An Interview with Tim O'Reilly & Eric Raymond

Corporate America and Open Source

	Eric Raymond author, The Cathedral and the Bazaar
	• Vocal advocate for open source technologies and methods. • Author of numerous poltical and technological essays • Member of VA Linux's board of directors • A thyrsus, (which is found in Eric's email address) is a staff carried by Bacchus or satyrs, sometimes referred to as "a spear enveloped in vine-leaves" Its point was thought to incite madness.
	Tim O'Reilly O'Reilly & Associates
	• CEO and Publisher of O'Reilly & Associates • Advocate for open source technologies • Started firm in 1978 as a technical writing consulting company.

Are big corporations learning the lessons of the Open Source movement? We recently talked with Eric Raymond, author of The Cathedral and the Bazaar, and Tim O'Reilly about corporate America's deepening infatuation with open source technologies and methodologies.

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Eric Raymond: I think it's a harbinger of several important trends. One is that IBM, like many other software producers, is recognizing the increased reliability and performance and other desirable features that you get from decentralized peer review. Economically I think it means IBM has also figured out that operating systems is a bad business to be in these days.

Tim O'Reilly: Yeah, I always loved Bob Young's remark that he was really trying to shrink the size of the operating system market. And I think, in fact, that that's just one of the key concepts that I think Open Source has really brought into the frame: Software is becoming a smaller part of the overall picture, and you've got to somehow have a strategy that goes beyond just selling your bits.

Raymond: That's right, and there are two ways to look at that, one of which looked kind of negative at first blush, and the other one of which looks kind of positive. The negative way to look at it from a traditional business person's and investor's point of view is that we're squeezing the leverage out of the software market. There's less and less room for investors to play by pumping in capital if the development networks are all decentralized and open source. On the other hand, this also implies that the investors have really been getting their leverage from inefficiencies in the conventional mode of production, and when those inefficiencies are squeezed out, everybody will benefit.

O'Reilly: With Collab.net, which is the company we started with Brian Behlendorf, which is aimed really at that marketplace of trying to help corporations embrace the methodology and use it, we're finding really good uptake on that. People are understanding that this is what they wanted, they just haven't known how to do it. I guess I see a lot of growth coming from companies that -- and this goes back to Eric's thing about inefficiencies in the market -- there's so many cases where the customers of these guys are reinventing the wheel, and the open source methodology allows the customers to sort of get on the same plane and start sharing data.

Raymond: That's right, and very directly what we're discovering is that secrecy, and the kinds of closed intellectual properties that are bound up with secrecy, are not efficient. They're not an effective way to generate value in software.

O'Reilly: You know the thing that I guess I see, a lot of people ... What metaphor do you use? Different metaphors in open source are better for explaining different parts of the problem. And so, for example, I see the first wave of the open source enthusiasm was a little bit driven by one aspect of the Linux story, which was, "Oh, look, they give it away for free and everybody uses it and isn't that a wonderful network effect?" So all these people came along and said, "Oh, we're going to give away our software for free, we'll make it open source and bingo everybody will use it."

Raymond: That's right, but the meaning of the long-term future of this revolution is going to be driven not by price but by value.

O'Reilly: Absolutely. But to go further along, what I'm seeing in terms of businesses, you know beyond that first wave of people who thought, "Oh we can just jump easily on the bandwagon," we're starting to see people for example who are trying to learn the Apache lesson instead. And I think that's a really fascinating lesson for business.

The Apache lesson was, here's a bunch of end-users, ISPs who basically were being disempowered by their vendors. You know, they were using a free solution, all of a sudden Netscape and Microsoft started saying, "No, no, the main path going forward is our proprietary solutions," and the users basically formed a collaborative network to keep the power on their side of the fence. And I guess I see a lot of opportunities where businesses are -- vertical markets are really cooperating to build some technologies they use to run their business. And that's what Eric talked about in this whole idea of "use value of software" rather than "sale value of software."

Raymond: When companies invest in a shared infrastructure, they can reap cost-efficiencies because they're not paying for the whole infrastructure if there's a whole consortium like the Apache group that's being funded by multiple corporations. Every time somebody joins that gang, the costs for everybody go down and benefits go up.

Sims: It reminds me actually, one of the earliest interesting things about the Internet itself was its ability to route around damage, and I made a big deal about that in the early days of the Internet, that it would route around damage. That's sort of a metaphor for what you were talking about. The damage was they couldn't get what they wanted out of the vendors; they routed around it. It's almost a sort of monopoly fail-safe in a way.

Raymond: Yeah. I like Gilmore's quote about the Internet interpreting censorship as damage and routing around it. These days I like to generalize it to: The Internet interprets attempts at proprietary control as damage and routes around it.

O'Reilly: We all know that hardware margins have come way down, but software margins have stayed where they are because Microsoft had this proprietary lock-in. And now everybody's saying, you know, "We want you guys to enjoy the same kinds of margins the rest of us have to live with."

Raymond: Yeah, actually I think that's going to turn around and bite Microsoft very badly in the near future. I'm giving a section of my talk nowadays called "The Seven Bullets Microsoft Has to Dodge to Survive the Next 18 Months," and I think of those the most difficult for them to dodge is the basic contradiction in their business model between the fact that their revenues have to rise every quarter to sustain their option program, and the fact that hardware prices are plummeting. That puts an intolerable margin squeeze on their hardware OEM standard. I think we're mirroring the point where those OEMs are going to revolt.

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