[Gllug] Glyn Moody article in Grauniad

Thu Jan 10 13:11:29 UTC 2002

On Thu, 2002-01-10 at 13:48, John Hearns wrote:
> GLyn Moody has an article on the front page of the
> Grauniad Online today.
> "Free Software Survives Downturn".
> 
http://www.guardian.co.uk/Archive/Article/0,4273,4332050,00.html

Free software survives downturn

Bill Gates beware: open source is flourishing even if the companies are
not, reports Glyn Moody
More internet news

Glyn Moody
Guardian

Thursday January 10, 2002

The battle to dislodge Microsoft from its vice-like grip on personal
computer operating systems seemed to be entering a new stage two years
ago with the explosive growth of new companies using free software. The
chief of these was VA Linux, launched at the height of dot.com mania.

When dealings in the shares started on December 9, 1999 they soared from
an opening price of $30 to a close of $239.25. That first-day gain of
nearly 700% was the largest recorded, and many commentators took it as a
clear sign that VA Linux represented a new breed of second-generation
net companies, those based up on open source software. Two years later,
they are skulking at around the $2 level: a fall of over 99%. But this
is not just another story of dot.com burn-out.

At first, the market's bullish valuation seemed justified by VA Linux's
growing success in selling its cheap but powerful computers - built
around the free GNU/Linux operating system - to other net startups. But
this strength also proved a weakness, as last year's dot.com downturn
dealt VA Linux a double blow: investors not only lost faith in the
company's original strategy, but many of its best customers went bust
too.

Revenues quickly fell. In 2000, sales for the third quarter had totalled
$34.6m; in 2001 they were just $20.3m for the same three-month period.
The worsening results prompted painful job cuts and dramatic strategic
swerves. These culminated on December 5 last year with a symbolic change
of name from VA Linux to VA Software, as the company sought to distance
itself entirely from what many now perceived as a defunct business
approach.

Nor is VA Software alone in its woes. Even the bellwether free software
company, Red Hat, which makes most of its money selling and supporting
GNU/Linux, has seen its share price plummet to a twentieth of the peak
value it had attained at the beginning of 2000. One of Red Hat's
strengths is that it employs some of the top open source programmers,
but starry talent alone is not enough to guarantee survival, as the
story of another free software company demonstrates.

Eazel had been set up in August 1999 by three of the big names behind
the original Apple Macintosh, including the legendary programmer Andy
Hertzfeld, whose job title in the startup was simply "software wizard".
Their vision was to achieve for GNU/Linux what they had for the Mac:
make it the easiest-to-use and coolest-looking desktop system around.

It was a great idea, but in their new-found passion for open source,
these top engineers had omitted to devise a business plan to sustain the
company while making their product freely available. Despite backing
from computer giants like Dell and Sun, Eazel folded on May 15, 2001.

Against this dismal background, it might seem that open source was just
another passing fad of those crazy dotcom days, destined to be consigned
to the cyber dustbin of history along with push technology and portals.
But closer inspection reveals a rather different picture.

While it is true that, almost without exception, the new free software
businesses are having a tough time, this does not mean that open source
is fading from the commercial computer scene. If anything, its profile
there is higher now than ever before.

This is largely due to the uptake of free software by traditional
computer companies, sometimes on a massive scale. For example, in
December 2000, IBM's chairman and chief executive officer, Lou Gerstner,
announced: "We're going to invest nearly $1bn in Linux next year.
Fifteen hundred IBM developers are dedicated to Linux-enabling our
products and services."

Thanks to the backing of companies like IBM, open source has become a
respectable choice for corporate users. One of the most dramatic
converts to free software is the leading e-tailer, Amazon.com. In a
recent US stock exchange filing, it revealed that it had reduced
"technology and content expenses" for its third quarter from $71m last
year to $54m this year thanks "primarily" to its adoption of the
GNU/Linux operating system.

Enabling organisations with squeezed IT budgets to save money on both
software and hardware is one of the chief attractions of open source
solutions. Even the British government seems tempted. A recent
consultative draft entitled Use of OSS [Open Source Software] within UK
Government states that "UK Government will consider OSS solutions
alongside proprietary ones in IT procurements. Contracts will be awarded
on a value for money basis."

Open source is flourishing, even if open source companies are not. A
typical reaction to the failure of a free software startup provides a
hint why. Within hours of the closure of Eazel, volunteers on an
internet mailing list were offering to maintain various parts of the
project: the licences under which free software - even from companies -
is released, mean that programs can live on in this way whatever happens
to the organisation producing them.

Alongside such code immortality, another key reason that open source is
thriving is because money has always been an incidental rather than
primary motivation for its creators. Whether in a bull or a bear market,
people go on writing software and giving it away much as they have
always done.

Sometimes they hone pre-existing software, as with the OpenOffice
project which uses code released as open source by Sun when it bought
the StarOffice program. An end-user version of OpenOf fice is nearly
ready, and looks set to be the first truly viable alternative to
Microsoft Office - one that is almost entirely compatible and completely
free.

On other occasions, new free software projects are begun, largely
because somebody somewhere sees a need and is prepared to start coding.
A case in point is Mono an attempt to write an open implementation of
portions of .Net, Microsoft's next-generation platform, which allows
software to be sold as an online service.

Nothing could typify better the extent to which the open source movement
has become the second force in computing than this decision to confront
Microsoft head-on by creating a free alternative to its latest
technologies. This growing confidence and ambition may explain in part a
notable change in Microsoft's attitude to open source.

Initially, Microsoft dismissed free software, claiming that nobody used
it. When it became obvious that this was untrue, Microsoft shifted its
attack to technical aspects. In particular, it claimed that open source
software like GNU/Linux could not "scale" to handle serious,
enterprise-level tasks.

That this is certainly no longer the case was established definitively
in August 2001 when IBM announced it was building one of the world's
most powerful number-crunchers, the $53m Distributed Terascale Facility
(DTF), which will be capable of performing 13.6 trillion calculations a
second, and storing over 450 trillion bytes of data. The DTF will employ
four interconnected GNU/Linux systems to form what is known as a
computing grid. Moreover, the key piece of co-ordinating software, from
the Globus Project, is itself open source.

In the face of this growing body of proof that open source is now far
more powerful than anything it has to offer, Microsoft has changed tack
again. It abandoned its arguments based on technology, and turned, with
what looks like increasing despera tion, to the area of intellectual
property. This new campaign culminated in the remarks of Microsoft's
chief executive officer, Steve Ballmer, to the Chicago Sun-Times in June
2001, when he said that "Linux is a cancer that attaches itself in an
intellectual property sense to everything it touches."

The virulence of these and similar comments by Ballmer's senior managers
is perhaps the clearest indication of just how threatened by open source
Microsoft feels - and just how successful free software has become.

Microsoft's unprovoked aggressiveness towards the open source world
offers perhaps the best refutation to the contention that in the wake of
the dotcom downturn, free software is a spent force. If it were,
Microsoft's top officers would not spend so much of their valuable time
vilifying it.

· To order a copy of Rebel Code by Glyn Moody, being republished on
January 31, for £8.99 including p&p, call the Guardian Book Service on
0870 066 7979

-- 
Gllug mailing list  -  Gllug at linux.co.uk
http://list.ftech.net/mailman/listinfo/gllug