Archive for the ‘business’ Category

More on the open core : the pragmatic view

Июль 5th, 2010
Open to the core I joined the number of those who have a public opinion on the open core debate.
Roberto Galoppini has graciously accepted to host a post on this topic in his Commercial Open Source Software blog.
Please read it directly from there:
Open to the core - The pragmatic freedom
Enjoy!

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eReaders and the Danger of Price Wars

Июнь 28th, 2010

Newsweek_ipad
 
A longer version of this story is published at www.opensources.com

Last week, Barnes & Noble announced they would cut the price on their wireless Nook eReader, from $259 to $199 ($149 for a new WiFi-only edition.)  Many thought this was a good opportunity for the third place contender to gain market share.  But within a few hours Amazon beat Barnes & Noble's price by $10, marking down the Kindle 2 to a mere $189.

As the New York Times notes:

The price cuts were made as manufacturers of e-readers faced a mounting threat from Apple’s iPad. Even though it is far more expensive than the e-readers, the iPad, which starts at $500, performs a range of functions with a versatile, colorful display that contrasts sharply with the static, monochrome screen of e-book readers. Apple said it sold more than two million iPads in the two months since the tablet’s introduction... Analysts had expected the prices of e-readers would gradually fall because of the natural decline in component costs and the increased profitability of e-books themselves.

The price cuts should add further momentum to what, despite incursions by the iPad, has been a growing market for dedicated e-reading devices. Amazon and its rivals are on pace to sell 6.6 million e-reading devices this year, up from 3.1 million in 2009, according to Forrester.

If Amazon, Barnes & Noble, Sony et al manage to sell 6 million eReaders this year, that would be impressive growth for a category that has been lackluster to date.  Amazon has never broken out sales of it's Kindle line, but by all appearances it's the leading standalone eReader and likely has sold a couple of million units in its three year history.

In comparison, Apple has sold more than 3 million iPads in its first 80 days. And they're expanding into 9 more countries next month.  Analysts are predicting that the iPad could sell between 5 and 10 million units this year, which blows Amazon's Kindle out of the water.  And unlike Amazon, Apple actually makes money with it's iPad since it's costs are around $260 for the $499 entry level product and margins improve on the higher end units.  

But its worth considering a few questions:

  • Will price cuts making any difference competing against the iPad?
  • Or does it just increase the burn of a money-losing business?
  • Why is Apple's iPad business profitable and Amazon's Kindle isn't?
  • If you could chose to be in either business, which would you choose?
  • And what does all this have to do with open source?

The key point here is that price is just one part of a disruptive strategy.  No doubt, part of the success of MySQL, Red Hat, jBoss, Alfresco, Zimbra, Pentaho, Revolution Analytics et al, comes from delivering 90% of the benefit for 10% of the price of incumbents. The trick is do to do in a manner that is profitable but that incumbents cannot respond to because of their higher cost of operations.  (And remember, most open source users don't pay anything!)  

Read a longer version of this story at www.opensources.com


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Four short links: 25 June 2010

Июнь 25th, 2010

  1. Membase -- an open-source (Apache 2.0 license) distributed, key-value database management system optimized for storing data behind interactive web applications. These applications must service many concurrent users; creating, storing, retrieving, aggregating, manipulating and presenting data in real-time. Supporting these requirements, membase processes data operations with quasi-deterministic low latency and high sustained throughput. (via Hacker News)
  2. Sergey's Search (Wired) -- Sergey Brin, one of the Google founders, learned he had a gene allele that gave him much higher odds of getting Parkinson's. His response has been to help medical research, both with money and through 23andme. Langston decided to see whether the 23andMe Research Initiative might be able to shed some insight on the correlation, so he rang up 23andMe’s Eriksson, and asked him to run a search. In a few minutes, Eriksson was able to identify 350 people who had the mutation responsible for Gaucher’s. A few clicks more and he was able to calculate that they were five times more likely to have Parkinson’s disease, a result practically identical to the NEJM study. All told, it took about 20 minutes. “It would’ve taken years to learn that in traditional epidemiology,” Langston says. “Even though we’re in the Wright brothers early days with this stuff, to get a result so strongly and so quickly is remarkable.”
  3. Startup.gov (YouTube) -- Anil Dash talk at Personal Democracy Forum on applying insights from startups to government. I hope the more people say this, the greater the odds it'll be acted on.
  4. Open Core Software -- Marten Mickos (ex-MySQL) talks up "open core" (open source base, proprietary extensions) as a way to resolve the conflict of "change the world with open source" and "make money". Brian Aker disagrees: There has been no successful launch of an open core company that has reached any significant size, especially of the size that Marten hints at in the article. My take: there are three reasons for open source (freedoms, price, and development scale) and if you close the source to part of your product then the whole product loses those benefits. If you open source enough that the open source bit has massive momentum, then you probably don't have enough left proprietary to gain huge financial benefit.


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Disrupting IT with Open Source & Cloud

Июнь 2nd, 2010

A couple of weeks ago I gave a presentation at the Apache Lucene Eurocon in Prague. It was a good conference focused on Lucene/Solr open source search technology and sponsored by Lucid Imagination.  

I've posted the bulk of the presentation below.  (I omitted a couple of slides that were MySQL specific.) Even though it was a technical conference, I got positive feedback from the attendees and organizers that the information was useful in helping folks think about where to focus their efforts.  

The slides have been posted to Box.net and are shown using their new "embedded preview" feature which is pretty cool. You can also use the short URL www.tinyurl.com/box-disr

Thanks to the folks at Lucid Imagination as well as those who gave input and feedback on the presentation.


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How to Brainstorm New Ideas

Май 13th, 2010

I promised in last week's post on "How to Kill Good Ideas" to follow up with some ways that more constructively help create new ideas.  The first of these is taken from an idea by Mats Kindahl's post of two other ways to kill ideas. Without further delay, here they are...

  1. Make it safe to contribute ideas
    The best way to do this is encourage risk taking and acknowledge that some ideas will fail and that's acceptable.  The people I know who are the most creative are also the most prolific when it comes to idea generation.  And some of those ideas are, objectively speaking, total crap.  But there are so many good ideas generated in the process, it really doesn't matter.
  2. Go for quantity
    One of the basic tenets of brainstorming is that you need to generate a lot of ideas.  In order to encourage that, you have to refrain from evaluating ideas during the initial phase.  You simply write every idea down, no matter what you think of it, and then try to generate more ideas. You can always winnow down the ideas later on to chose the best ones to work on. But judging raw ideas as they are suggested is the surest way to kill a brainstorming session. 
  3. Make it a team sport
    Often in meetings there's a tendency to have one person present and others passively watching or worse, critiquing.  That's not a good way to generate ideas.  Instead, it's better to break up into smaller groups and give them a short period of time (20-30 minutes) and ask them to generate ideas.  Then you need to make sure that everyone is contributing.  It's a participation sport folks!  You're not there to be a spectator.  Not only will you generate more and better ideas, people will actually enjoy the meeting and feel that they contributed something.
  4. Cross-Pollinate
    Sometimes if all of the people working on a problem are from the same background you'll run out of ideas.  Call in someone with a different perspective.  When we've done successful brainstorming sessions at offsite meetings, the best ideas come when you mix up groups across disciplines and force people to explore ideas and problems outside of their area of expertise.  Invite the salespeople into a product brainstorming session.  Heck, invite the finance team.  You might get ideas that you'd never get from engineers.
  5. Get down from the mountain
    If you find yourself short of creative ideas maybe you're too isolated.  Get out of the ivory tower, the executive suite, or from behind your computer screen and get out into the real world.  I have found going out to see customers and just asking about their problems is a tremendously useful way to generate ideas.  Conferences are also good; you can see what other people are doing and consider how to apply other ideas to the problems you have.
  6. Consider it as an experiment
    Sometimes when the stakes are very high, it's easy to end up paralyzed.  In those cases, it can be helpful to approach potential solutions as experiments.  You test them out for a period of time and then you'll know whether it works or doesn't.  In most cases you can "undo" the experiment if it doesn't work out. But be sure to know what you'll measure to know if the experiment is a success. It might be product downloads or new customers acquired, but make sure you have some basis for knowing whether the experiment succeeded or not.  And sometimes even if it fails, you'll have learned something you can do differently. 
  7. Take a break
    This is counter-intuitive, but it's sometimes the best way to break through on a tough problem. If you're too entrenched in a problem its sometimes hard to be objective or open to a radical approach.  In those cases, it makes sense to take a break and engage in some other activity.  For me, the best way to come up with ideas is to go out for a run by myself and just see what ideas come to me.  For other people it might be a walk around the office building, a hike, a bike ride or a leisurely drive.  Anything that gets you out of the mode of intense concentration into a more receptive way of thinking will work.
  8. Be optimistic
    Sometimes the only difference between achieving success or failure on a problem is the belief that there is a solution and the willingness to continue to make the effort to strive towards it.  And every failure along the way is just a stepping stone.  Personally, I think it is better to be an optimist in life than a pessimist or even worse, a cynic. Besides, who wants to hang out with a pessimist? 

As before, I've stopped this "Top 10" listing short to encourage others to share their observations on how to come up with creative ideas. 


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MySQL is gone. Here comes MariaDB and Drizzle.

Май 6th, 2010

After Sun Microsystems was acquired by Oracle, there has been a large amount of discussions in the business and developer community on the future of MySQL community involved in its development.

A Community Fork?

Interestingly, MySQL community has been able to create a new Database by a fork from the public branch and has revived the project as MariaDB.

On it’s website, AskMonty.org [founded by Michael "Monty" Widenius, the founder and creator of MySQL] states that its aim is,

To provide a community developed, stable, and always Free branch of MySQL that is, on the user level, compatible with the main version. We strive for total interoperability with both our own, and our upstream, communities.

It also states that,

MariaDB is a backward compatible, drop-in replacement branch of the MySQL® Database Server. It includes all major open source storage engines, including the Maria storage engine.

What about cloud?

There is another branch of MySQL survived as Drizzle which aims to focus on Cloud. The Drizzle project states that,

…[It] is building a database optimized for Cloud and Net applications. It is being designed for massive concurrency on modern multi-cpu/core architecture. The code is originally derived from MySQL.

Looking at both of the above, it can be seen that even if the main source of the above two projects are same (MySQL), they are going on different directions as a result of the community turmoil created because of Oracle’s acquisition.

The Future [and the Community Edition]?

Oracle had stated that it will be continuing to serve existing business customers of MySQL of Sun by providing more investments to the development and continuing support for the existing customers, but has not issued any statement related the community editions of the MySQL. It is seen that Oracle plans to retain existing customers of Sun but most probably, not the community. Having a closed source culture and being business minded, Oracle is highly able to transform the existing MySQL customers to Oracle Database solutions by strategically reducing and finally discontinuing support for existing MySQL customers.

Adding with the demise of MySQL [probably within the next couple of years] from almost every xAMP stack, the free and open source community has to reinvent the wheels to continue its race against the well-built closed source commercial software.

This has also been made difficult due to the absenteeism of a centralized management framework for managing the functionality and requirements  in most open source software as highlighted in a previous post in this blog [Is Open Source software a classic example of fail for Design by Committee?].

Related Articles and Links :

http://zerolinesofcode.wordpress.com/2010/04/29/is-open-source-software-a-classic-example-of-fail-for-design-by-committee/


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Investing in Disruption

Март 30th, 2010

Innovator_solution
 
 I'm an advisor, investor and board member to several startup software companies including Revolution Computing, Pentaho and most recently Erply a new Software as a Service (SaaS) company.  One of the common threads I look for is the opportunity to disrupt a large market.

One of the things that made MySQL successful was its use of open source technology to disrupt the multi-billion dollar database market.  In Silicon Valley, people often talk about disruption, but usually what they mean is they have some new feature or a new way to do things that is 10x faster or 10x cheaper.  Those are good things, but that's not necessarily sufficient to make a business truly disruptive.  

The classic disruption model as defined by Clayton Christensen comes down to 4 important factors:

  1. There's a proven market with large incumbents
    This demonstrates that customers are willing to pay money to solve this problem

  2. There are underserved customers whose needs are not being met by the incumbents
    They may be receptive to a "good enough" product that is easy to access

  3. The incumbents cannot profitably meet the needs of this market
    Ideally, their entry into this market would hurt their core business 

  4. To disrupt market, you need to disrupt all the players, not just some of them
    If there are other players, you need to disrupt all of them

If you have all of those things, then your business could be disruptive.  But typically many startup companies ignore the third point.  It's not enough to do something the incumbents don't do today, you want to do something that they cannot do, because it would hurt their existing business.

In the case of MySQL, the product targeted the underserved web developer market.  MySQL was not only a better fit technically in that area, but due to its open source model, it was a business that was unattractive to the incumbents. (Or it was, until it grew to beyond $100 million in revenue.  Now Oracle will leverage this force to compete against Microsoft SQL Server.)  

There are plenty of great businesses out there that are not disruptive; perhaps you're creating a new market, or you're introducing a new innovation that the incumbents have not discovered.  Disruption isn't the only strategy, but if you can make your business disruptive, you gain a significant advantage in the market place.


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European Startup Situation

Март 22nd, 2010

Sxsw_logo

I attended a panel session at the South by Southwest Interactive conference recently on the topic of high-tech startups in Europe.  The panel included Marten Mickos (former CEO of MySQL, now at Eucalyptus), Resham Sohoni (CEO of Seedcamp), Peter Robinett (Bubble Foundry) and Felix Petersen (Nokia).  It was interesting to learn about some of the initiatives, like Seedcamp, which are investing in and promoting startup companies like Erply, and Codility coming out of eastern europe. These companies are small, but they have big ambition and are leveraging open source and cloud infrastructures to keep their costs low.

Here's some video from the panel...


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Future of Open Source Survey 2010

Февраль 17th, 2010

Survey_results

As usual, Michael Skok of North Bridge ventures will be presenting the results of the annual Future of Open Source survey at this year's OSBC conference, March 17-18 in San Francisco.  This is a great opportunity to weigh in and provide your perspective on some important business questions. Here are the 2009 Results as reported by Ostatic.


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LinuxTag 2010: Call for Papers Ends Today

Январь 29th, 2010

LinuxTag is the most important place for Linux and open source software in Europe. Last year, LinuxTag had over ten thousand attendees, and over 300 speakers. This year, the 16th LinuxTag will be June 9-12, 2010 at the Berlin Fairgrounds in Germany.

LinuxTag seeks exciting and suitable proposals for presentations in the conference tracks. The Call for Papers ends today.

I am proud to be a member of the LinuxTag Program Committee. Although a lot of proposals have already been submitted, there are some topics missing that I’d personally like to see covered. So, if you’re up for a last minute submission, get your inspiration from the following list:

  • Is/was the recent economic crisis an opportunity for Open Source?
  • More real-life case studies on how OSS is being used in mission-critical scenarios.
  • A European or global perspective on Open Source in Public Administration.
  • How to make use of Amazon EC2 or Google AppEngine with Open Source apps?
  • Technical tutorials for beginners, especially for building Web apps (e.g. PHP/Ruby/Java/etc. for beginners).
  • High performance Web environments with Open Source tools
  • Security in the Cloud
  • What’s the status of some of the regional Linux distributions?

I can’t promise that your talk will be accepted if it covered one of the above topics. The review process is of course a joint effort of the whole Program Committee. Anyway, it’s definitely worth a try. Of course, any other topic I did not think of is also highly welcome.

Go here to submit your LinuxTag proposal.


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