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We’ve written about how a bad economy is indeed good for open source software. We’ve also recognized that with open source software’s maturity and place at the enterprise software table, a bad economy can be a double-edged sword for open source since the failure or fade of large enterprise customers, say big banks, hurts open source vendors right alongside traditional software providers.

What is interesting is that after a couple of years of economic rebuilding, we’ve seen recently how open source is being driven by innovation, particularly in cloud computing, where open source is prevalent and disruptive, and also mobile computing, which continues to be impacted by openness.

Given recent economic developments around the globe, I’m wondering whether we may see a return of cost as the main driver and benefit of open source software in the enterprise. Recent conversations with vendors and customers illustrates the fact that the motivation for adopting open source is not always the main benefit from open source. For example, open source users and customers identified cost as the main reason for adopting open source when we asked more than 1,700 of them two years ago. However, when the same group was asked what was the main benefit from open source, the top pick was flexibility. We also saw dramatic increases in factors such as performance and reliability when comparing drivers for adoption and benefits from adoption. Still, just as we’ve seen unpaid community Linux lead to paid subscription Linux and also paid Linux lead to more unpaid community Linux use, it can go both ways with open source advantages, as well. One recent conversation with an up-and-coming, open source-centered vendor in the NoSQL space highlighted how many large enterprise customers are deploying open source in divisional, departmental, pilot and other limited form to replace traditional databases primarily for flexibility, performance and similar reasons, but finding the cost savings to be significant and worthy of wider deployment.

This begs the question whether open source software, driven by its myriad of advantages for different contexts, finds a way to win regardless of whether economic conditions are good or bad? There’s no question open source has displayed staying power throughout both. We should also point out that these advantages and factors end up putting a lot of pressure on open source software development and projects, given there are inherent expectations of cost-savings, flexibility, speed, performance, scalability, etc. As we’ve highlighted recently, open source is not always the correct route for enterprise ogranizations. However, we do believe that if done properly, open source projects and communities can and do deliver benefits that enable both providers and consumers of technology.

Similar to sales and marketing, longevity, economic and developer opportunity, open core, etc., it all boils down to the community, which in a good economy tends to drive innovation and value or in a bad economy serves as a source of cost efficiency, savings and survival. That is, of course, if the community is properly supported in code, cash, contributions and stewardship that still allows open source to do its thing.

 
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

• Amazon: Kindle $189
• New York Times: In Price Wars, eReaders go below $200

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.

• Conference: Apache Lucene Eurocon, Agenda, Training
• Lucid Imagination: Main site, Blog, Training, Services

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. 

 
 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.

• Amazon: The Innovator's Solution