Who's Profiting from Open Source?

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Who's Profiting from Open Source?

Who's Profiting from Open Source? By Russell Shaw
Enterprise Linux IT
October 14, 2004 6:04PM

"Suppliers are being very smart," says IDC's Dan Kusnetzky.
"Supporting a world-class Unix typically costs a supplier
upwards of $100 million a year. Sharing this cost with
others in the industry can significantly reduce the
supplier's engineering costs." See Complete Story

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IBM Latest News about IBM, Sun Microsystems Latest News
about Sun Microsystems and other technology companies
recently "donated" portions of their software to the
open-source community. But those donations are not motivated
by corporate generosity; there are tactics and strategies
behind these moves.

"Vendors will use open source Latest News about open source
as a competitive weapon, by open-sourcing pieces of
technologies for strategic reasons," David Smith, a
vice-president at Gartner, told NewsFactor.

"Most vendors will use open-source tactics as needed, as
part of overall software strategies. Few will have
completely open-source oriented strategies."

Self-Serving Motives?

In an effort to gain credibility as vendors that can
accommodate open-source systems, suppliers must contribute
something of value -- something that is not seen as
self-serving, says Dan Kusnetzky, program vice-president of
system software for IDC.

"If, for example, IBM merely contributed code necessary to
allow Linux to run on their zSeries, that might be seen as
self-serving and not really helpful to the community as a
whole," Kusnetzky told NewsFactor.

Collaborative approaches with other suppliers can even lower
developmental costs of systems that incorporate some
open-source formulas.

"Suppliers are being very smart," Kusnetzky adds.
"Supporting a world-class Unix typically costs a supplier
upwards of US$100 million a year. Sharing this cost with
others in the industry can significantly reduce the
supplier's engineering costs."

Me-First Strategy

As publicly traded companies with a mandate to focus on the
bottom line, large, sophisticated vendors see virtue in some
open-source products, but that does not mean they are
turning into altruistic organizations with no concern for
the bottom line.

They will "cherry pick what aids and abets them, doesn't
detract from their revenue, and hurts their competitors,"
Dana Gardner, senior analyst for application infrastructure
and software programs for the Yankee Group, told NewsFactor.
"So far, though, their donations have been rather spotty and
insignificant."

In terms of competitive advantage, "we will see vendors
continue to push open-source business models on competitors
whose profits depend on commercial-software businesses,"
says Gartner's Smith.

Turn the Corner

The Yankee Group's Gardner believes that at some point the
major suppliers will see the need to turn the corner and
recognize that an open-source development approach will save
them money. "At that point, they will need to cultivate the
open-source community with more than just gestures," he
said.

Tangible momentum toward "cultivation" is, of course,
subjective. "What would be a telling indicator," says
Gardner, "is if Solaris 10 becomes truly open source, with a
GPL Latest News about GPL license. A variant of that license
that is not quite as open, however, would show that Sun is
still being selective."

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