Don Dodge on The Next Big Thing

Why have customers asked for Windows and Linux?

Why have customers asked for Windows and Linux to work together? Joe Wilcox at Jupiter Research has figured out the details. But, the best responses are from customers themselves;

"The City of Seattle’s IT staff supports a number of different operating environments, including Microsoft Windows^®, Novell NetWare and several varieties of UNIX/Linux. All these environments require separate physical servers, and our data center is running out of space. This new Microsoft and Novell collaboration agreement could allow significant virtualization of servers, reducing the number of physical platforms we’d have to maintain. That, in turn, reduces costs for maintenance, electricity, cooling and space,etc"

Bill Schrier
Chief Technology Officer
City of Seattle

“Microsoft and Novell should be commended for putting customers and innovation before licensing ideology. This is the kind of achievement that can only be reached when parties respect one another’s innovations and intellectual property and put their customers first. 

This announcement is a victory for customers and the industry, including small software developers developing solutions for both Windows and Linux platforms. It’s further proof that free market forces are working and enable a vibrant software ecosystem that provides customer choice, innovation and competitive products. 

The reality is that customers are not interested in the best proprietary product or best open source product; they want the best product, period. With their pioneering approach, Microsoft and Novell are giving customers the choice they have demanded, leaving behind the philosophical licensing debates around open source and proprietary software."

Jonathan Zuck
President
Association for Competitive Technologies

Customers have been using Linux and Windows for years, but typically on separate servers, and for very different tasks. It is now quite common for a customer to choose Windows to run a CRM or production management system, and choose Linux to run a print server, file server, or a rapidly changing environment.

What has changed is that now customers are using virtualization to better utilize their servers, and they now want to run Windows and Linux on the same server. Customers also wanted assurances that they would not be caught in the crossfire of patent infringement lawsuits between  the vendors.

This deal is a big win for customers and the industry. See my previous post for more details on the deal.

Microsoft & Novell, Windows & Linux

Microsoft and Novell announced a broad collaborative effort that puts customers first.  It includes a set of three agreements: broad business and technical collaboration agreements to build, market, and support a series of new solutions to make Novell and Microsoft products work better together for customers, and a patent agreement that provides each company’s customers with patent coverage for their respective products.

Customer demand coupled with common business interests between Microsoft and Novell made this deal happen. This agreement comes on the heels  of Oracle announcing worldwide customer support services for RedHat Linux.  The Linux world now has the attention of the largest software companies because their customers are using it, and it makes good business sense to support it.

Customers have been using Linux and Windows for years, but typically on separate servers, and for very different tasks. It is now quite common for a customer to choose Windows to run a CRM or production management system, and choose Linux to run a print server, file server, or a rapidly changing environment.

What has changed is that now customers are using virtualization to better utilize their servers, and they now want to run Windows and Linux on the same server. Customers also wanted assurances that they would not be caught in the crossfire of patent infringement lawsuits between  the vendors.

These customer requests caused Microsoft to look for a Linux partner who would work cooperatively to make interoperability successful, and recognize the IP rights of both companies. Novell has a long history as a commercial software company and has significant ownership and patents in the Unix and Linux space.

Microsoft has reached out to the Linux world and Open Software community.

• Microsoft announced an agreement with Zend to develop a high performance PHP runtime environment for Windows.
• SocialText announced SocialPoint, an open source based wiki environment for SharePoint
• Port25 is Microsoft's community site to communicate with the open source community.
• XenSource is working with Microsoft to ensure that Xen based open source works with Windows 
• CodePlex - similar to Sourceforge, a new portal for source code sharing and collaborative software development. CodePlex has over 400 projects, 40 from Microsoft employees.
• JBoss interoperability work announced last year.
• Support for ODF and PDF file formats. ODF stands for Open Document Format.

Customer demand drives decisions at Microsoft. It is that simple. It is not about philosophical or "religious" arguments. It is about what our customers request and what makes good business sense. Microsoft has millions of customers and they all have slightly different needs. But some issues clearly rise to the top, and those get addressed. You can never go wrong listening to your customers.

Subscribe - To get a FREE automatic feed of all future posts subscribe here, or to receive them via email go here and enter your email address in the box in the right column.

Open Source vs. SaaS - Software as a Service

Dan Farber wrote a summary of opinions declaring that Open Source will not doom the traditional enterprise software business. Tim O'Reilly has an interesting post entitled "Open Source: Architecture or Goodwill". This got me thinking about software development models, delivery models, licensing models, and business models. They are four different things, but are often confused and used interchangeably. Open Source can be used to describe all four models, but can be used selectively. For example, you could have software that was developed by an open source project team, delivered on an OEM server, licensed per server, and paid for on a term basis. In a world where software can be delivered as a service does it matter how it was developed?

Development models are concerned with architecture, technology platforms, and how the development work will get done. You can use open source teams, offshore or out sourced teams, or internal development teams to get the work done.

Delivery models include shrink wrapped, OEM, down loadable binaries, open source code, or SaaS Software as a Service. The delivery model is only about how the software is delivered, and does not necessarily dictate the licensing model or business model. For example software could be developed internally by a software company, delivered as a hosted service, licensed for consumer use only, and paid for by advertisements.

Licensing models set the rules for how the software can be used and what rights the developer retains. Traditional software licenses were tied to a server, a PC, or a user, but all the IP remained the property of the software company. There were various models that tried to match the way the software would be used to the pricing. Open Source projects typically use a General Public License (GPL), a Creative Commons license or some variant. But the many variants have different rules about how the source code and derivative works can be used and redistributed. Some require that anything you develop from using the free source code must also be redistributed for free. The licensing model governs the use of the software, but not how it is paid for.

Business models include traditional perpetual up front license fees, term based payments, subscription based, ad supported, or the support and maintenance model. Software could be free to consumers but require payments for commercial use. Again, the business model or payment method is independent of the development, delivery, or licensing model.

The software business is very complex. The licensing and business models are morphing into strange combinations. Open Source is a broadly used term that can have very different meanings in the context of development, delivery, licensing, and business models. Make sure you know what you are agreeing to when you acquire the right to use software. I go back to my earlier question. In a world where software is delivered as a service does it matter how it was developed? Hmmm...a lawyer would say "Well, it depends".

Subscribe - To get an automatic feed of all future posts subscribe here, or to receive them via email go here and enter your email address in the box in the right column.

WikiCalc = Google Spreadsheet killer

WikiCalc is the latest piece of software artistry from Dan Bricklin the creator of the world's first spreadsheet, VisiCalc.  WikiCalc is way more than just an on-line spreadsheet. It is light years ahead of Google Spreadsheets, NumSum, iRows, and all the others.  WikiCalc is part wiki, part spreadsheet, part web page authoring tool, and totally brilliant.

The attention to detail in the design of WikiCalc is amazing. It has all the powerful spreadsheet functions you would expect plus formatting features that can create professional looking web pages and graphs. While it is still technically in beta, it has the feature set of a Version 4.0 product. To get full appreciation take a look at the  Screencast: wikiCalc demo done by Dan Bricklin himself.

I was particularly impressed with the web services interfaces and ability to link cells to live dynamic data like stock prices, or dynamic links to other spreadsheets. Cool! WikiCalc can be used as an on-line spreadsheet with a web browser, or it can be downloaded and hosted on your own server.

Dan is a leader in the Open Source community so it is no surprise that WikiCalc is available as open source. However, Bricklin and SocialText announced a deal where SocialText will sell and distribute a commercial version of the product. Good move.

VisiCalc was the first packaged software program I ever used, so Dan Bricklin was "The Man" in my book. Recently he has become a good personal friend. One of the nicest guys you will ever meet. While he is a strong Open Source proponent, he is also a friend of Microsoft.

Dan attended a Microsoft party in Boston yesterday. Here is a picture of Dan with Alan Yates, General Manager of the Information Worker group at Microsoft responsible for Microsoft Office.

Good luck to you Dan!  I hope WikiCalc brings you additional fame and fortune.

Google competing with OpenOffice and StarOffice

Google Spreadsheets will be announced today. Google also recently acquired Writely, and On-line word processing company. All the pieces are coming together for Google to compete directly with free open source offerings such as OpenOffice and Sun's StarOffice. Last year there was speculation that Google and Sun would team up to offer a Google version of StarOffice. Google has instead decided to go its own way and compete with all the open source projects in the spreadsheet and word processing space.

C/Net says "Google spreadsheets turns up heat on Excel" I don't think so. Microsoft Office is a powerful, industrial strength, client based, information worker productivity platform. Microsoft Office is moving beyond just being a collection of applications (Word, Excel, PowerPoint) to being a server based application platform for ISVs. Lots of companies run their business on Excel spreadsheets. Now creative start-ups are using Office as a front end User Interface to a whole variety of business applications.

So, while the headlines may scream Google Spreadsheets is competing with Microsoft Office, the more accurate statement is that Google is competing with OpenOffice. Remember, free and open source alternatives to Microsoft Office have been around for a long time. They serve a different segment of the market. Google is competing with Open Source and going after that market.

Subscribe - To get an automatic feed of all future posts subscribe here, or to receive them via email go here and enter your email address in the box in the right column.

The "Tom Sawyer's" of Open Source make millions while "contributors" work for free

Red Hat reportedly will acquire open source project JBoss for $350M. Ponderings of Woodrow included some interesting JBoss numbers from the Red Hat conference call.

CY2006 - In excess of $60 million bookings, $40 million revenues

CY2007 - $110 million bookings, $80 million revenues

150% YOY revenue growth in March Q

JBoss growing revenues faster than expenses

Cash flow negative historically (moving to positive in a few quarters)

$0.01 dilutive to Q2 (August) for RHAT

Neutral to earnings and cash flow for full fiscal year (Feb 07)

Dana Gardner who writes "Between The Lines" for ZDNet says this acquisition represents a seismic shift towards open source. Perhaps this "seismic shift" will have some unintended consequences.

How will the developer "contributors" who worked for free on the project react to a few people at the top making hundreds of millions? I am reminded of the famous Huckleberry Finn story where Tom Sawyer convinces his friends to work for free and paint the fence for him. "Come on it will be fun".

The Open Source phenomenon has been difficult for venture capitalists and business people to understand. Why would talented software developers work for free? When something of value is created who collects the rewards? How could open source be monetized?

Then there were the legal issues of ownership, patents, copyrights, etc. Enterprise IT managers worried about copyright or patent infringement lawsuits if they used open source project software with no warranties. Other concerns were who would fix bugs, add new features, or address performance, scalability, and integration issues?

Now that Open Source software has hit the big time and become a billion dollar business will things change? Will developers still be willing to "contribute" for free? Now that there are millions of dollars at stake will patent lawyers jump in with infringement lawsuits? When big companies buy open source project companies will the business model change? How will these big companies recover their investment?

IBM, HP, Oracle, Novell, and Red Hat were all playing together nicely in the open source world. Now that Red Hat and Oracle have made big acquisitions will they all continue to play nicely?

Did you ever think you would see The Adventures of Tom Sawyer applied to software?

RedHat acquires JBoss - open source consolidates

CNet reported today that Red Hat has acquired JBoss for approximately $350M. Open Source software is attracting lots of attention from the big players and VCs. There have been several acquisitions recently and probably a few more to come.

There was speculation that Oracle would acquire JBoss after recently acquiring open source database companies SleepyCat and InnoDB. The Open Source business is consolidating into a few big players. MySQL is probably the largest independent open source company remaining.

JBoss is an open source application server company founded by Marc Fleury. InfoWorld estimated that JBoss did about $20M in revenue last year and might do $50M this year. Assuming $50M revenues, and a $350M acquisition price, that yields a 7X forward revenues multiple. Marc Fleury reportedly owns 50% of the company. VCs David Skok of Matrix and Peter Fenton of Accel were lead investors in the company. JBoss has 150 employees.

The Open Source software market is consolidating. There will be a few winners and many "also-rans" that never really make it. In an earlier post "Open Source - the Darwinian approach to software" I talked about the odds of success for open source projects.

Open Source projects must pass the Darwinian test (only the fittest (most interesting) survive) to attract developers and contributors to the project. Maybe 1% of all Open Source projects attract more than 30 developer/contributors. Then the user community applies its own Darwinian test to that 1% of projects, as only the most useful and supported projects attracts a significant user community. The Open Source projects you read about are the ones that passed the Darwinian tests. Yet, the media would have you believe that Open Source is a sweeping movement.

There are VERY few VC investment opportunities in Open Source. There will only be one or two winners in each space, and the larger spaces are already covered. Linux has already been covered by Red Hat, IBM, HP, Novell, and others. Apache is also supported by many companies including Covalent and Microsoft. The database space is already covered by MySQL, Postgres, Ingres, SleepyCat, BerkleyDB, and 4dbObjects.

Oracle, Red Hat, IBM, Novell, and other large players are busy acquiring the most successful open source companies. How will this affect the open source community? Will the acquired companies remain open source? Will business models change? Would you bet your company on open source? Would you build mission critical applications on open source? Questions to consider for entrepreneurs and  IT executives.

AJAX explained

AJAX is in the news all the time now and it is assumed that everyone knows what it means. Many people don't, so here is my quick summary of what AJAX is and some examples of applications.

AJAX is an acronym for Asynchronous Javascript And XML. Microsoft invented this concept in the late 90's but referred to it as XMLHttpRequest, also sometimes referred to as DHTML or Dynamic HTML. AdaptivePath coined the term AJAX to describe a similar set of technologies. AJAX is not a product or a platform. It is a set of technologies used to build interactive web applications that don't require constant page reloading each time the user takes an action.

AJAX makes web applications behave a lot like client based apps in terms of User Interface and responsiveness. With typical web based apps every time you take an action (entering data, moving an object, or selecting an option)  it sends a request to the server, which returns a new web page to be loaded in your browser. This slows things down considerably. Client based applications do most of this locally. Think of Outlook email client on your PC versus Outlook Web Access through a browser.

The secret to making AJAX apps work is the downloading of Javascript "engine"  and data in the background that handles communication between the web app and the server. This engine can handle many common user actions and calculations right in the browser without requesting anything from the server. When it can't it sends a small XML request (asynchronously) to the server while it simultaneously updates the page. This is where the "Asynchronous"" in AJAX makes things much faster.

Most browsers already support Javascript and XMLHttpRequest so no browser add-ons are required. The AJAX engine and associated snapshots of files and data are downloaded to your browser in the background asynchronously without you knowing about it.

You may have already used AJAX applications without realizing it. Microsoft Outlook Web Access, Google Maps and Yahoo Maps are AJAX apps. NetFlix, and many other consumer web sites, use AJAX to provide interactive information. For example, when you are on the NetFlix site and you hover over a movie title, a pop-up box gives you a description and details about the movie.

Other AJAX apps you may have already used include; Zimbra, Meebo (IM), Gmail, Flickr, Digg, JotSpot, Writely, NumSum, Amazon Catalog, 37 Signals, Yahoo search as you type, etc. WikiCalc by Dan Bricklin is currently in beta.

AJAX has re-energized web based applications. Aside from the UI and performance improvements, the big change is making traditional individual user client based apps into multi user network based applications. Spreadsheets, word processors, and presentations, that were traditional single user applications can now be web based collaborative applications.

AJAX does have downsides. These apps still require a connection to the Internet or local network to work. Working independently off line is still a client app thing. Security, data integrity, and backup are also still concerns for web based apps.

AJAX web based applications are quick, easy,  intuitive, and mostly free. They solve some problems very well, but will not replace traditional applications anytime soon. Users will continue to find a blend of solutions to satisfy their needs.

WikiCalc from the creator of VisiCalc

Dan Bricklin has been working hard on his new innovation, WikiCalc, which is an open source mashup of Wikis and spreadsheets. The idea is to have an online spreadsheet that anyone can edit, make changes, and have those changes visible to everyone simultaneously. It allows simple collaboration around a spreadsheet metaphor. Cnet has a story "Spreadsheet whiz tackles wikis" that provides some background.

You may remember Dan Bricklin, who partnered with Bob Frankston, to create VisiCalc, the first PC spreadsheet, long before Lotus 123 or Excel. Dan is a Boston software legend and now spends his time consulting, speaking, and dabbling in open source projects.

For years spreadsheets have been a personal, single user application, even now in the networked world.  People send spreadsheets as attachments via email to multiple people for updates, edits, or review. This creates a huge version control problem where you are never sure  who has the latest copy,  if all updates are reflected, and who made which changes. WikiCalc will solve several of these problems.

Groove Networks created a solution to this problem several years ago in the context of a Groove shared space. It worked well, but required that each user install Groove, join a shared space, and do all their work within that shared space. The problem was that most people work in email or web browsers and it is difficult to get them to collaborate in a separate application.

WikiCalc is just the tip of the iceberg. This metaphor could be extended to any authoring tool or collaboration application. Dan Bricklin may develop more applications, or others in the open source world may innovate on the concept.

Microsoft Office Live will have lots of basic applications for small businesses. This is an area ripe for innovation. The focus will be on simple 80% solutions to everyday problems. The UIs will be intuitive, web based, and collaborative.

TechCrunch has a nice review of "Microsoft Office Live goes into beta"

This is not an online version of Microsoft Office. It is a set of online tools for businesses to help them have a web and email presence at a very low cost (starting at free with ad support). The core tools are a free non-microsoft domain name, website and up to 50 email accounts with 2 GB of storage each.

For a small company needing a informational website, it will be great. Given that the domain name, website building, hosting and email will all be free, this will be very attractive to a small business.

The new way to launch your product or company

In the old days you needed a big marketing staff, a huge budget, a PR agency, an elaborate press event at a big hotel (with food and drinks), and the attention of the trade press writers to launch your product. And then you would pray that all that investment of time and money resulted in a few good stories published about you. Just to make sure your message got through you would buy print ads in all the major publications. This was a VERY expensive proposition.

Today you need none of that. It doesn't cost anything to publicize your new product or service. Simply engage a couple of the "A-List" bloggers (Michael Arrington, Robert Scoble, Dave Winer, Om Malik, Steve Gillmor, Cory Doctorow, Richard MacManus,  Stowe Boyd, and others) by sending them a link to your new product or service. Tell them what problem it solves and why it is cool. When they blog, people listen. When their stories hit Tech Memeorandum, Digg, TailRank, and other services the story explodes across thousands of blogs within hours.

All the trade press writers have personal blogs. Om Malik, Steve Gillmor, Cory Doctorow, and Richard MacManus are just a few examples. Once the blog world spreads a story about your product the trade press will pick it up too, which in turn feeds another round of stories, comments, and reactions.

CoComment is the most recent example of this new product launch phenomenon. It all started with Robert Scoble getting a sneak peak at the new service (still in invitation only beta) while skiing in Europe. Robert blogged about it, others picked up on it, Tech Memeorandum aggregated all the discussion, and it blasted off in about 24 hours on a Saturday.

Big money and influential VCs are no longer a requirement to launch a company or product. The price of software, hardware, and bandwidth has been reduced by a factor of ten, or more, since the late 90's. Open source software, free web services, and super cheap hardware have made it possible to start a business for pocket change. Many entrepreneurs are self funding all the way to cash flow, or even break even.

The web, and more specifically blogs, have made it simple and cheap to promote your product. And it can all happen in 24 hours...without ever leaving your computer screen. This is transformational. It has been happening gradually over the last 5 years so we haven't really noticed how dramatic the change has been. It is huge.

Today it is much easier to get a company started. But, with so many companies and products launching does it make it harder to get noticed? Not if you take advantage of the new approaches to exposing your beta product on the web, and engage the blog community for early feedback and promotion. It only takes one or two A-List bloggers to get you noticed. Then it is up to the product to speak for itself.

Products must be intuitively obvious in their design, usability, and value. A new user should be able to understand the value of the product/service, and be able to start using it, within minutes. No training required. No complicated integration with other products. No changes in user behavior. Just solve a user problem, add value immediately, and up sell other services later.

We now live in a meritocracy. Money, VCs, and the press no longer decide what will be successful. Great products/services with intuitive designs that solve a real problem win. Of course once the product catches on and other entrepreneurs take notice, then you need to scale up fast to cement your first mover advantage. That might be where VCs and money add their value in this new world.