IBM, Hewlett-Packard, Novell and smaller companies like JBoss are providing services around a packaged set of open-source products. Why start a new one?
Platform vendors absolutely would be natural candidates for doing this. In fact, as you said, they are beginning to talk about and provide some of these services. But ultimately, the larger objective of that company is in promoting and selling that platform.
Clearly, part of the reason open source took off is because the software is free. Does a services company still have a cost advantage, even when there aren't any software licence costs?
I think there is a whole new pricing model developing in a way that's different from how software has been priced for the last 20-plus years. With licences, you pay a significant up-front cost and then the ongoing maintenance. Maintenance is becoming a bigger and bigger chunk of revenue for software companies. But it is the model of a bunch of money up front, and then customers are left to essentially try to figure out how to implement the software.
That model is starting to get a lot of push-back, because IT can now supply itself. We are seeing instance after instance of CIOs deciding to reject commercial software and instead adopt open source, in part because it is also getting better from a quality and reliability standpoint and a robustness standpoint. When that happens, the pricing model gets turned upside down as well.
How is a subscription model for assembling and packaging open-source components an improvement?
Layering addition stacks and addition services over time -- that's not about taking a huge bite up front or socking IT with these inflated maintenance contracts. But instead it's providing them with what they need and no more. I believe that ultimately, every software component application is going to be available in some form of open-source software.
Does that mean that software becomes free?
Well, I am talking about looking out on the horizon, where this is all going. Certainly, there will be intellectual property which is unique and innovations which are unique and which companies and developers want to protect. That is how it should be, but over time, I think that more and more categories will begin to be commoditised with open-source software.
So as more software categories become easily available commodities, does the money in the industry go toward services like you are describing?
It's what happens to every industry when it becomes commoditised; innovation moves up to the next layer, basically. You look at a company like General Motors today, which increasingly has a pretty significant piece of its business from OnStar. So it is further moving up the stack in the automotive business, licensing the service to other car companies.
Does that mean that building and selling products is not as interesting as it once was? Why are seasoned entrepreneurs starting services-oriented companies like SpikeSource and SourceLabs?
Think about the building industry. Doc Searls is someone who talks about this extensively: "Do-it-yourself IT" -- the fundamental building blocks, the concrete and the lumber, that is becoming widely available, and a lot of complexity just is inherent in putting those pieces together.
That's what's becoming automated now in the companies, like ours, that are getting into the business. I don't for a second believe that this means that commercial software or closed-source software is going away. But innovation will happen in new areas, just as it has in the construction industry.
