When the hordes of volunteer programmers who make up the open-source movement met this week for their annual convention in San Diego, one constituency was conspicuously absent: entrepreneurs. Many start-ups that tried to make money from open-source software have already gone bust, and many of those that have survived are in a sorry state.
This is not all that is worrying open-source advocates. Microsoft is leading an increasingly nasty campaign against programs such as Linux, the free operating system, and has even been putting it about that such programs make it easier for terrorists to hack into computers. Worse, Linus Torvalds, the inventor of Linux, appears to have reached his limits as a manager. There is growing frustration among hackers that he is ignoring their contributions. Is open source doomed?
In part, the movement is a victim of its own hype. At the height of the “new economy” craze, open source was billed as radical new economics based on sharing. Programmers around the world contribute their time to write free programs so as to gain reputation among their peers. For this to work, the source code of a program — its basic ingredients — must be freely available, in contrast to the proprietary software of such firms as Microsoft.
Venture capitalists and Wall Street were wowed by the open approach. In 1999 public offerings by open-source firms broke all records: the shares of VA Linux Systems, for instance, gained almost 700% on their first day of trading. But these start-ups have since been flattened by the dotcom bust faster than other firms, in part because most of their customers were other start-ups fighting for survival.
To stay afloat, open-source start-ups such as VA are now having to become more proprietary. Even Red Hat, the leading distributor of Linux, is going hybrid. In January it introduced a high-end version of Linux that is not entirely open-source. Development of Linux is increasingly driven by large computer makers, such as HP and IBM, which are spending serious money to make Linux run on their hardware. IBM even discounts its mainframes if buyers use them to run Linux. Enterprise-software firms, such as Oracle and SAP, have rewritten their applications so they also work on Linux.
Their aim is to undermine the market power not just of Microsoft, the firm behind Windows, but also of Sun Microsystems, which dominates the market for high-end server computers. If operating systems become a commodity, reason IBM and other Linux backers, then companies will spend more money buying their hardware, software and services. For similar reasons, RealNetworks, a multimedia-software vendor, said this week that it would publish the source code of a new set of programs called Helix. In doing so, it hopes to keep Microsoft from dominating the multimedia-software business.
Although this is all appalling to open-source purists, it may not spell the end for their beloved programs. On the contrary, it is likely to speed their adoption. Indeed, open source looks ideal for these difficult times. Free software is an attractive proposition when technology budgets are tight. Also, because more eyes look at the source code, it tends to be more secure and robust than proprietary software. Linux is thus winning unexpected converts, such as investment banks and government agencies. Since April, for instance, Credit Suisse First Boston’s global trading system has been running on Linux.
Small wonder that Microsoft should still be so rattled by open-source software. It is not so much the programs that the firm takes aim at, as the licence that comes with many of them: the general public licence (GPL). The GPL destroys intellectual property, argues Microsoft, because it dictates that all improvements, say to Linux, automatically become a public good.
Yet even Microsoft admits that open-source groups have many benefits, mainly because of better feedback between software developers and users. Thus, the firm has launched an initiative, called Shared Source, in which large customers can have access to the Windows source code, on condition that they do not modify or reuse it. Even Apple Computer, which guards its intellectual property jealously, has made an open-source program the core of its new operating system, called OS X.
Most surprising, however, is that firms outside the technology industry have taken to using open-source techniques. For instance, Dresdner Kleinwort Wasserstein, an investment bank, has released the source code for programs that link different computer systems within the firm. Barclays Global Investors, an investment-management firm, lets its programmers use the same development tools as open-source groups. Both firms are customers of CollabNet, one of the more promising open-source start-ups.
Having shown that there is, in many cases, a better way to develop code is undoubtedly the open-source movement’s biggest achievement so far. And if Linux does one day become the standard for operating systems, as some enthusiasts predict, it will have taught the computer industry that it is more efficient to maintain its software infrastructure collectively. This would be bad news for Microsoft and Sun, but it would benefit customers — through greater competition, lower prices and, not least, better software.