Tim O’Reilly on Open Source

When Tim O’Reilly speaks, we should all listen. Excerpts from an interview in InfoWorld:

Basically, we’re really seeing the development of something that’s analogous to hardware with the IBM PC. If you look at what happened to the hardware business, there was a transitional period where everybody tried to play by the old rules. It wasn’t until Dell figured out that, no, the rules really are different, and the business levers are different, that we saw somebody figure out how to really leverage commodity hardware.

Ian Murdock, the guy who started Debian, and now runs a company called Progeny Linux Systems is right on track with this. Instead of seeing Linux as a product, he sees Linux as a set of commodity software components he can put together for different purposes.

If you look at the history of the PC, the Compaq strategy didn’t fail. It’s just that the Dell strategy was marginally better. The whole essence of the Dell approach was build to order, and I think we’re going to see the emergence of that business model for Linux.

The value will be driven up the stack to data. For this I go back to my Amazon and Google examples. Google may have less of a lock. They probably have more of a traditional software lock in that they’re just better at what they do. But there’s not much difference between Barnesandnoble.com and Amazon.com in the software they have. What are different are the customers they have, and the amount of customer contribution to their data.

With eBay it’s even clearer. The fact is, it’s the critical mass of marketplace buyers and sellers and all the information that people have put in that marketplace as a repository.

So I think we’re going to find more and more places where that happens, where somebody gets a critical mass of customers and data and that becomes their source of value. On that basis, I will predict that — this is an outrageous prediction — but eBay will buy Oracle someday. The value will have moved so much to people who are not now seen as software suppliers.

Amazon is the furthest along this path, in a lot of ways. Amazon really understands that they are becoming a platform. They are becoming the e-commerce engine of an awful lot more of the Internet than people realize. It’s not just a site, but they’re running e-commerce for other people, they’ve built Web services, so people are building applications that (Amazon doesn’t) control that use some of their back-end services.

Two key takeaways:
– use open source commodity components to put together solutions for different purposes – “build to order” software
– build a platform which aggregates data – that is where the value lies

We want to do both in the context of SMEs:
– create solutions for SMEs based on open-source (an SME Tech Utility with 80% standard components, and 20% customisation for a price)
– build an SME information marketplace using RSS, Wikis, Weblogs and publish-subscribe

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Rajesh Jain

An Entrepreneur based in Mumbai, India.