial Times that "Oracle considers venturing into Linux".  This was picked up by CNet (via Reuters) which set up the discussion about Oracle's desire to deliver a entire stack of technology to customers, and then drew attention to the quote that Oracle has even "considered buying Novell."  And thus are rumour mills fed.  Let's actually look at the discussion in a business context:

In an interview with the Financial Times, Mr Ellison said that Oracle wanted to sell a full “stack” of software that, ... included both operating system and applications. “I’d like to have a complete stack,” he said. “We’re missing an operating system. You could argue that it makes a lot of sense for us to look at distributing and supporting Linux.”

Not an unreasonable opinion.  Go all the way back to Geoff Moore and Crossing the Chasm (1991).  You want to present a "whole product" solution to your customer, i.e. your core revenue driver and all the complements you can reasonably provide that your customer perceives as the complete solution to their problem.  If to sell an Oracle "solution" today means Oracle licenses and Oracle vertical specific applications, AND an expensive operating system on expensive hardware, AND an expensive application server, then reducing the overall cost to the customer while driving the core revenue generators would seem to be A Good Idea. 

As part of a recent study of the open source software market, Mr Ellison said that Oracle had considered buying Novell, which after Red Hat is the biggest distributor of Linux. “We look at everything, play this thing out,” he added.

This statement should not surprise anyone that has worked in a large enterprise with a view of the executive offices.  Companies explore ideas on paper constantly in their corporate/business development offices.  Lot's of "what if" scenarios are played out, and numbers crunched without anyone ever committing to doing something.  Companies even pay good money to the McKinsey's of the world for this sort of analysis even if they have their own inhouse "business consulting team". I'm sure Oracle has also run the numbers on Red Hat and SuSE (before the Novell acquisition) and developing their own distribution at various times in the past, and will do so again.   

“Now that Red Hat . . . competes with us in middleware, we have to re-look at the relationship – so does IBM,” he said.

This last quote is the troublesome one (or maybe it's a misquote without context).  Oracle is the enterprise relational database company.  It's been expanding its brand with vertical specific Oracle applications.  It needs middleware (i.e. an app server), like it needs an operating system on which to run, but it isn't a middleware company. 

Go back to the original business goal expressed in the article, that Ellison wants to provide a complete stack or solution to his customer.  Good idea, but he has better ways to spend shareholder dollars to solve customer problems than acquiring the stack outright, and then living with the cultural consequences and long term engineering expenses of becoming an "operating system company" and an "app server company" as well as their primary focus as the enterprise database company.  Spending good money to get into other rapidly commoditizing businesses, rather than serving your customers needs by supporting companies like Red Hat with its JBoss acquisition that already know how to make money in a different margin business seems a waste.

As I suggested Friday, Oracle should be hammering down Red Hat's door to expand the relationship with all the money they saved by not acquiring JBoss, or in this case (hopefully) Novell.

P.S. You have to love news editors.  I was interviewed by Hiawatha Bray from the Boston Globe yesterday.  The quote as it appeared:

But Stephen Walli, vice president of Optaros Inc., an open source consulting firm in Cambridge, said buying Novell or Red Hat would be a mistake for Oracle.

''They would have to carry all that cost on their balance sheet," Walli said. ''I think it would be a really bad idea."

This is why I blog the whole idea.  While accurate, the quote could mean it was a mistake for Oracle's business to carry the engineering expense compared to the value to their solution to their customers (which was meant), OR that Novell or Red Hat are dogs that one wouldn't want on one's balance sheet (which wasn't meant).  Maybe I'm being overly sensitive. 

 

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Microsoft continues to learn about Open Source: Wix is two years old!

I was pretty hard on Microsoft with it's open source and standards messaging the other day, and deservedly so if we're talking about their public messages and actions.   But in the background we continue to have great examples for Microsoft to learn from.  I wasn't paying attention to the date (or the blog world enough of late).  Wix is two years old. (Wix is the Windows Installer XML project published on SourceForge under the Common Public License — so yes, Microsoft DOES open source — even if they insist on shades-of-grey marketing calling it shared source.) 

Rob Mensching's entry tells the whole story:

• 30+ Releases
• 215,000+ Downloads
• 630,000+ Project Web Page Views
• 600+ wix-users mailing list members
• 530+ Bugs (480+ Fixed)

And it is essentially a group of Microsoft employees on their own time, with an engaged community of happy Windows developers.  Not only do internal teams use WiX, along with a healthy set of customers, but so do a number of open source products (MySQL first, and now SugarCRM) for their Windows packaging. 

Read his blog entry and see why Rob is a great example of a community leader.  As he says in closing, "I stop and think about where we are at today and I can't help but smile. This is so much fun and I'm definitely looking forward to the next two years."

Excellent work, Rob!

Oracle and the Red Hat JBoss Acquisition

The other day I offered up my opinion on the Red Hat pending acquisition of JBoss.  One of the things I discussed was the "what if" scenario if Oracle had acquired JBoss instead.

"If Oracle had acquired JBoss, it could have been an opportunity for Oracle to have grown its core business and revenue streams by making an inexpensive app server available as part of the mix, creating a better overall solution for their customers that need a database, apps and app serving infrastructure.  This is similar to what SAP did a number of years ago with SAPDB (now MaxDB from MySQL).  Oracle could have also used such an acquisition to begin the long and necessary cultural evolution to learn about open source as a supporting development, marketing, and delivery strategy, similar to Novell's long road with the Ximian and SuSE acquisitions.  Or they could have made a complete mess of it, ...."

The Red Hat acquisition is actually the best of both worlds for Oracle:

• Oracle and Red Hat have a long standing relationship.
• The only open source messaging Oracle delivers well is around Linux.  They always fall down when they get caught between praising open source in a Linux context, then denigrating open source when asked about the myriad open source database engines.
• Oracle needs to reduce the complement costs in their overall solution pitch to their customers to better serve those customers against the competition from BEA, IBM, and Microsoft.  (Maintaining the engineering development expense of delivering your own app server with its own support and maintenance burden when you're a database company isn't a great way to do this.) 

Oracle can now deliver the same less expensive overall app serving solution to their customers on a JBoss Red Hat bundle for their Oracle Java app world, through the existing relationship, and consistent with their open source messaging, without having eaten the financial and cultural pain of a US$350M+ acquisition, and its attendant business risks.

Hopefully Oracle is not simply ecstatic — but aggressively ecstatic and hammering down the door at Red Hat to expand the relationship with all the money they saved. 

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Is Microsoft playing well with others?

That's the headline of a recent article by CNet's Martin Lamonica.  In it he covers both sides of the debate through the past year with lots of excellent examples.  We have things like:

• Bill Hilf's announcements supporting partnerships with SugarCRM and JBoss over the past six months.
• Bill Hilf's announcement about VirtualServer support for Linux.
• Bill Hilf's announcement of Port 25, which he hopes to become sort of Channel 9 for the Linux and open source world.

Do we see a pattern here?  Let's contrast it instead with other pronouncements from Microsoft on standards and open source from the last couple of quarters:

• Alan Yates and Jason Matusow commenting on ODF as a closed "standard" despite multiple implementations from a variety of vendors, versus their own proprietary specification which they're rushing through a standards development organization (ECMA) so they can claim to have a standard too.  (And this doesn't begin to cover the lobbying nastiness around Peter Quinn in Massachusett's over the ODF war.  That's a helluva way to treat a customer.  Almost as good as threatening them with BSA audits.) 
• Despite creating an ECMA standard around C# and the Common Language Infrastructure, and a "shared source" research project, they continue to throw up licensing ambiguity around the Mono project, and deny it birds-of-a-feather meetings at their developer conference, despite it being the only other real implementation of their standard.  (Maybe this is a clue to future messaging and practises around companies and projects that try to implement the coming Microsoft Office format initiative at ECMA.)
• Don Dodge's blog commentary on the Red Hat acquisition of JBoss where he is deliberately divisive in his commentary, and naive with his open source rhetoric that reflects a Microsoft of four or five years ago.  He started the discussion on Redmonk's James Governor's blog in the comments and rolled it to his own blog. 
• While a year old, Bill Gates started 2005 off unable to resist another "communism" barb thrown in the open source direction (that was later echoed by Shai Agassi):
  "There are some new modern-day sort of communists who want to get
  rid of the incentive for musicians and moviemakers and software makers
  under various guises. They don't think that those incentives should
  exist." And remember, culture comes from the top of an organization. 

It's Dodge's entry that actually provoked this post in the context of Martin's article.  After laughing at open source developers that have contributed to the JBoss code base without getting rich, Dodge makes all the traditional Microsoft rhetorical blunders around patents, litigation, "working for free", and support. 

At one point he states, "The Open Source phenomenon has been difficult for venture capitalists and business people to understand."

That's certainly not been my experience the past few years.  The VCs I regularly interact with are at worst deeply curious about the business model with sharp insights and good questions, and most have become quite savvy.  They recognize that it's just economics.  As a business development director in Microsoft's Emerging Business Team, I would have thought that Dodge would be more inquisitive rather than divisive, and less prone to throwing around old rhetoric.  Perhaps he needs to meet with Bill Hilf so he can get "on message."  Or maybe, he already is on message. 

Bill Hilf is ex-IBM and can be trusted to use open source projects and practises tactically to serve the business best.  I don't think that's a bad thing at all. Indeed I still think that my former employer is missing a huge opportunity, but that's old news.  But Bill's initiatives seem to be the only co-operative ones we hear about lately from Microsoft in the open source software space, and they're essentially Linux focused.  In a company of 60,000 Bill Hilf is one person.   

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Red Hat to Acquire JBoss

Updated (11-Apr-2006, 17:00): Added reference to Stephen O'Grady's analysis up front, and news links at the end including a brief discussion on the apparent blog scrubbing at JBoss.

Red Hat has acquired JBoss.  Here are the official links:

• Red Hat announcement
• JBoss FAQ (A good read.)
• Marc Fleury's blog entry on the subject.
• Stephen O'Grady's (Redmonk) excellent analysis is here. 

At the very high level, this looks good.  Two "open source software" companies, each using free software licenses, each pitching the enterprise and selling support and maintenance subscriptions.  It's certainly a great data point for those that doubt an open source business model as the deal was valued at US$350M dollars. 

I've never been a big fan though of thinking about "open source software" business models as something new or special, and think the more interesting questions are actually the boring business aspects of the deal.

These are actually very different companies:

• Red Hat is 11 years old, and has been public for 7 of them (this summer), with all the discipline to the numbers quarter on quarter that level of execution requires.  JBoss is coming through it's explosive growth period over the past few years since emphasizing the support and maintenance model (rather than the training or consulting models of earlier JBoss Inc. history), and has a very different culture to support that growth.   
• The Red Hat value proposition is inexpensive "UNIX" servers that scale out to add incremental compute power at marginal added cost, pitched to operations and procurement.  The cost justification is easy against traditional big iron price points (i.e. it doesn't matter to the customer that the "license" is called a "support and maintenance subscription" or that this is open source in a direct way, but rather that it's much less expensive).  The JBoss value proposition is inexpensive app server software, again that scales out to add incremental app serving power at marginal added cost, pitched to applications architects.  The cost justification is easy against the traditional big app server licenses, and application architects no longer need to pervert their overall applications architecture to reduce the number of expensive app server licenses they need.  Each company may be pitching the same enterprises, but their sales teams are probably talking to different people.

The processes and values of the two companies are likely very different at this point, so this is where the results of the acquisition will be interesting to watch over time.  By values, I'm not talking about open source software, but rather all the boring business questions:

• What makes a good customer?
• Is this customer important?
• How are the field organizations compensated?
• How will next year's product offerings be determined?

If Red Hat can introduce JBoss technology to a lot of its customers, this could be great for business growth, assuming the packaging works.  But the reverse may not be true: indeed Marc pointed out during the announcement of their Microsoft partnership last September that 50% of their user base could be on Microsoft Windows.  Many customers may not want to move from their SuSE, Windows, Solaris, or other Linux systems to Red Hat's support and maintenance subscription.

This will be the interesting challenge for Red Hat — how to preserve the continued growth of JBoss technology regardless of the growth of Red Hat Advanced Server deployments.  Novell is a JBoss partner.  Microsoft is a JBoss partner.  These could be opportunities for Red Hat to maintain the growth of JBoss, or to try to grow the RHAS base, and if they're too heavy-handed they run the risk of damaging JBoss growth.  (I know they say they won't do this in the FAQ — let's see what decisions come out of their strategy meetings over the next few quarters rather than the intent of today's announcement.)

And this is the trick of any acquisition.  If Oracle had acquired JBoss, it could have been an opportunity for Oracle to have grown its core business and revenue streams by making an inexpensive app server available as part of the mix, creating a better overall solution for their customers that need a database, apps and app serving infrastructure.  This is similar to what SAP did a number of years ago with SAPDB (now MaxDB from MySQL).  Oracle could have also used such an acquisition to begin the long and necessary cultural evolution to learn about open source as a supporting development, marketing, and delivery strategy, similar to Novell's long road with the Ximian and SuSE acquisitions.  Or they could have made a complete mess of it, creating old-style pricing models, attempting to lock the technology to their way of doing things, and maintaining their 4-year old "open source" rhetoric about quality, security, and so forth. 

This sort of cultural fit is important and Red Hat will make a much more predictable home for JBoss.  One might wonder if Marc Fleury will become less outspoken than he has been in the past.  I find that hard to believe for a couple of reasons.  First, Red Hat already supports such a culture and has a number of outspoken people, including Micheal Tiemann and Ulrich Drepper.  Second, he's always appeared to be sensitive to what information to share and what not to share.  While I may disagree with a lot of what Fleury has to say with respect to "professional" open source and his perception of the battle with IBM, he's always remained quotable. 

The Red Hat acquisition will hopefully prove to be a great fit and use of technology and the message to the benefit of all their customers, new and old, and to their continued growth.

Press links:

• CNet coverage from Martin LaMonica (article on the acquisitoin quoting our own Dave Gynn, and blog in which the blog scrubbing is discussed). 
• On the blog scrub issue (Register's article), I have to agree with Raven Zachary — who cares.  Marc has been outspoken for ever, sometimes to the caustic and foolish point of the sort of material suddenly scrubbed from the JBoss blog site.  Has he recanted?  Probably not.  Is he feeling perhaps a little sheepish or foolish — likely.  Did ANYONE really believe someone wouldn't remember the comments and go cache diving?  That's almost the more naive and embarassing thing at this point in history on the web. 
• InformationWeek coverage from Charles Babcock
• ComputerWorld article from China Martens (and Eric Lai)
• CRN article from Paula Rooney

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