Inflection Point

The burgeoning Linux vendor industry is facing its first challenge from beneath as companies like SpikeSource, SourceLabs, and Optaros compete with them for support contracts. Who will win, and what will the open source community gain or lose as a result?

Meanwhile interesting technology like Ruby on Rails and AJAX (Asynchronous Javascript and XML) has turned the world of web apps on its head. The web as we know it was built on HTML and some combination of the LAMP stack. What web will emerge from AJAX'd Rails, Plone, PHP, and Perl apps? And where's Java in all of this?

And even at the bottom layers, the world is changing. Linux has thrown out the BitKeeper source control system and is looking for an open source replacement. Xen is spreading the virtualization gospel to the Linux vendors. And Microsoft is open sourcing software! Something is definitely afoot ...

Placebo (no, not the band)

Everybody already knows how powerful the brain is. Take a sugar pill that’s supposed to be a powerful medicine and watch your symptoms disappear. Have a surgeon not perform bypass surgery on your heart and discover that the angina that has been crippling you vanishes.

The placebo effect is not just for sick people anymore.

Why do some ideas have more currency than others? Because we believe they should. When Jack Welch or Malcolm Gladwell writes about something, it’s a better idea because they wrote about it.

Even as your culture of ideas and marketing enters its long-tail, open-source, low-barrier, everyone-has-a-blog era of mass publication, we still need filters. Would your iPod sound as sweet if everyone else had a Rio? Would your Manolo Blahniks be as cool if everyone else were wearing Keds?

Arthur Anderson audited thousands of companies, and those audits gave us confidence in those companies, made them appear more solid, which, not surprisingly, made them more solid. Then, post Enron, the placebo effect disappeared. Same companies, same auditors, but suddenly those companies appeared LESS solid, which made them less solid.

The magic of the placebo effect lies in the fact that you can’t do it to yourself. You need an accomplice. Someone in authority who will voluntarily tell you a story.

That’s what marketers do. We have the “placebo affect.” (* The knack for creating placebos.) Of course, we need to persuade ourselves that it’s morally and ethically and financially okay to participate in something as unmeasurable as the placebo effect. The effect is controversial and it goes largely unspoken. Very rarely do we come to meetings and say, “well, here’s our cool new PBX for Fortune 1000 companies. It’s exactly the same as the last model, except the phones are designed by frog design so they’re cooler and more approachable and people are more likely to invest a few minutes in learning how to use them, so customer satisfaction will go up and we’ll sell more, even though it’s precisely the same technology we were selling yesterday.”

Very rarely do vodka marketers tell the truth and say, “here’s our new vodka, which we buy in bulk from the same distillery that produces vodka for $8 a bottle. Ours is going to cost $35 a bottle and come in a really, really nice bottle and our ads will persuade laddies that this will help them in the dating department… nudge, nudge, know what I mean, nudge, nudge…”

It would be surprising to meet a monk or a talmudic scholar or a minister who would say, “yes, we burn the incense or turn down the lights or ring these bells or light these candles as a way of creating a room where people are more likely to believe in their prayers,” but of course that’s exactly what they’re doing. (and you know what? there's nothing wrong with that.)

It’s easier to get people to come to a meeting about clock speed and warranty failure analysis than it is to have a session about storytelling.

We don’t like to admit that we tell stories, that we’re in the placebo business. Instead, we tell ourselves about features and benefits as a way to rationalize our desire to to help our customers by allowing them to lie to themselves.

The design of your blog or your package or your outfit is nothing but an affect designed to create the placebo effect. The sound Dasani water makes when you open the bottle is more of the same. It’s all storytelling. It’s all lies.

Not that there’s anything wrong with that.

In fact, your marketplace insists on it.

From Lord Vader Himself

If you've been around the blogosphere, you've likely come across "The Darthside: Memoirs of a Monster." This clever blog is written in the first person form of Darth Vader himself, a character in the hyper-popular Star Wars series. The blog attracted the attention of Slashdot, then eventually G4 did a spot on "Attack of the Show". Hilarious, and at times poignant, today may very well be the final entry in the blog, as the Darth One goes to bring his son before the Emperor (which, being in the omniscient role of the reader, we know what will happen).

Open Source in Latin America

In 2002, then-US Ambassador to Peru, John Hilton, delivered a threatening letter to the Peruvian congress using his public office to act on behalf of a very powerful American private interest. The letter, which was leaked to the press, stated that the Microsoft Corporation and its chairman Bill Gates disapproved of Peru debating a proposed law, Special Bill 1609, which favored the use of free software in public administration. Hilton warned its passage would harm US-Peru relations.

This incident was only an early salvo in a brewing international conflict. As nations of the world increasingly turn to free software to cut costs and promote local development, powerful North American commercial interests have responded by bullying. Sometimes they have done so by proxy, such as using public servants like Ambassador Hilton. Sometimes they have threatened legal action to intimidate outspoken critics such as Brazil's National Institute of Information and Technology (ITI) president Sergo Amadeu, who compared Microsoft business practices to that of drug dealers. Sometimes, they have threatened governments directly, such as last November, when Microsoft CEO Steve Ballmer threatened to sue Asian governments that choose to use free software.

Part of what distinguishes free software (also called “open source” or “libre” software) commercially from proprietary software is a matter of licensing. While all software is protected under copyright, commercial proprietary software is often licensed under terms that create additional restrictions, such as limiting where one can use such software and who may be allowed to use it. Often proprietary commercial software includes licenses to explicitly deny users many basic rights, including ability to modify software to fit their needs or access their own data, the right to speak about the functionality of the software they purchased, or to resell or give it to others when they no longer wish to use it. In contrast, free software expressly asserts and grants these fundamental rights through licensing, and does so in a way that enables others to fully reclaim these rights such as by providing source code.

While both free and proprietary commercial software have co-existed uneasily for a long time in many parts of the world, I believe what has made certain private North American commercial interests respond directly in Latin America is that many nations there have chosen to promote the use of free software, specifically in public administration. There already is a long history for the support and use of such software in Brazil by the Workers Party, starting from the days when they controlled the state government of Rio Grande Du Sul and instituted private/public sector partnerships through projects such as procergs. Most recently the government of President Luiz Lula Da Silva has chosen to use free software solutions built around GNU/Linux exclusively in a project to make computers available to the poor, as recommended by MIT this past March.

Free software in public administration is not just about software for special government programs such as digital inclusion for the poor. This is a battle about the purchase and use of all software by national governments and the terms such software will be provided under. This is about the procurement of servers and database applications used to house government data. This is also about the software that will be purchased and used on the desktops of government office workers every day, and whether they will continue to purchase and use Microsoft Windows and Microsoft Office under the terms of a monopoly supplier, or free software alternatives such as GNU/Linux and OpenOffice.

As Latin American governments increasingly use free software, suppliers will need to adapt to provide it. Private industries that interact with government will also be affected to remain compatible with, and provide additional private markets for, those vendors. All of these create a national economic environment that certain companies, such as Microsoft, would need to change in order to fully participate in.

One reason free software is being promoted by Latin American governments is a question of initial cost. In Brazil, they expect to save over $1 billion dollars annually through the use of free software and elimination of license fees. Many other Latin American governments are of course keenly aware of the cost benefits of free software. In some countries, such as in Peru and Argentina, they have tried passing special procurement laws to more rapidly increase the adoption of free software in government. In Venezuela, the use of free software in public administration is now supported directly by President Hugo Chavez.

While it is true that the total cost of using software is not represented in the purchase price or license fees alone, most other factors also tend to favor free software and better explain the potential for large cost savings through its use. One reason is commercial-free software will often work on existing and older hardware rather than requiring new hardware to be purchased. Another is that since proprietary commercial software publishers depend on the number of licenses they can sell, it is often desirable to require as many additional software sales to perform a given level of work as possible. It should therefore come as no surprise that I often find the same workload that can be done, for example, with a typical GNU/Linux system may require three or four times as many proprietary servers, which also represents additional hardware and support costs.

Free software also can result in lower costs through the absence of monopolies. One cannot achieve a monopoly in free software in part because there will always be another free software publisher that can supply the same goods at a lower cost should this occur. This is in fact one of the main reasons for governments to prefer using free software instead of proprietary commercial software: When money is spent on proprietary software, only a small proportion of that money goes towards funding useful services and software development, as a large part of it goes as a monopoly rent to the shareholders of the proprietary software company. On the other hand, in the world of free software, there are no such monopolies, so money that is spent on free software is available for creating jobs and hence offers other direct and local economic benefits. In Latin America money that is spent on proprietary commercial software serves mainly to make already-rich foreign software publishers even richer.

In trying to create a market for or to promote the use of free software, many Latin American countries, such as Peru, have often chosen to do so through procurement laws like special bill 1609, which cover how a government will purchase goods and services. These laws typically state the terms of purchase that a government will use. Often they are designed to prevent bribery, and to make the process of government purchase transparent. This is often done through the use of competitive bidding. Competitive bidding allows products created by different manufacturers and publishers to compete in providing the same service, and by doing so, prevents the government from being forced to rely on a sole source supplier. Proprietary commercial software by its very definition and restrictions is software that can only come from a single provider.

In providing opportunities for Latin American citizens to directly participate in development and the worldwide commercial software market locally, free software offers incentives for forming a local software industry that can then compete on an equal basis with that of any other advanced country in the world. What we often forget is that software does not require expensive plants or high capital investment to develop. Software may only require people who are free to use their skills and natural talents. Certainly, the nations of Latin America can and do produce people with such talents and skills. Free software means these people can practice these skills for their own benefit and the benefit of their society as a whole without having to look for work in or migrate to foreign lands. By choosing to procure free software, the national government can directly encourage this.

If Latin American countries choose to create an economic environment that accepts participation by free software, existing corporations need not be excluded. Companies like Microsoft could choose, for example, to change the way they license their existing products. They are also free to adapt and offer services based on existing free software already in the marketplace. Instead of competing in these new markets, some companies have responded by trying to make it impossible for Latin American governments to choose and use free software at all. These companies not only resort to bullying, but also lobby our government to modify free trade treaties and use international organizations to include conditions that try to make it impossible for Latin American nations to choose alternative products or develop local markets.

I have often seen WIPO used in this way to promote the private commercial interests of wealthy corporations. WIPO is often used to promote treaties and laws that export both the North American corporate notion of pharmaceutical and software idea patenting to developing nations. Private corporations use these same treaties to then enforce existing North American patent monopolies, thereby preventing the development of competitive local industry. Another example of market control through trade treaties is the “IP rights chapter” of the Free Trade Area of The Americas (FTAA) treaty.

One way I have seen Latin American countries respond to WIPO and other patent bearing treaties has been by banding together with other developing nations around the world to help promote a development agenda for WIPO and bring it into harmony with the wishes of the UN General Assembly. Yet powerful American and European commercial interests have chosen to use the WIPO chair to explicitly bar NGOs representing the interests of developing nations from attending or participating in WIPO discussions on a development agenda even those organizations already duly certified and recognized with observer status.

The people of Latin America, of all people, surely know well what corporate bullies are. Last century many nearby Caribbean nations were routinely invaded by US Marines as part of the banana wars to prop up the interests of specific North American corporations such as United Fruit. While last century's bullies came with tanks and guns, the bullies of this new century come with laws and treaties they wish Latin Americans to adopt that undermine the heritage and the most basic rights Latin American citizens enjoy, not for the benefit of Latin America, but once again for the benefit of private North American corporate interests. The right to innovate is not a privilege to be restricted to a tiny minority, is not even a right specific or exclusive to the question of free software alone, but is a basic and fundamental right every human being must be free to enjoy.

REFERENCES

"Microsoft's big stick in Peru", Wired Magazine, July 27, 2002.

David Sugar, "Bill 1609 Will Be Good for Peru's Economy: an Open Letter", Linux Journal

"GNU.org.pe: Peruvian Congressman's Open Letter to Microsoft" Linux Today, May 7, 2002

Lawrence Lessig's blog: www.lessig.org/blog/archives/001983.shtml

John Lettice, "Use Linux and you will be sued, Ballmer tells governments", The Register, November 18, 2004

Fernando Ribeiro Corrêa, "PROCERGS: todos os estados deveriam ter uma" Olinux.com December 29, 2000.

Todd Benson, "Brazil: Free Software's Biggest and Best Friend" New York Times, March 29, 2005

Terry Wade, "MIT official advocates open-source on computers for poor in Brazil" Computer World.com, March 18, 2005

The use of open source represents annual savings of US$ 1.1 billion for the Brazilian government. (www.brazzil.com/2004/html/articles/apr04/p136apr04.htm)

Gregory Wilpert, "Venezuela's Public Administration to Use Open Source Software" Venezuelanalysis.com, December 30, 2004

"The WIPO Development Agenda and Why You Should Care About It" Electronic Frontier Foundation.

Paul Walcutt, "Why the Banana Wars" Experts: Central/South American History, January 10, 2004

Linux Fan, Windows User?

A friend of mine has lately been heckling me about the fact that I use a Mac and a Linux box at home. It strikes him as odd that I'm always writing and talking about open source and yet don't wear that Linux on my sleeve, night and day. I use a Windows XP at work and all of my development and day to day work is Windows based.

Anyway, as I explained to him, I promote Linux all day, every day. I just don't personally prefer using it. Were my alternatives Windows and Linux, Linux would win. I sincerely dislike the Windows interface, and don't like the inability to tinker (in the limited sense that I, as a non-hard core geek, tinker with my software). But that is not my choice: Windows or Linux. Because of a fortuitous series of events, I also have the choice of BSD/Unix. This gives me the stability of Unix with the flexibility of open source. What's not to like?

So, to my friend's question, I aggressively promote Linux where it's a no-brainer (data center, edge of the network, embedded devices), and somewhat cautiously promote it on the desktop, where the average user resides. I don't want to have anyone get suckered into using a system that is not yet as easy to use as a Mac or Windows machine. There's no sense in burning that bridge. Linux desktops have a buying audience today (engineering, fixed-purpose desktops), which audience will continue to grow as we make it better. Use it where it fits best.

Java and Open Source

Regarding Java and Open Source, I have some good news and some bad news...

• The good news is that Java is "open" in the sense that you can look at its source code
• The bad news is that it's not truly "open source" according to the official definition.
• The good news is that you can see the source so you can work around problems.
• The bad news is that you can't actually fix the problems in the JDK.
• The good news is that you can fix the problems in your own version of the JDK.
• The bad news is is that you can't distribute your own version to your customers.
• The good news is that you could always email your fix to Sun and hope that they incorporate it.
• The bad news is that that's never really worked at all.
• The good news is that Sun has now set up a real mechanism to submit bug fixes,
• The bad news? Well, we'll have to wait and see if there is any bad news.

IBM's Own Geronimo

In what must be a harbinger of things to come, IBM announced today its acquisition of Gluecode, an open source provider of the Geronimo (Apache) application server and portal management software. To those who still can't get their minds around open source - revenue models and such - this acquisition will be perplexing in the extreme. What did IBM buy, anyway, given that most of what Gluecode sells is open source, available to all for free?

This misses the point. As with any industry (technology-centric or not), acquisitions are as much about customer base (likely not IBM's modus operandi here), expertise (bingo!), and leadership (product, market, or otherwise). I believe IBM simply wanted a strong foothold in a growing open source project, especially given Apache's traction in other areas of the enterprise (e.g., web servers). They bought into Gluecode's leadership in Geronimo (through its employees who work on the Geronimo project).

I doubt the acquisition required IBM to give up much (or any) cash, so it's a win for IBM, and gives Gluecode liquidity. Nice all around.

Except maybe for Red Hat, which persists in its Quixotic quest down the JOnAS road. IBM hasn't been cutting Raleigh any favors lately.

And, on a parting thought, it's funny to me how much Gluecode has changed over the past year. When I spent a day with Winston (then CEO) and his team a year or so ago, they were a portal/business process management company. Geronimo was just a dull gleam in their eyes at that point, but I remember Winston telling me they were thinking of picking up some expertise in that area. One year later, Gluecode's website is awash in Geronimo (announced in July 2004), and light on the very products/technology that make up its history (Portal/BPM). It's interesting how quickly the company should change its emphasis...until you see who its hires have been in the past year, which makes all the difference (in an open source world) as to where the company could claim its strongest leadership.

Source of the code, not source code.

Seeing What's Next Review

When Clayton M. Christensen published The Innovator's Dilemma in 1997, the title added an important new conceptual catchphrase to the lexicon of technology management. Innovative companies in any technology-based industry, Christensen explained, must balance the need to perfect the products that made them successful and at the same time watch for the next great new technology. The dilemma Christensen identified is that companies become so enamored of their past innovations that they are unable or unwilling to adapt to new technologies that offer dramatically different levels of performance and price.

Now Christensen has teamed with two of his former MBA students—Scott Anthony and Erik Roth—to write Seeing What's Next, which promises to guide readers in the art of predicting industry change so that they can avoid falling victim to the innovator's dilemma.

This latest book is in many ways easier to read than the original landmark volume or its 2003 sequel,The Innovator's Solution. The first book examined in excruciating detail the workings of the disk drive business—an esoteric technology practiced by companies whose names are unfamiliar to most. Now, the telecommunications business is the primary case study, making the examples in this new book much more meaningful, since the technologies are better understood and the names of the companies familiar to most.

Western Union leads off in the study as the quintessential victim of the innovator's dilemma. In the 1870s, the company passed up an opportunity to buy the patents for the telephone, because it could not envision any market demand.

The decisions of Western Union management, Christensen points out, were perfectly logical given their view of the market and technology. They were focused on long-distance communications, and the early telephones worked only over short distances.

What they overlooked, he notes, was the disruptive nature of the new telephone technology. It met the needs of a different market—people who wanted to send a message across town instead of across the country. Because these people didn't consume telegraph services at all, they were of no concern to Western Union. But as other companies developed the telephone, it soon eclipsed the telegraph.

The Western Union lesson illustrates one of three situations that Christensen warns readers to watch for if they are to "see what's next" and be open to future breakthrough possibilities. In addition to nonconsumers, the second group to watch for is what he calls "undershot consumers," who use the existing products but are frustrated by their limitations and willing to pay for enhancements. Examples here are those who were willing to pay extra for mobile cellphones in a later era.

At the other extreme are "overshot consumers," who, he notes, are more than satisfied with current products and are unwilling to pay for further improvements. As an example, Christensen sites MCI's ability to sell streamlined long-distance communications services at a discount to businesses, undercutting AT&T's full-service long-distance offerings.

The lessons are important ones for all engineers and technology professionals. To be successful, engineers and technologists must design devices and processes that perform efficiently and reliably. This naturally causes them to favor familiar and proven technologies. But unless they are vigilant, they risk getting stuck in a rut and being bypassed by bolder, new competitors.

Christensen believes these lessons also apply to any industry impacted by technology. Seeing What's Next includes brief examinations of the effect of Internet-based distance learning on higher education and the repercussions of new medical procedures and tests on the delivery of health care.

But, although this book is recommended reading for anyone involved with technology, there is one note of caution. Unfortunately, Christensen is succumbing to his own innovator's dilemma. This is his third book on the theory of innovation. While he's improved his ability to explain his concepts, readers of either of the previous two books will find little new substance in this one.

Living in Suburbia

Respected analysts such as those at John S. Herold Inc, the first analysts to call BS on Enron, have gone so far as to predict when each of the big oil companies will peak, which they think will all happen by 2009 (Total S.A by 2007, Exxon Mobil, ConocoPhillips, BP, Royal Dutch/Shell and Eni S.p.A by 2008, ChevronTexaco by 2009). A recent report by David Coxe, an analyst working for the Bank of Montreal, said that the worlds largest oil field, Gharwar in Saudi Arabia, has started to decline, or peak. Other analysts such as Matt Simmons and Colin Campbell, the head of the Association for the study of Peak Oil (Aspo) all agree.

Of course Saudi rejects all notion that their oil fields will ever run out of oil, but promises by them to increase production last year failed to materialise and the recent 500,000 barrels per day increase was not Saudi Light crude as expected, instead the new oil was heavy, sulphurous oil that only a few refineries can use and is common when oil fields start to decline.

So, what does peak oil mean for all of us? According to James Howard Kunstler in Rolling Stone Magazine, it'll mean that we'll all have to move out of suburbia, grow our own food and accept that life will never be the way we once knew it. He also says that alternative energies won't help the world ween off of oil because they're not developing fast enough and therefore oil is a stronly inelastic good and the price of oil will continue to rise. This notion that alternative energies are underdeveloped was reiterated by a French bank, Ixis-CIB, who recently warned that oil could hit $380 per barrel by 2015. The analysts argue that this is possible because alternatives are not developed yet and the world will rely on oil no matter what the cost. The analysts also said existing new oilfield projects would not be enough to satisfy unprecedented growth in demand from developing economies, particularly China.

To help curb the dependence on oil, the International Energy Agency has also advised that all oil consuming nations remove subsidies that they give to oil. Theses subsidies distort the oil market and removing them will promote the development of alternative energies which is badly needed if we want to continue living the dream in suburbia.

Technological Solutions & Cultural Solutions

...A recent thought:

There can be no technological solution without a cultural solution. Cultural solutions are more valuable and profitable than technological solutions.

Agree/Disagree?

Agree!

It's kind of obvious to me that since it's the people within the system that are needed to buy into and use the technology, the "cultural" aspects are primary for the acceptance and use of the technology.

Also, how the technology is applied and the efficacy of it as a "solution" is also dependent on a cultural component. Is the technology being used to simply pave the cowpaths, speeding transactions and analysis in the system's old way of thinking about and doing things, or is the technology a means of supporting a significant improvement that involves a new mindset and set of operating rules -- a "new culture"?

On the other hand, the benefit of a technological solution is that it can help to do just that -- institutionalize a cultural solution so that it gets a chance to eventually become the old method subject to another solution.

Bottom line -- significant, meaningful, profitable results come from the cultural solutions. While they may be made possible or supported by a tech solution, the technological aspect may be neccesary but not sufficient.

IT Growth Predicted for Latin America

How is the global tech sector doing? It largely depends on what currency is being used for measurement. Forrester measured the global revenues of 35 large IT vendors in US dollars. They found that the Asia Pacific market is the strongest for vendors, with revenues calculated in a mix of US dollars and Japanese yen likely to grow by 7% in 2005. The Americas (that means us) is the next strongest market for IT vendors, with a prospect of 6% growth in US dollars for 2005. Vendor revenues in euros for Europe, the Middle East, and Africa (EMEA) are the weakest, with 4% growth for both 2004 and 2005. Thus, exchange rate changes that have favored US IT manufacturers are masking a slow growth period for IT globally. Computer hardware revenues are strongest, especially in Europe; software, IT services, and IT outsourcing revenues are more even by region but are growing moderately; and communications equipment spending is weak in the US but stronger in Europe and Asia.