Is Open Source Bad for Business?

In the late 1990’s Wall Street analysts predicated that ‘new business paradigms’ would ensure that the Dot Com bubble would drive the economy to dizzy heights. Cold economic data highlighted that ‘pure-play’ web companies were hemorrhaging finances, had no clients (or even products) nor a viable business plan. [ad#adc-2] Those who highlighted such opinions were dismissed as lacking vision. After all, it was a new era and things would be different. At the peak of this frenzy, media coverage tended to look away from the less pleasant prospects that may have been in store. In retrospect, it was a 20th century version of the Kings New Clothes fable. Then reality struck, companies folded, investors lost their shirts and some CEO’s even went to jail. Today there is a curious parallel between the media coverage of Open Source and that infamous dot com era. Open Source, and its pinup star Linux, are spoken of in the same approving tones. Magazines rarely carry articles with a critical slant. Analysts tend to sidestep its shortcomings. And few high-tech journalists raise their heads above the parapet. There is no doubt that Open Source has it merits, but there are downsides. For a moment, let’s leave IT aside and consider this. Would you buy an open source car? One developed by designers all over the planet to a ‘movable feast’ of specifications. OK, it’s free, but if it breaks down, who do you call? If you have an accident, can you sue the makers? Were their quality checks? Can you get insurance for it? Has it been built to international development standards? How could you tell? Chances are you’d probably buy a car from a known dealer, built according to approved standards, with a nice warranty and insurance coverage. The car manufacturer is responsible for its product — if you’re not satisfied you get your money back and go elsewhere. You don’t get this with Open Source, although, to be fair, it never claimed to offer such protection. Stand up for your IP rights In the debate about Open Source versus Proprietary Systems, you can draw the line over one simple single issue — Intellectual Property Rights. Open Source is open, free and alternative. In turn, proprietary systems are lambasted for being restrictive, stodgy, and constrictive. This is slightly unfair. The fundamentals principles of Intellectual Property Rights (IPR) have enabled the IT industry to mature over the past 40 years and give thousands of IT professionals, across all social strata, the opportunity to build livelihoods out of this business model. IPR drives our economy. The principle is simple. You build it; you own it. The exchange of proprietary goods is the cornerstone of most (first world) marketplaces. Remember, very few magazines that promote Open Source give their publications away for free. How could they: overheads, salaries and investments all need to be managed. IPR has a democratic element to it, i.e. you make it, you own it. Imagine if you could not own the IPR. By contrast, Open Source is based on sharing and exchange. And both have their place. But, in the current economic climate, IPR is often seen as an enemy of the consumer. Where did all this start? Unfortunately, objective analysis gets sacrificed when emotions are stirred, and, for better or worse, IT journalists have little to say about the Redmond folk that is endearing. The unfortunate victim here is the consumer. After all, they trust Hi-Tech journalists to guide them on their path irrespective of the writers misgiving and mood-swings. For now the concept of proprietary software (IPR) is indelibly associated with Microsoft. Rivals such as Sun, IBM, Oracle, Novell, CGI, Adobe and others all make a living from selling their IPR, but it is Microsoft that’s perceived as the main perpetrator. The fact that it’s ‘King Of The Hill’ may also be a factor. Who benefits from Open Source? Companies such as Dell, Oracle, Sun and HP have taken the penguin mascot to their heart. IBM, the worlds largest IT company, has allegedly spent 1 billion dollars on Linux and other Open Source projects. But, if you want to determine why a new business model gains popularity, ask this question— who benefits? Why is big Blue so kind? Shareholders have to be satisfied. No-one can generate revenue by giving systems away for free. Open Source projects benefit such IT giants in three ways: 1. By cross-selling the hardware and software that accompanies an Open Source product. Large multi-million contracts build around ‘Open Source’ products typically have a range of proprietary technologies bundled with them. When determining Total Cost of Ownership (TCO) these licensing costs are worth scrutinizing. 2. Lucrative consultancy fees are spun out of business and technical expertise. Linux may be free, but your need someone to install, troubleshoot, integrate and maintain it. 3. Pressurizing commercial companies (e.g. Microsoft and others) into releasing its source code, or releasing Open Source variants of flagship products. Possibly in response to the Open Source coverage, Microsoft recently launched a Shared Source initiative whereby trusted partners, government agencies and developers can access its crown jewels. For example, the Government Security Program gives national governments access to the windows source code so that they can evaluate the security of the Windows platform. Indeed, developers involved in the open source community may feel slightly aggrieved that their efforts have been assimilated into these IT Giant’s marketing plans, and driving up share prices in the process. It remains to be seen if the generous spirit of Open Source developers remains so open-hearted once it becomes clear that others are lining their pockets out of others charitable efforts. What’s wrong with proprietary systems? Advocates highlight that Open Source is free and open to the community. They also emphasize that Open Source and licenses such as GNU General Public License favor the consumer—to a degree this is correct. But this masks other issues, in particular those related to ownership. Nobody owns Open Source, which is both its strength and weakness. And just because is free doesn’t mean it’s good. Haven’t we all reminded others of the truism: ‘You get what you pay for’. Small software houses depend on IPR to survive. To ensure this they get their products tested, functional and compliant. Alas, they don’t always succeed. But they do offer several advantages that open source products cannot. Let’s take a look: • Accountability — Commercial software companies are legally bound to fulfill their obligations. Shoppers know their consumer rights and are quick to seek compensation when things go wrong, for example, the CD you ordered was for the wrong platform. With commercial software, the buyer does have legal protection. • Competition — The main driver behind most economies is competition. This pushes companies to deliver more stable, secure, and feature-rich products than its rivals. Competition in all commercial sectors (not just IT) ensures that prices are driven down and quality goes up. If you take away the reward system, this principle is compromised. • Strategic Planning — Before making an important software purchase, an IT Manager’s consider numerous factors, such as the supplier’s technical support. Access to dedicated Helpdesks will always be more preferable than bulletin boards and newsgroups. After all, companies such as Oracle, Dell, Adobe will be around for a while. Buying an inexpensive system from a web-based company doesn’t provide the same security.  Security — This is always a contentious issue. Microsoft have historically been the focus on unrelenting attacks from hackers, and have been severely criticized for this weakness. In response, it ran a Windows security Push in 2002 whereby all development on Windows was stopped for 60 days as staff underwent intensive security training. At it may have paid off.
A UK security research firm mi2g claims that during the Iraqi War, three-quarters of successful hacking attacks worldwide—19,208 compromises—were against Linux systems, compared to only 3,801 Windows breaches. The vulnerabilities may not actually reside with Linux, but in flawed third-party applications that add functionality to commercial Linux releases. What’s noting here is that Open Source software is now just as vulnerable to security breaches as commercial software. mi2g executive chairman D.K. Matai believes that, “As penetration of Linux has grown, and people are able to download free versions of Linux, the do-it-yourself mentality means that people are becoming fairly lackadaisical about security matters.” Open Source is having a remarkably positive effect on the IT industry, and we can only wonder what technology will surpass Linux as the next big thing. For now, it provides an alternative which is always to be welcomed. And it puts pressure on commercial companies to offer better products, better services and better prices. To do justice to Open Source, its limitations need to be discussed more openly, as otherwise unsophisticated consumers may adopt this new technology model and later become disillusioned once its shortcoming arise. In summary, when considering the relative merits of both Open Source and commercial software, companies need to determine the true total cost of ownership, understand how the supplier is addressing security and offering a long-term solution that will compliment tomorrow’s requirements. [ad#5links]