IT Investment Research

Ingres CEO Touts Open Source Software as Help to Economy

There is an article/advertorial floating around the Internet by Roger Burkhardt, CEO of Ingres, that asks the question. “Can Open Source Help the Economy?”

I am afraid Burkhardt is suggesting possibilities that open source software terms, conditions and marketing techniques cannot deliver.  As such it sets up expectations which—when not met—will spread more misinformation and doubt about the open source culture and movement.  Open source cannot relieve “pressure on global IT budgets” in any kind of significant way for two reasons, neither of which can be controlled by the open source culture and its fans in the supplier world: 

1. First, annual “new-new” licensing of software is a small percentage of the overall IT spend in any given year (about .5%--$20 billion of $5 trillion--depending on whose market-size spending numbers are used). That means the opportunities to save vis a vis an individual IT budget are also small even if Burkhardt is saying open source could replace the "new-new" license spend totally (very unrealistic).  IT budgets consist mostly of personnel costs, overhead, systems and storage hardware acquisition and maintenance, implementation and other types of consulting, IT-based services such as software as a service (SaaS), maintenance on existing installed software and “new-old” licensing where new but required versions of installed software is not included in the maintenance fee. Of course, Burkhardt's company naturally treats the latter two types of spending as sales opportunities but very few such situations turn into migrations simply because of human nature and the odd happenstance that a large number of IT users are happy with their software.
2. Second, there is a significant personnel cost (training, implementation time, and so forth) associated with bringing in open source software and no one in the open source movement would tell you otherwise.  In addition, typically—but not always—a maintenance support cost equal to the maintenance fees associated with any other kind of software is involved.  As with point 1, anyone looking at total costs of ownership is not going to find a large nut to trim. The open source movement is always careful to position its deliverables as free as in speech (or some such similar analogy where speech isn't free), not "free as in beer."

Burkhardt cites 25% savings found by Forrester.  But I would guess they are realized against the half of a percent mentioned in point 1 above. So now the "global IT budget savings" that could be realized with open source software are down to around a tenth of a percent. Every little bit helps as they say but don’t promise “much lower costs.” (The 25% savings on hardware costs he mentions could be realized by using any software on commodity servers.)

Even if “proprietary vendors” were foolish enough to raise license fees by 45% (unlikely in a down economy) everyone solely competing in the software market--whatever the terms and conditions of their licenses--is competing for this sliver of the "global IT budget."

And what is a "proprietary vendor" anyways? Ingres' top competitor Oracle just published how it's involved in the open source culture and its activity probably dwarfs Ingres', simply because of scale.

So the answer to his question is "No, open source cannot help the economy very much, and should not be expected to." For Linux in particular, publicly available IDC research illustrates that Linux is replacing older Unix versions as would be expected because of the way IBM (IBM), HP (HPQ) and other systems suppliers promote Red Hat and Novell as a replacement for their own heritage Unix software (Q3 IDC data is available but I have not yet posted on it; the trend remains the same). I do not see any suppliers making a similar recommendation for the “higher level software applications” that Burkhardt mentions. There is one systems supplier making a recommendation like that vis a vis Oracle (ORCL) RDBMSs but I don't see how Sun (JAVA) pushing MySQL helps either open source or Ingres.

Leave open source to what it can deliver--more open development processes that save suppliers (trickling down to users) research and development expense.  As it has delivered for the last 50 years.

Where Is China in the Open Source World?

Yet another European Union (EU) front group has glommed on to the open source software (OSS) culture and OSS terms and conditions (Ts&Cs) to make a political statement in favor of government regulation and manipulation of the information technology (IT) market. The document could even be seen as calling for UN-like intervention in the market. Called the Open World Forum (OWF), its propaganda vehicle is a document titled the “2020 FLOSS Roadmap.” Open World is filled with the usual litany of front-group capitalized concepts such as Open Platforms, Open Processes Open Standards, Open Services, Open Clouds and the like.

It’s probably no coincidence that the document was launched at an event in Paris because it reads like a modern-day Plan Calcul (that turned out well, non?). The document implies IT workers will have to “volunteer” their time to work on OSS. It uses the words "must" and "impose" more than once. It also implies that these undefined international regulators will reduce the number of OSS licenses available to OSS communities and even force community interaction. These statists even want to regulate business models. I wonder if in this proposed brave new Open World some college kids would be allowed to start a business, say using OSS-based servers running, say closed-source patented search algorithms monetized by, say selling ads?

The Open World Regulatory Authority (OWRA) might even prohibit certain mergers and acquisitions and business practices.  Neelie Kroes was not nominated as Czaress however.

Written apparently by a group of academic and political elites along with the usual assortment of vendor-backed consortia, the listed authors also include representatives from Accenture, Alcatel, Bearstech, Experlog, Google (GOOG), Nexedi, OpenLogic, Sopinspace and Sun (JAVA). To be fair, I think the suppliers simply contributed sections or commentary on certain sections. IBM (IBM) and Red Hat (RHT) seemed to have had the good sense to distance themselves from the actual manifesto (the front group’s word, not mine) but both have members on what is called the FLOSS 2020 Roadmap Committee along with AtosOrigin, Bull (BULL on Euronext), Ingres, Mandriva, Nuxeo, Openwide, SAP (SAP), Siemens, Talend and others.

The false economic, historical and technical assumptions are too numerous to mention in a blog post and the document is even geographically inaccurate.  Consider this excerpt:

“…  Fast developing countries in the South such as China, India, or Brazil have fully grasped the significance of this and are developing a strong industrial and public policy around FLOSS applications so as to reduce the digital divide that separates them from Northern countries."

The fact that OWF has placed China and India in the southern hemisphere is only one of the many problems with its treatise.

Elsewhere it says:

"Today, lower budgets will force organizations to reassess their investments, and to try, as a result, to optimize their development projects. This should have the result of favoring “low cost” solutions and in particular, the development of FLOSS applications. When considering any prospective work, then, we must absolutely take this analysis into account."

The idea that OSS is de facto part of a “low cost solution” is the opposite of what the open source culture and philosophy stands for. In fact FLOSS is an Esperanto-like attempt to combine the English word ‘free’ and the French word ‘libre’ with the OSS acronym, done purposely to demonstrate that the concept of free in the definition of OSS does not relate to cost but means free as in the French meaning of the word libre.

By the way, there is an interesting and easy solution to all the risks the 2020 FLOSS Roadmap authors outline in terms of too much government intervention into your data and your personal code (should you choose not to volunteer).  It's called a personal computer.

Streadily Increasing Penetration of Open Source Software in Europe Reported

Recent Forrester research into open source software, sponsored by and released by Bull on December 1, documents the conventional wisdom of slow, steady increasing acceptance of open source by "large enterprises" in Europe.

The survey says, in my opinion (using a little of my own unscientific triangulation), that about 14% of large European enterprises are using open source program development software, databases and web servers; 12% are using open source operating systems such as Sun (JAVA) Solaris and Red Hat (RHT) Enterprise Linux; a smaller percentage is using open source middleware such as application servers, enterprise service buses and portals; down to about 5% using open source application frameworks such as Rails and Spring and IDEs such as Eclipse.

The triangulation is necessary because Forrester was commissioned to interview “enterprises already using open source, at least at a minimal level,” which Forrester says is 15%-24% of enterprises in Europe and North America today. But Forrester does not provide the detail behind that 15%-24% estimate so I am just using 20% as a multiplier against the reported data points  Forrester uses similar triangulation within the report at the country level (the report is available from the Bull link provided above if you fill in a form).

Most of the enterprises in the survey that said they were not yet using such open source software said they would be adding it to their mix in the next 12-24 months. Only very small percentages in each product category said they had no plans to adopt such software, and that backs up the primary Forrester conclusion—with which IT Investment Research analysis agrees—that says the penetration of open source software is inevitable.  Forrester found similar adoption and planned-acquisition percentages for collaboration, business-intelligence, ERP and CRM software. That is why Bull (BULL-Euronext), IBM (IBM), Oracle (ORCL), Sun and now even Microsoft (MSFT) are committed to re-building their businesses incorporating open source terms and conditions.

CAUTION: The survey sample was heavily weighted to government users. This skews the results because European politicians are pushing open source in an inexplicable attempt to roll-back a perceived domination of U.S.-domiciled software companies in Europe. The political position is inexplicable because, on one hand, these U.S.-domiciled companies have tens of thousands of European employees and, on the other, most of the leading open source projects mentioned in the survey are at least nominally North American based. But no one ever expects politicians to be logical. (Alfresco, Mule, OpenBravo and Talend are exceptions and—because software really has no nationality—most of the others have multinational contributors). 

(NOTE: Some of the Forrester analysis covers North America and Europe but the data points are only European. Further, some person-to-person interviewing was done but the data points are only those resulting from an online survey with 102 respondents.)

Who Will Abandon Desktops for the Cloud First? Microsoft or Users?

Bruce Everiss says he is "a veteran games industry marketer," probably for the same reason I say I call myself a "senior analyst." It's not because I have been doing IT market analysis for a long time--which I have-- but because I get two bucks off now at the movie theater and 10% off at Dunkin Donuts after 9am.

Bruce wrote an interesting blog post December 1 on how Microsoft (MSFT) is becoming a gaming company (and "a lot more"). His finding is that Microsoft is moving to provide more consumer services (including gaming) and less technology. I agree except that I believe Microsoft wants to own both the consumer and business IT-enabled services markets (not just consumer) and is uniquely positioned to do so.

The steps Bruce takes to get to his opinion however are based on some bad base data.

Microsoft in the browser market

Bruce imples that Microsoft owned the browser market all along.  Actually in the beginning Netscape owned it, tried to monopolize it by giving away the browser to sell the requisite server that did all the work, and lost out to the Apache Software Foundation's HTTP web server, which was distributed with open source terms and conditions. Microsoft just came in and picked up the desktop piece despite what some bad European Union and U.S. Department of Justice politics-based legal findings say.

Microsoft in the operating system market

Similarly Microsoft has not "owned the operating system sector since MS/DOS" as Bruce says. It still does not. IBM (IBM) owned it until the 1990s; UNIX/Linux has owned it since.  Microsoft's various operating system products have been pretty much stuck with about 40-45% server-software share this decade.  I expect the latest IDC quarterly data any minute now but here is the data from the last quarter--and watch this space.

Microsoft on the desktop

I am guessing that Bruce is referring to desktop operating software only. But in the desktop (and emerging netbook) market, you cannot distinguish the device market from the operating software market. In desktops, it has been IBM/Lenovo, HP/Compaq, Dell, and so forth that have owned the market, not Microsoft--which simply got lucky when the CPM guy did not call IBM back in 1979 (or whatever the history of the IBM PC says). 

Over the years, the PC manufacturers simply chose DOS/3.1/XP etc. because it was almost the only game in town when it came to running the applications consumers wanted (don't send me any pro-Apple blather; I just don't have time to go into all the Apple-Microsoft details in this blog post). Circularly the application writers were always going to "write to" the Microsoft operating software first (and maybe only) because that's the operating software the PC manufacturers chose. 

Further into his opinion, Bruce buys into some Canonical PR about Ubuntu. But how many of the games he markets are being written for or ported over to Debian/Ubuntu? (Ubuntu is more Debian based than GNU/Linux based but I don't want to get into the fractured nature of the so-called open source software market.) Applications drive the desktop market, not Windows or Linux or Pick.

Microsoft in the Office market

That's why in comparing Google Apps to Office Bruce is simply buying into a Google PR line. Microsoft does appear to have some Office pricing problems on the business side (which I'm sure will be fixed) but for consumers at least, the price of the competing word, presentation and spreadsheet processing products is virtually the same (at least in the U.S.): $12 per year for Office 2007 vs. "free" for Google Apps.  Consumers have figured out that the delta of $12 for Office is well worth it.

Microsoft in the cloud

Concluding for whatever reason that Microsoft is in big trouble in browsers (his data about Firefox is interesting and bears following but inconistent with everything I've seen), operating systems, desktops and Office applications, Bruce says Microsoft is "not seeing the (emergence of the) cloud coming."

That depends on your definition of cloud computing. I would argue that the cloud predates the founding of Microsoft.

But buying into the Google PR cloud definition of the day for the sake of discussion, all the evidence is that Microsoft is uncharacteristically ahead of that curve--in terms of cloud technology and implementation.  What Microsoft has done in freezing the virtualization market over the last three years has brought Microsoft quickly to a par with everyone else [EMC (EMC)/VMware (VMW), IBM/Transitive/back-in-time, Red Hat (RHAT), etc.) relative to one of the most important enabling technologies in cloud computing.  What Microsoft is doing in building out data centers to run its Live (and other brand) services for business and consumers probably outstrips any company other than IBM and Amazon (AMZN). And Amazon even playing around in this arena is a major strategic blunder but that's another issue.

So Microsoft is ready to respond as soon as users abandon their desktops for the cloud. But there's a little problem with that. There is little indication that that is happening very quickly in business (general trusting the cloud problems vis a vis Google email outages, demographic trust problems because PC generation is still in charge of IT and remembers the problems internal data centers caused, and so forth). And other than gaming (based on Bruce's findings-I do not follow it), there does not appear to be a big demand among consumers either. 

But Microsoft will be ready when it happens.