Will open source be a victim in the Dot Bomb 2.0?
Summary: I'm not saying it's time to call mom and tell her you're moving back in your room. But every market goes through a boom, then a bust, before finding its footing, and the second stage may have just arrived for open source.
In some ways Dot Bomb 2.0 has already begun.
Google is down 27% since the start of the year. Once solid niches like consumer health are starting to falter.
As Time-Warner set off Dot Bomb 1.0 by acquiring AOL, putting a cap on potential Internet values, Microsoft may have set off the second through its bid for Yahoo, which seems to have shown that a premium on current prices isn't there.
For the last few years the words "open source" have been what "e-commerce" was in the last decade, a secret sauce or code phrase which led greedy investors to the trough.
But real profits have been tough to come by, just as they were in e-commerce back in the day. Look at a chart for, say, Red Hat, and you wonder if the big bucks will ever arrive.
With the full cost of the Big Shitpile still unclear, fear is rapidly replacing greed on Wall Street. Even companies like Applied Materials are having trouble getting traction, despite talk that they're a solar energy play.
(Full disclosure demands I mention my brother-in-law has worked at Applied for many years, and I have some AMAT in my retirement account. He's due to retire this month.)
When markets roll over it's those companies with weak profits which are shot first. First individual stocks, then whole sectors.
I'm not saying it's time to call mom and tell her you're moving back in your room. But every market goes through a boom, then a bust, before finding its footing, and the second stage may have just arrived for open source.
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Talkback
Insightful
(Minor as you indicated in this comment:
But real profits have been tough to come by, just as they were in e-commerce back in the day. Look at a chart for, say, Red Hat, and you wonder if the big bucks will ever arrive.)
There's some question whether open source ever could be the primary basis for a large company's profits. (A company like IBM which uses open source to reduce staff costs and as part of bait-and-switch for bids is not relevant to this discussion.)
I'll phrase the question: Is there a business model based on open source which you would consider likely to produce a company the size of Oracle, say?
Correction
I don't think that open source will implode, as much as Anton Phildor might want it to, but commercial promotion of it might be curtailed somewhat. One of the advantages here is that unemployed open source programmers are free to continue work on their projects while they look for work and afterwards, even if nobody pays them to do so (many programmers have hobbies). Richard Stallman and the FSF are certainly not going anywhere.
One thing that will be interesting to see is how many "Web 2.0" businesses will survive a downturn. What the dot-bomb fiasco should have taught investors is that eventually, all businesses have to turn a profit in order to be viable. No bubble lasts forever.
Not expecting an implosion...
And companies like Red Hat are unlikely to collapse in a downturn. The complaints about the fate of JBoss from its (rich) former owner shows that Red Hat is willing to sacrifice significantly in order to avoid investing in people. Such parsimony may not maximize product quality at any given time, but it does assure survival.
And with luck people eliminated during a downturn will continue to labor on the product without being encumbered by salary. As you say, they will be "free to continue work on their projects while they look for work and afterwards". Red Hat might even lay off the company's most dedicated employees because of the greater likelihood of voluntary work.
Another reason for open source continuing through a downturn is the cleverness of companies which sell open source to other companies which in turn are not required to share their modifications. Just selling/licensing the software outright would be simpler, but ways of evading the open source philosophy are being developed successfully.
So, no, I don't expect open source to go away, not even the commercial varieties. It has been accepted as a normal part of the business of selling software. And there's always a need for paid software.
I said "want"
Personally, I'm completely opposed to alcoholic beverages, but that doesn't mean I think outright prohibition is feasible or even that they're likely to become obsolete any time soon.
Doesn't really makes sense
The profit in open source software is not in the software it's in the reduced cost of IT allowing the actual business to make more profits.
Say my business is generating electricity. Now I need software to control all those systems. My set up is not like any other and proprietary system don't fit. Basically a proprietary solution has me paying for a bunch of stuff I don't need. So I take some open source solution for free have my in house developers modify the parts that I do want to work with my business. Since I'm not selling software I keep those mods to my self.
Now no one is profiting off this software directly but indirectly I'm profiting from my business. The software is in place and it costs me a lot less to implement the solution that allow the business to run. So my business is profiting by selling energy not by selling open source software.
Some observations.
Second, it's okay to obtain stuff you don't need. So long as the stuff you do need is there and the price is acceptable.
Third, the example you give requires the open source using organization have "in house developers". Comparatively few organizations can afford to maintain such a staff, and fewer still probably would have the time, talent, and resources to make major modifications to elaborate software. Especially when software adapted for specific industries is widely available.
Fourth, organizations changing open source must as a rule give the changes to the "community". Though some open source sellers will include a contract provision authorizing the paying organization to keep its changes secret.
Quibble
Most of what you wrote was on the mark. The bit I quote above isn't, though. Under the GPL and similar licenses (which covers most of open source), no one is requered to give internal changes back to the community. Source code to the changes are required to be made available if you re-distribute the software, but if you're not distributing then there's no onus upon you.
Please clarify.
There is a real problem here. Combining GPL software with other open source products, or merely tweaking GPL software for your own use, obligates you to contribute those code enhancements back to the community.
[End quote.]
http://blogs.zdnet.com/open-source/?p=2027
Thanks.
No problem
Rather than depend on his erroneous second-hand take on it, I would invite you to look at the actual licenses.
Here's the GPLv2,the most common license:
http://www.gnu.org/licenses/old-licenses/gpl-2.0.html
The GPLv3 is slightly clearer in this regard:
http://www.gnu.org/licenses/gpl.html
Carefully read. You'll see that all the onus of providing source code is in the context of distributing (or "conveying" in the GPLv3) the program. Don't distribute the program and you don't have to distribute the code.
Furthermore, in the GPLv3 you'll see that Section 2 even allows conveyance to "others" (such as contract programmers) for the purpose of creating private modifications for you. Those private modifications are truly private, and are specifically exempted from external distribution. IOW, somebody who is hired to create a private hack for you is specifically NOT allowed to distribute it behind your back, although they could distribute everything BUT your hack.
If that's not clear enough, or if you feel my interpretation is in error, here's a plain-language clarification from the FSF that definitively puts the issue to rest:
[b][i]"The GPL does not require you to release your modified version, or any part of it. You are free to make modifications and use them privately, without ever releasing them. This applies to organizations (including companies), too; an organization can make a modified version and use it internally without ever releasing it outside the organization."[/i][/b]
http://www.gnu.org/licenses/gpl-faq.html#GPLRequireSourcePostedPublic
Which means that you can distribute it to your employees for internal use without incurring the onus of distributing your source code modifications.
Dana is simply propagating a fallacy that has been used by detractors of FOSS for the purposes of FUD for a long time now. I won't speculate on whether it's for market advantage, out of ignorance, or from pure laziness. ;) Whatever the cause, he should know better, and his "retraction" (http://blogs.zdnet.com/open-source/?p=2031) is written as poorly as this article.
The bottom line: nothing in the GPL requires you to distribute modification you made for your private use, so long as you do not deliberately release those changes. You can successfully sue people for stealing and distributing your private changes. Of course, once the horse is out of the barn it's nearly impossible to put it back, but that's an issue shared by all software under any license.
Further to that....
A considerable number of them have IT departments with high expertise in UNIX which they can transfer to Linux with relative painlessness. The odds are that they're writing their own code as well to perform said integration. How much will make its way back to the mainstream via the kernel or other software is questionable, of course, but well within the spirit and rules of the GPL.
Smaller entities do rely on consultants and the rule applies to them as everyone else. If you hire a consultant make sure you vet the living daylights out of their CV history the same way you would, say, the plumber.
So far "dot-bomb 2.0" is a fantasy as this current panic is rooted in far too much cheap credit floating around that finally came home to roost when it was discovered that people had borrowed far more than they could ever pay back.
If you're drowning in debt and the baliffs are at the door then perhaps it is time to call mom and see if she hasn't rented out your old room yet.
ttfn
John
...
In house developers
Even if you don't hire developers, you could divert licensing funds to contract developers for specific work. With free software, you can hire the developer of your choice.
Etc...
Will the company behind the open source solution make a profit?
How profits are achieved and more ...
Either way, there are fewer hidden costs with open source because you can try it all out before buying it and you know which components come with a price.
Another thing ... if your developers made modifications to the open source software components to work with your business, they will likely want to contribute those modifications back to the community because they gain notoriety from it and others can use those modifications, so your company looks generous and cool. Later, your developers may get better jobs because of their demonstrated learning with the modifications they contributed. Your company profits from the use open source, the developers profit from contributing to the open source, and ultimately the open source company profits as well. Everyone wins.
Does that help?
Virginia
xaware.org
TimeWarner/AOL sparked dot bomb 1.0?
What caused the dot bomb was all the .com's that ran out of money and closed up shop. The default on office leases and rents, equipment and telcom contracts ran rampant over the silicon valley economy from San Francisco to Hollister. The commercial real estate market tanked. The telco's wrote off tons of T1 and T3 contracts and cancel millions in contacts to their vendors. The canceled orders to the vendor rippled out into the economy in general.
What surprised me, was that the wireline plunge rippled into the wireless industry. Wireless was on the verge of rolling out their 3rd generation networks. Instead, they put that roll out off 18 months that turned into 5 years. I got laid off the end of 2001 as a result of the wireless retrenchment that resulted from the wireline and real estate crunch.
Since Open Source isn't running on VC or other investor money, I don't see how Open Source can possibly be the victim of dot bomb 2.0.
Likewise, I don't see the Microsoft bid for Yahoo marking an end to the dot com bubble 2.0. Microsoft is getting desperate to find SOMETHING to battle Google with. Yahoo is as good a hammer... uh, tool as there is, not that it would work.
TimeWarner and AOL wasn't in response to any threat. It was a forwarding looking move to combine the old and new media and create the next big thing. It didn't work, which SHOULD be a warning to Microsoft.
Will open source be a victim in the Dot Bomb 2.0?
Some [i]companies[/i] may keel over, but "open source" is here to stay.
The first dotcom bubble burst because few people had figured out a way to make money off of their Internet presence before their venture capital ran out. The whole "invest now and we'll figure out how to profit later" strategy was a highly risky gamble.
Note that the failure of a huge number of dotcoms did not foreshadow the death of Internet commerce. Plenty of companies did learn how to turn a profit and now it's commonplace.
Likewise for Open Source. Some projects will fail, as always happens in every industry. But we do not see the same insane levels of VC funding as we did in the late 90s.
And people are investing for different reasons, and different returns. In the 90s you'd find people hoping to make a fortune selling petfood (or whatever) on the Internet. Today you've got companies like IBM saving a fortune by building infrastructure around open source software. That's not a subtle difference. The projects that are valuable to these high-powered consumers have been and will continue to be bought and/or supported by them even if the projects don't otherwise make a profit.
If it didn't rise, how can it fall?
PUH LEEZE.
RE: Will open source be a victim in the Dot Bomb 2.0?
RE: Will open source be a victim in the Dot Bomb 2.0?