In terms of software business models, the current phase in the industry’s history is characterized by three general types: subscription licensing, open source, and ad-sponsored software, and the most promising of these models going forward are open source and ad-sponsored.
Don’t take my word for it, because these are the words and ideas of Microsoft General Counsel and Vice President Brad Smith. Smith says we are in the third phase of the software industry, first software had no value other than on the hardware it was designed for and IP rights weren’t considered (ala OS/360), then software had value independent of the hardware (ala Altair Basic).
According to Smith, the present era of the software industry, or "phase 3" as he calls it, is characterized by the 3 aforementioned business models:
The third phase has developed over the last 6 or 7 years. Three business models for software have developed, with the latter two showing the greatest potential.
- Licensing. We continue the mass marketing of licenses. Now, it’s just done more on on subscription basis so that you get updates as they came out. This allows for continued services in an ever developing world.
- Open Source. Very distinctive from the first in that developers are working on code in diverse environments. The cost of the development work is not recouped by sales of the software. It’s recouped by service, hardware or other software sales. You are using open source to develop distribution channels to sell something else. This is the Novell and Microsoft deal where Microsoft drives licenses to open source community and Novell gets cut.
- Advertising. Probably the most important business model is ad sponsored software. Software is given away for for free in a web based atmosphere but advertisers are given rights to run ads. This is the google model, acknowledging google is all software.
So, is this an admission by Microsoft that their historical business model of shrink-wrap software is dead, and their present model of subscription-based is inferior to that of their perceived nemesis, Google? Is this a further signal of Microsoft changing tack, as it tries to evolve from a shrinkwrap/subscription license business model to the more nimble, and admittedly superior, open source and advertising models such as their Live services?
After all is said and done, perhaps somewhere out there is a chair deserving of an apology, as it appears now that Ballmer is going to "f%&king imitate Google!" instead.
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If Windows is so genuine and innovative, then how can Microsoft explain the following?
Gates: “And through Windows NT, you can see it throughout the design. In a weak sense, it is a form of Unix. There are so many of the design decisions that have been influenced by that environment. And that’s no accident.”
In light of the recent saber rattling about Linux and patents, the “There are so many of the design decisions that have been influenced by that environment” sentence is particularly interesting if these patent threats include things that are prior Unix art. “In a weak sense, it is a form of Unix” is also telling. I said before that I don’t think that’s the case; I think the patent stuff is talking about things like Samba and Mono, but even there the “influenced by that environment” could be important in the court of public opinion if not in actual law.
This is definitely a noteworthy observation, which has just been posted by Anthony Lawrence.
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The peculiar paths which Novell has followed cease to amaze. It seems as though everything is possible. As a lead developer from the Wine project said immediately after the deal had been made, it is expected (yet arguably so) that Novell will inherit SCO’s role. Whether it will also inherit SCO UNIX is something that remains to be seen. Have a look at this:
Novell is going to take back ownership of System V UNIX. It supposedly transferred this to SCO, but a Federal Judge found that the contracts had more holes than paper. Novell has leave to contest the agreements, and if SCO goes belly-up while the matter is in debate, Novell’s there to snatch up a very valuable property.
This speculation comes from Tom Yager. He is an Apple advocate/journalist whom I have always perceived as Linux-hostile. He once authored an article titled “Linux will get buried“. By all means, he makes the statement above with real confidence. It seems like a victim that grabs a criminal’s weapon. I certainly hope that Novell is not turning into its own enemy in the same way that an abused child, much to his/her misfortune, soon resembles his/her parents as he/she matures.
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Over on Groklaw, there is an excellent piece penned by Georg C.F. Greve of FSF Europe, which introduces those of us who don’t speak German to a new term, Danaergeschenk. The term relates to the "beware greeks bearing gifts" saying in English, but interestingly in the German idiom apparently it is more the "gift" itself that should be feared rather than the "Greeks".
In this case, Greve argues, Novell’s Danaergeschenk for the world is their supporting Open XML in OpenOffice.org.
So in the case of OpenXML, Microsoft now seems to be using Novell to put a pro forma implementation of OpenXML into OpenOffice.org, which will make it easier to migrate from OpenOffice.org to Microsoft Office but can never be sufficient to read all Microsoft Word Documents.
One reason for this is the sheer size of the implementation; another reason relates to the containers used within OpenXML, which make use of Microsoft’s proprietary implementations instead of industry standards such as SVG. Moreover, there is really no knowing what kind of hooks Microsoft has put into the specification that people will not detect at first reading. Indeed, it is quite possible that OpenXML will allow what Bruce Perens refers to as “Predatory Pratices” in his definition of an Open Standard.
And while there will be a migration path from OpenOffice.org to Microsoft Office, Microsoft avoids opening the inverse path to any other ODF-compliant Office program, by neglecting ODF support in Microsoft Office.
So, once again we are seeing that Open XML is a one way standard. Open XML is no more than Microsoft’s latest marketing tactic, a pseudo-standard in name only designed to keep their Office products at the center of the IT universe by limiting interoperability with competing products.
Bob Sutor, IBM’s Vice President of Standards and Open Source has written a good analysis why the specification is more akin to a denial of service attack than an Open Standard. OpenXML basically represents a change of strategy: Instead of trying to hide information by not telling anything about their products to anyone, they’ve apparently now switched to hiding information in noise, which is by far the more effective method.
So, as Greve points out, it would be advisable for OpenOffice.org to eschew Open XML support from the main branch, rather than naively accept Novell’s Danaergeschenk and the misfortune it may bring. I would also like to add, with apologies to Virgil: "Whatever it is, I fear Novell even when they bring gifts."
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