SAP's Shai Agassi recently got some press saying "FOSS does not promote innovation" and slamming "open source socialism".

"Intellectual property [IP] socialism is the worst that can happen to any IP-based society," he says. "And we are an IP-based society. If there is no way to protect IP, there is no reason to invest in IP."

This echoes an earlier sortie by Bill Gates on "open source communism".

"No, I'd say that of the world's economies, there's more that believe in intellectual property today than ever. There are fewer communists in the world today than there were. There are some new modern-day sort of communists who want to get rid of the incentive for musicians and moviemakers and software makers under various guises. They don't think that those incentives should exist. And this debate will always be there. I'd be the first to say that the patent system can always be tuned -- including the US patent system.

 

Interesting. I think both Bill and Shai raise the right questions but answer it emotionally, phrasing their dismissal with buzzwords for press effect. In the midst of such extreme statements, let me see if we can put some middle-of-the-road common sense in this discussion.

 

The question of innovation is the right one. If our industry is incapable of sustaining innovation then it should be just a commodity business, think electricity. This is clearly not the case of software, an industry that is only 30 years old and still in the technical dark-ages, especially our middleware infrastructure, which is still primitive and immature.

 

I agree that a business model of software MUST include R/D. The idea that FOSS is "free" development is a fallacy, a romantic lie, which is where the IP socialism/communism label is probably coming from. At the end of the day, everyone must put food on the table. However, it is proven today that FOSS development models are economically sustainable, have lower expenses associated with them, specifically in the QA arena and that for-pay licensing-based software, while greatly profitable, can be undermined by cheaper models.

 

At JBoss we always claim that FOSS is about a better way to develop, distribute and support software. Today's software have tons of room to grow in terms of technical maturity, the economarket dynamics have tightened since the bubble forces The dirty little secret of the enterprise software model in today's maturing market place is that, with the notable exception of a few players (MSFT and SAP included, ironically) the days of the hugely profitable sotware license are gone. In With the traditional software development model, your cost of sales, marketing and distribution is so high that these models completely depends on the for-pay license.

 

But FOSS turns that equation on its head, again we have a better way to develop and distribute. An optimally functioning FOSS business model needs 20 cents of sales and marketing to acquire 1 dollar of maintenance, where a traditional software company will have to spend around 2 1/2 dollars. Get it? Professional FOSS businesses can sustain sales and marketing costs out of the maintenance revenue stream. What does that mean? That this model produces earnings (EBITDA) according to the P&L of stable software business models, those in mature subscription-based phases. The P&L of these business sustain R&D of 20%, where we are today at JBoss. Thus Professional FOSS, in theory and practice, sustains the research and development expenses associated with the classic business model.

 

THAT economic fact is what should concern these guys, the fact that innovation is sustained by the new business models. As a proof point, JBoss and the FOSS community in Java have been pushing the frontier with EJB3, annotations, light-weight containers, IoC, SEAM and you ain't seen nothing yet, and trust me there's a lot more in the pipeline above and well beyond what the proprietary competition is doing. That's the point.

 

"Someone is doing the same thing better and cheaper". SOMEONE WILL ALWAYS BE DOING IT. It may or may not be us or mySQL in 20 years, it may or may not be IBM, but the innevitable fact remains: SOMEONE WILL BE DOING PROFESSIONAL OPEN SOURCE IN 20 YEARS. The financial models are solid and proven today.

 

Obviously the reality in the field is different than these statements to the press. Jboss is working with both organizations at various stages of discussion, both SAP and MSFT. We are actually very pleased with the level of collaboration with MSFT actually, good things will come out this.

 

Don't be afraid, the days of fat profits in licenses may be gone but software is moving ahead, as vibrant and innovative as ever.

 

marcf