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Posted on 06/16/2005 4:49:37 PM PDT by Golden Eagle
NEW YORK - Marc Fleury is shocked--shocked!--that IBM would use the same tactics to attack him that he's been using to attack IBM.
"Frankly, it leaves us scratching our heads," he says.
For the past two years Fleury's company, Atlanta, Ga.-based JBoss, has been stealing business from IBM (nyse: IBM - news - people ) by giving away a set of open source programs that do the same work as IBM's WebSphere software. Fleury claims JBoss shipped more copies last year than IBM did.
IBM apparently has grown tired of having a freebie program eating away at its sales. So now it is going nuclear. In May the computer giant acquired JBoss's main rival, Gluecode, which also distributes a set of open source Web server programs.
Gluecode used to make money by selling some "closed source" programs that ran on top of its free open source stuff. No more, says IBM, which intends to release the source code for all of Gluecode's programs and distribute them for free. IBM also will slash prices on service and support, charging less than half of what Gluecode used to charge, says Scott Cosby, IBM's Gluecode transition executive.
The pitch to customers is this: You get the software for free and service and support at a bargain rate. And it all comes from IBM, a name you can trust.
Cosby says IBM is just responding to customer needs. He says he hasn't thought much about what IBM's acquisition of Gluecode means for JBoss.
Fleury has, however. He claims IBM is trying to put his privately held company out of business. He is furious, but also stunned: He says Gluecode could hurt sales of IBM's WebSphere as much as it hurts JBoss, yet IBM doesn't seem to care.
"Where does this all end? When the whole deck of cards, the whole software industry, falls apart? I find it arrogant on their part that they think they can control what they've unleashed," says Fleury, JBoss' chairman and chief executive.
Poor guy. Did he not get the memo? This is what open source software is all about: creating knockoffs and giving them away, destroying the value of whatever the other guy is selling.
What's new is that now open-source companies are turning on each other.
It's not just JBoss getting attacked by Gluecode. Red Hat (nasdaq: RHAT - news - people ), the leading Linux distributor, is besieged by knockoffs of its "enterprise" Linux: the one customers are supposed to pay for. It's starting to look like one of those Quentin Tarantino movies where a bunch of guys end up all pointing guns at each other.
Fleury, talking tough, insists he is not worried about IBM. He says his software is better than Gluecode, and that IBM doesn't know how to manage a software business.
But if Microsoft (nasdaq: MSFT - news - people ), for all its billions, is doomed by the open source movement, as many open source proponents believe, then what chance does Fleury's 130-person startup stand against IBM, a company that had $96.5 billion in revenue for 2004, aims to use software as a loss leader and can absorb losses for years?
Indeed, IBM's assault on JBoss raises big questions about whether stand-alone open source software companies can ever make enough money to sustain themselves. Because their code can be freely copied, these companies can't charge for their programs. Instead, they hope some users will pay for service and support.
Problem is, most people just take the free stuff and run. Only 3% to 5% of JBoss customers buy support contracts.
No wonder no one is making any real money at this. JBoss operates at a loss, as does MySQL, the open source database company. Novell (nasdaq: NOVL - news - people ), the No. 2 Linux distributor, is losing money. After a decade of losses, Red Hat earned $45 million last year on sales of slightly less than $200 million, but 40% of its profit came from interest income rather than operations.
These companies were built on the notion that they could make knockoffs of programs sold by giants like Microsoft and Oracle (nasdaq: ORCL - news - people ) and charge only a dime where the big guys charge a dollar. That's a pretty flimsy idea to begin with. But it looks even dimmer when others come along who are willing to sell for a penny.
Even proponents like Fleury admit the open source business model is not intended to produce powerful, wealthy, massively profitable software companies.
Yet people are racing into this business, and venture capitalists keep funding them, pumping $150 million into open source startups in 2004, triple the amount for 2003, according to VentureOne.
Sounds like the dot-com bubble, except that this time it's not just investors who will get burned. Customers are taking a risk too. Because when these open source software providers burn through their venture funding and go out of business, customers will need to either hire teams of expensive techies to maintain that orphaned code or pay someone to rip out the old stuff and replace it with something new. Either way, all that free software is suddenly going to look awfully expensive.
The good news, if you're a JBoss customer, is that IBM will be there to help you migrate.
well, i'd call you an zero sum thinker, i don't subscribe.
"Sorry but I don't follow that reasoning. Why would they advertise at all if 97% of those dollars are lost in net result?"
I downloaded JBoss a month or so back, I used it for non-profit evaluation, and then I removed it. So I may be included in the percentage of people who did not ask for follow up services. But all they have spent on me is the price of a download.
Generally it is good to do this because now that I am more familiar with their product, know what it does, and a bit about how it works, then I am more likely to recommend it as a solution to others, or even to a future employer who may want follow up services. So giving the product away free is a way of advertising it.
Reminds me of pure open source more than any proprietary software company. Those products are notoriously poorly documented, are they not? If you disagree, give some examples of open source that are better documented than their proprietary counterparts. Thanks.
"A significant portion of the manpower that creates open source software comes from the United States; so, you can think of any disclosure to the ChiComs as a net loss not only in terms of domestic technology and revenue but also as a gain by our adversaries. They get something valuable from us for nothing which increases their capabilities. That's a bad thing, in my opinion."
Can you name one aspect of Redhat Linux that presents a security concern if it falls into Chinese hands? Something that the Chinese would not be able to obtain easily otherwise. Seriously I cannot think of one thing. Its just an operating system and they teach how operating systems work all over the world.
Which would be illegal. They can't legally take IBM AIX and rename it Chinux and run their supercomputers on it. Hey, I think we should cut off all trade with them, but if trade is going to be allowed, it should at least be profitable for us and subject to export restriction, and these free copies are neither.
"Reminds me of pure open source more than any proprietary software company. Those products are notoriously poorly documented, are they not?"
That I agree with
"Which would be illegal. They can't legally take IBM AIX..."
Sorry maybe I got confused. I was talking about red hat
how would anyone, outside of the developer ever know if an proprietary program was "documented", with open source you can read it, it's open.
But you belive service only is equal to sales and service?
windows api is well documented, but of course windows is proprietry. I think thats the general idea. Course i dont know the correct terminology for that kind of thing.
But then along came Bic and turned the business inside out by making plastic razors with blades cheap enough to be disposable. Why should I spend money refilling my razor, pen or lighter when they are cheap enough to just throw away and buy new ones?
So why should I spend money on software service and support when I can get free new software from someone else?
I didn't, I asked where can I get Sensor XL's for under $6. One free razor from Schick per lifetime hardly qualifies.
Sure, it's clustering capability, which is perfectly suited for nuclear weapon design, simulation, and post simulation analysis. And they're getting that software for free, including not only the right to use, but legally rename, and even resell, without even a thank you back to the US.
The problem with your theory is, they did pay for that download and didn't get anything in return. Worse, if you had liked it, you still wouldn't have to pay for it. Worse still, if you give it to your buddies, who may like and use it too, but they don't have to pay for it either.
The model of distribution and impact to the tech economy is more similar to illegal pirated copies being distributed than anything. Especially when the admitted figure of those who use it without paying is 97%.
it is obvious that you know almost nothing about free software.
you name redhat as an example as if redhat "wrote" it.
redhat, the operating system is a "distribution" of linux.
with maybe 1 or 2 percent written by redhat personnel.
the contributions to linux are made by people from all over the world, including china.
i cannot take anything you say seriously, since you make statements that you either know to be untrue, or show your complete ignorance regarding free software.
it is *particularly* germane to this thread, as opposed to your attempts to sow Fear, Uncertainty, and Doubt (along with your sad and predictable attempts to obfuscate, which shed no light at all on the subject at hand).
Name one significant chinese contributor.
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