Executive Briefing : Hot Seat: Open Source, Asymetric Competition, and Web2.0

Tim O’Reilly, Founder and CEO, O’Reilly Media, Inc.
David R. Skok, General Partner, Matrix Partners
Michael Tiemann, Vice President, Open Source Affairs, RedHat, Inc.
Paul Weinstein, Executive Vice President of Business Development, MySQL AB

Tim: “how do you respond to the ideas raised today, are you still disruptive or are you mainstream now”

We get treated to a story from Red Hat guy about India and famine and how it was solved by democracy (even though they have the highest rate of malnutrition in the world)

America went from 1920’s starvation to obesity with nothing in between (this gets a wry laugh from the mostly American crowd)

Focus shifted from what people are spending on IT to what they are wasting on it.

The biggest shift in the business model is that the biggest cost for a startup is sales and marketing but open source is changing that now by reducing the cost

What happens when OS becomes so mainstream that they don’t get the free press anymore, Jboss were making money on selling documentation but they switched to give it for free and then understand who was ready to pay, in the end they found out three things:

  • They wanted support contracts
  • They wanted a roadmap of where it was going
  • They wanted to know the company was going to be there long term

Constant debate in MySQL is where do they focus all their efforts, old world or the new world. Do they try and make the product better or come up with new features. They make money from support and they have been built by users so they aren’t going to change that.

Q: how much do users really affect what OS companies do

The Red hat guy opines that there are a lot of people who only want to go to the fringe and when something gets mainstream they leave, however they see more users as they get more mainstream, then makes some bad inside joke about Phil Moore’s tattoos

Tim chips in with how the most successful OS projects are modular and distributed on virtual pizza, Jeff Bezos apparently says that the best projects are 2 pizza teams, i.e. if you need more pizza you have too many developers?

Q: what is it about OS if it isn’t about price? Eventually everyone’s income sheet looks the same

JBoss – it is definitely about price, BDA make you pay for upgrades, not support, where as in OS they are free and you can pay for support if you like.

Redhat – long winded story about looking not at the actual cost of getting something from a company but to look at how they create revenue for you, the argument is that RedHat gives you a better competitive advantage with their product which includes a tale about the futures market saving money by trimming time off transaction results

My SQL – whilst they like to think its all about the technology it’s not true, for some people they are scared that if they buy Oracle that they will be locked in for life, not sure about this line of argument, what happens if MySQL goes bust?

Q: the software supply chain management problem hasn’t been solved yet

JBoss – the trouble is (Tim) that you are an early adopter and you look for the cool new stuff and features where as mainstream are too scared to take the risk quite simply

Q&A

If support is the profit centre and source of revenue do you see India taking over?

JBoss – incredibly high margin, like insurance but they might never use it, usual story, If only 2 calls made for $100K they wont be happy, however what RedHat have done is show the way forward by creating a support contract that includes updates, stable releases and a powerful network for distributing releases.

What are the disruptive effects you see coming up?

JBoss – mobile, gaming

RedHat – Technology is getting better but our ability to react to it or even listen to it is not

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