Open-Source Initiatives

The Economist writes about RealNetworks’ strategy of releasing its software as open-source in an effort to thwart Microsoft:

This may sound like a desperate echo of 1998, when Netscape, struggling in Microsoft’s chokehold, published the source-code of its web browser (an initiative that yielded few real results until this June, when the first serious new version of the open-source browser, Mozilla, was released). Yet RealNetworks is not playing defence. It is trying to encourage the creation of a common multimedia software infrastructure for every kind of file format and device, thus thwarting Microsoft’s ambitions in this promising market.

The firm hopes that others in the industry (volunteer programmers, media firms and hardware makers) will take the code, called Helix DNA, improve it and make it run on new devices, such as mobile phones and home stereos, turning RealNetworks’ software into an industry standard. Clever licensing terms are supposed to ensure that this standard does not splinter and that the firm still makes money.

Concludes the article: “RealNetworks’ move is another sign that the software industry is going hybrid. Mixing elements of proprietary software, where the source-code is tightly controlled, with open-source programs enables firms to expand a market, harvest the ideas of others and, they hope, still make money.”

Adds Dan Gillmor:

I continue to marvel at the power of open source. Its logic is inescapable, because its legions of supporters are collectively so committed.

A respected engineering firm with strong government ties (Mitre) told the Pentagon it should be expanding the use of open-source software, also known as free software. The benefits, the firm said, would be high quality, lower costs and product diversity.

Free and open-source software is already vital to the defense mission, the report says, and it needs to be encouraged — albeit carefully, to ensure security and reliability in the future. This is sensible policy.

Dan Gillmor points to a new report by defense contractor Mitre for the Pentagon. [PDF file ]

Also check two articles on the use of open-source in government from InfoWorld [1 2].

TECH TALK: Technology’s Next Markets: Making It Happen

Tech Talk: Isnt developing all this software a mammoth and costly exercise? Surely, this will take up a huge amount of resources and time.

Deviant Entrepreneur: Heres where I have an interesting theory. Call it the Reverse-Walmart model. Think of what Walmart does. It sources products from the worlds cheaper manufacturing countries and sells in volumes to the worlds developed markets where the purchasing power is there. Lets flip this model for software. There are hundreds of software products developed by companies in countries like the US for their local markets. They have done the thinking and architecting. The US market now is a saturated and mature market. There is an increasing reluctance for the larger companies to spend on new technology as rapidly as they had done in the past. (This oversupply led Vinod Khosla to state that 8,000 of the 10,000 tech companies in the US may not be needed.)

What these companies need to do is to open up new markets. This is where the emerging market opportunity comes in. But in these markets, the price-points have to be very different a fraction of what these products sell for in markets like the US. Unlike communications equipment or hardware where there is a base cost for doing each additional unit, in the case of software, there is a near-zero incremental cost. This is what can work in favour of the emerging markets.

The same state-of-the-art software can now be offered to users and organisations at very different price-points. This will not be done by the existing market leaders who have everything to lose by lowering pricing (their existing customer could turn against them, for example). But in the case of the newer software companies, they have everything to gain by opening up markets which they would perhaps never be able to target. This is the disruptive market opportunity for them.

So, in effect, the US becomes the software R&D centre for the emerging markets, who can now leverage the latest and best software. Not having legacy to worry about makes adoption of the new technologies much easier. In fact, in the next 5 years, it may not be impossible to imagine enterprises in the emerging markets having a better and more real-time technology infrastructure than their counterparts in the developed world.

TT: Very interesting! Wish you the very best in your efforts, Deviant Entrepreneur. One last question. What do you think it will take a make it all happen?

DE: Will and Vision, combined with Entrepreneurial Thinking. First and foremost, we need the vision to imagine a different future one where technologys next markets can be imagined and created from the users who have had little or no exposure to technology. The challenge is akin to what the developers of Pudong must have faced in the early1990s as they stared at the marshy wastelands across the river from Shanghai. Think Big, Start Small and Scale Fast.

Next, there needs to be the will to make things happen from many different entities. There needs to be a new ecosystem which must be created this should be an emergent, bottom-up ecosystem, where the whole is greater than the sum of the parts.

Finally, one needs to think entrepreneurially. We know the general direction in which we need to go, but we are going into uncharted territory. There are no maps because the terrain is unknown. All we have is a compass to navigate a world of slippery rocks. And in the words of Dan Bricklin, As we jump from rock to slippery rock, we have to like the feeling.