Software and beer: What open source and craft brewing have in common
There's a common thread to IBM's and Microsoft pending respective acquisitions of Red Hat and GitHub: both are pillars of the open source world, and neither wants to destroy their open source credibility. There's a good precedent for where IBM and Microsoft might take their cues: the craft brewing world, where the big guys don't want to destroy the identities of the independent brands they've bought.
A couple times within the last month, my Big-on-Data bro Andrew Brust has been the one to disrupt my routine with some drop-everything news. First, it was just after taking the phone off airplane mode while landing at Newark, as he texted me about the announcement of the Cloudera-Hortonworks merger that just broke an hour or two earlier. There went that night. And now, just a couple days ago, Brust messed up my Sunday night with news about IBM buying Red Hat, just as I was about to sit down and stream The Romanoffs. Thanks a lot, Andrew.
Steven J. Vaughan-Nichols and Larry Dignan have already weighed in on the big picture. This one zooms in on a very small part of that picture. My revenge to Mr. Brust, as it also covers a topic that is dear to both of us: craft brewing.
Hold that thought.
The idea came from a realization that the viability of both the IBM/Red Hat and Microsoft/GitHub deals hinges on their ability to preserve the independence and credibility of their new (or pending) acquisitions. That's just as global beer giants are doing with the craft brew labels that they are collecting.
Specifically, for Red Hat and GitHub, the market success has been attributed to their Switzerland-type reputations as supporters and central players in the world of community-style open source.
The back story relates to the origins of open source. It provided a new community-based meritocracy for developing software that rebelled against the dominance of commercial ISVs who operated with proprietary models and their associated No Trespassing signs to shoe off independent developers. For the open source community, the rationale was that opening up software development to the community would not only provide more freedom, but also improve software quality as you tapped the world's largest virtual development team.
Over the past decade, open source has moved from the margins to mainstream acceptance. You can credit Linux with opening the door, but today, developers often prefer open source on their resumes because it makes their skills more portable. And their employers now look to open source for commodity technologies that avoid vendor lock-in.
While Red Hat is not the only commercial distributor of Linux, its commitment to a 100% open source product model (most of which is based on community-managed projects) has made it the poster child for commercial success. In turn, GitHub has built its street cred as the largest repository of open source projects. Both companies need to keep proving that they will continue to play neutral Switzerland roles to developers. The last thing they need is becoming known as captive subsidiaries of IBM and Microsoft.
For now we have one proof point that corporate ownership is being downplayed. With the Microsoft GitHub deal having closed just last week, you can go to the GitHub website and look for mention of Microsoft. You'll have to do some searching. It's not on the Home page, nor About This Company page. Nope, you'll have to drill down to the press page where there is a link to an external article that ran in Ars Technica.
So what about the craft beer analogy?
The craft brewing industry emerged in rebellion to commercial brewers who dominated the market with bland product. The movement, which began in the 1980s, reached critical mass in the 2000s as beer drinkers realized that they no longer had to put up with the same stale product. Although it has dipped a bit of late, craft beer growth by far still outstrips the legacy commercial beer market. Aside from a few giants, like Sam Adams, the success has been largely driven by enthusiasm for hyperlocal brands that have made beer festivals such a lucrative pastime. "Miller Time" no longer has the ring with millennials that it enjoyed with baby boomers.
Just as IBM and Microsoft want to cash in on the mainstreaming of open source, global giants of the beer industry want to tap into the hottest growth segment of their market. Not surprisingly, there has been significant consolidation over the past few years. But if you look at a bottle or can or go on the website of Ballast Point, you won't see any mention of the company being part of the Constellation Brands empire. Nor will you see that Goose Island is one of 100+ bands owned by ABInBev.
The craft brewing industry has its fair share of angst about whether brewers that are no longer independent realty fit the category. There's a lot of concern that the power of global giants will push distributors away from independent brands.
In the same way, were GitHub or Red Hat to be viewed as captive subsidiaries of Microsoft and IBM, much of their value proposition would evaporate. It could lead to forking, such as what happened with MySQL after Oracle acquired its parent, Sun Microsystems.
Admittedly, the IBM/Red Hat Deal has another value proposition for IBM that drove it to pay roughly a third of its market cap that went beyond the pure open source angle: the inclusion of OpenShift, that could make IBM, a distant challenger in the public cloud, become the go-to for enterprises seeking a common, container-driven environment that allows them to keep their cloud options literally open. Nonetheless, IBM doesn't want to mess with the goose that lays golden eggs. It has pledged to preserve the Red Hat brand, operate it as an independent entity (within the Hybrid Cloud group), and keep the company intact. We expect that will also mean mentioning IBM's ownership of Red Hat in the fine print, if it's mentioned at all.