Open Source is ubiquitous. Open Source is inevitable. But why would anyone even engage in Open Source? Does making money with it even work? Modern Open Source is not Richard Stallman's Open Source anymore. Now that even Microsoft is open sourcing .NET (and possibly: Windows?), we'll need to review our opinions about Open Source. Large corporations have engaged in commoditising their infrastructure software via Open Source in order to increase demand for their primary offerings: PaaS, SaaS, and IaaS. And with this new model in mind, we'll have a short look into whether it still makes sense for ISVs to engage in Open Source development, or if we should just enjoy the massive free ride.

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The Business of Open Source
This isn’t Richard
Stallman’s Open
Source anymore

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Stallman doesn’t strictly like “Open Source”
(who noticed the flaw in the title?)

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Me – @lukaseder
Open Source is free. Beer.
- Founder and CEO at Data Geekery
- Oracle Java Champion
- JUG.ch Board Member

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Why do I talk about Open Source?
Data Geekery is a (dual-licensed) Open
Source Software vendor.
Check out our products:
http://www.jooq.org/products

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Why do I talk about Open Source?
Let’s say, I have
an opinion about
Open Source

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Why do I talk about Open Source?
(yeah, who doesn’t)

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Why do I talk about Open Source?
I also like gifs

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Why do I talk about Open Source?
Please relax 😃
(don’t get too 😡 about this topic)

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If OSS were translated to car manufacturing

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What is Open Source?
Who in here is
using OSS?

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What is Open Source?
Everyone! 😍

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What is Open Source?
Who in here
contributes to OSS?

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What is Open Source?
Some of you 😐

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What is Open Source?
Who in here
contributes
significantly to OSS?

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What is Open Source?

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What is Open Source? – This:
Open-source software (OSS)
is computer software with its source
code made available with a license in
which the copyright holder provides the
rights to study, change, and distribute
the software to anyone and for any
purpose
https://en.wikipedia.org/wiki/Open-source_software

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What is Open Source? – This:
Open-source software (OSS)
is computer software with its source
code made available with a license in
which the copyright holder provides the
rights to study, change, and distribute
the software to anyone and for any
purpose
https://en.wikipedia.org/wiki/Open-source_software

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What is Open Source? – This:
Free as in freedom
(or «libre»)

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What is Open Source? – But also this:
A report by the Standish Group (from
2008) states that adoption of open-
source software models has resulted in
savings of about $60 billion per year to
consumers.
https://en.wikipedia.org/wiki/Open-source_software

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What is Open Source? – But also this:
Free as in beer
(or «gratis»)

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What is Open Source? – But also this:
In other words, Oracle, Microsoft,
IBM, etc. lose $60 bn / year

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In fact, it’s not that bad
Article by Peter Levine: https://techcrunch.com/2014/02/13/please-dont-tell-me-you-want-to-be-the-next-red-hat/

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Short History of Open Source – FSM / GNU
1983: Free Software
Movement and GNU

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Short History of Open Source – FSM / GNU
Goal:
Software should be
free as in «freedom»

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Short History of Open Source – FSM / GNU
Freedom to...
1. Run the program for any purpose
2. Study the program, change it in any way
3. Redistribute copies
4. Distribute copies of modified versions

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Short History of Open Source – FSM / GNU
Context
1. Software was extremely expensive
2. Software was «unavailable»
3. So was hardware
4. Small vendors had a hard time in
business

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Short History of Open Source – FSM / GNU
Freedom is obviously a
highly ideological concept,
not necessarily something
that adds immediate
«business value»

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Short History of Open Source – OSI / Netscape
1998: Open Source
Initiative and Netscape

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Short History of Open Source – OSI / Netscape
Idea:
Remove anti-commercial
touch from «free» software

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Short History of Open Source – OSI / Netscape
Make source code available
with relaxed (or no)
restrictions on the use and
modification of the code.
«Freedom» is opt-in, kinda

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Short History of Open Source – OSI / Netscape
Modern example
(because defaults to «all rights reserved»)

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Short History of Open Source – OSI / Netscape
Goal:
Rapid evolution of
software.

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What about consumers?
But:
Do consumers
even care?

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Which product do you use?
Good enough (for devs)

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Which product do you use?
I did these with Gimp for /r/photoshopbattles

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Which product do you use?
Much much better

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Which product do you use?
No clear winner

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Which product do you use?
Much better for end users

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Which product do you use?
Much better for operations

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Which product do you use?
???
No real competitor

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Which product do you use?
???
No real competitor

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It’s not about the license
Fact is:
Sometimes you prefer OSS,
sometimes you prefer
proprietary software

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It’s not about the license
Fact is:
End users don’t care at all
about software licensing (this
includes most devs)

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It’s not about the license
Have you ever observed a geeky friend
try to explain the miracles of free
software to a non-geeky friend?

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It’s not about the license

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In the end, Open Source boils down to…
Consumers want:
- High value
- Low price
Duh, right?

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In the end, Open Source boils down to…
Open source is
- High value (it depends)
- Low price (at least initially)

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Why does any vendor participate in Open Source
Vendors want:
- Just enough value
- High price
Duh, right?

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Why does any vendor participate in Open Source
So, why do vendors
engage in Open Source?

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Why does any vendor participate in Open Source
Free as in freedom?

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Why does any vendor participate in Open Source
Free as in freedom?

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Why does any vendor participate in Open Source
Free as in beer?

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Why does any vendor participate in Open Source
Free as in beer?

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Why does any vendor participate in Open Source
Wikipedia OSS Business Models
https://en.wikipedia.org/wiki/Business_models_for_open-source_software
1 Dual-licensing
2 Selling professional services
3 Selling of branded merchandise
4 Selling of certificates and trademark
use
5 Selling software as a service
6 Partnership with funding
organizations
7 Voluntary donations
8 Bounty driven development
9 Pre-order/crowdfunding/reverse-
bounty model
10 Advertising-supported software
11 Selling of optional proprietary
extensions
12 Selling of required proprietary parts
of a software product
13 Re-licensing under a proprietary
license
14 Obfuscation of source code
15 Delayed open-sourcing

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Why does any vendor participate in Open Source
Wikipedia OSS Business Models
https://en.wikipedia.org/wiki/Business_models_for_open-source_software
1 Dual-licensing
2 Selling professional services
3 Selling of branded merchandise
4 Selling of certificates and trademark
use
5 Selling software as a service
6 Partnership with funding
organizations
7 Voluntary donations
8 Bounty driven development
9 Pre-order/crowdfunding/reverse-
bounty model
10 Advertising-supported software
11 Selling of optional proprietary
extensions
12 Selling of required proprietary parts
of a software product
13 Re-licensing under a proprietary
license
14 Obfuscation of source code
15 Delayed open-sourcing

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Why does any vendor participate in Open Source
All of these «models» set Open
Source as the prerequesite.
And now, how to make money??
🤔

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Why does any vendor participate in Open Source
However, companies want to
make money first.
And perhaps, they choose Open
Source. For a reason.
🤑

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Here’s an OSS “Vendor”

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Here’s an OSS “Vendor”
Netflix doesn’t make money with
software.
But thanks to their «coolness»,
they got free labour from the
market

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Here’s another OSS “Vendor”

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Here’s another OSS “Vendor”
Microsoft, Open Source?

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Here’s another OSS “Vendor”
By 2020 "Cloud Shift" Will
Affect More Than $1
Trillion in IT Spending
- Gartner

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Here’s another OSS “Vendor”
Open Source may just be
the only chance Microsoft
has left to catch up.
- me

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Magic Quadrant for Cloud IaaS - Gartner
Source: Gartner (August 2016)

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Some economic theory
Complementary
good
• http://www.joelonsoftware.com/articles/StrategyLetterV.html
• https://en.wikipedia.org/wiki/Complementary_good

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Some economic theory
Reasons for vendors to
choose OSS:
1. Commoditisation
2. Fast market adoption

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Some economic theory
Us, for instance...
Trying to enter the
ORM market that is
saturated in 2009...
Very hard without
OSS licensing

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Here’s a third OSS Vendor
VMWare puts free infrastructure
software into every enterprise Java
shop in the hopes of following up with
sales for “the real business”.

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Here’s a fourth OSS “Vendor”
We don't have to fight
open source, we have to
exploit open source.
- Larry Ellison

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Other examples
Well, where did you
think OSS comes
from?

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What is Open Source?
¯_(シ)_/¯
Image credit: https://www.flickr.com/photos/tomaisashdene/8686481567 By Tomais Ashdene. License CC-BY 2.0

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What is Open Source?
Where do you think
OSS comes from?

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Conclusions from the node.js / leftpad disaster
We’re the only industry who
doesn’t seem to care about
supply chain management!

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Conclusion
There is no such
thing as free software
(vendors provide stuff for free for a reason)

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Conclusion
Yet, Open Source is
inevitable
(vendors commoditise software for many reasons)

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Conclusion
Conclusion
1. Continue consuming OSS.
2. Contribute if you want but no hard feelings if
you don’t.
3. Just beware: You’re the product. Know why
vendors give you free stuff. Stay in control of
your supply chain.

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Thank you
And come see my 2nd talk at 13:00
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