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[ox-en] Open Source: Shifting Lucrativeness Sweetspots

O'Reilly Radar: OSCON 2004
by Daniel H. Steinberg

O'Reilly Media founder and president Tim O'Reilly opened up OSCON 2004 with
a look at what is currently on his radar. He began with an abbreviated
version of a talk he has been giving lately on Internet applications. He
then turned his attention to social software.

Following the Value

Tim began by asking what it means that Google, eBay, and are the
new killer apps. He repeated Clayton Christensen's quote that "Free and open
source software is the Intel inside of the next generation of software
applications--or is it?" According to Christensen's law of conservation of
attractive profits, the value simply migrates to adjacent levels.

To put this in historical context, Tim said that as building computer
hardware became a commodity business with lower margins, the value went up
the stack to proprietary software. At the same time, Intel showed that there
was an opportunity to push value down the stack as long as you build a
critical component that the next layer depends on. So the value was pushed
out of the middle layer of building computers to the adjacent layers of
software such as the Windows operating systems, Office, and to hardware
components such as Intel chips.

Looking at that dynamic, people imagined that with the rise of Linux and
open source we would replace Windows with Linux and Office with an open
source solution. This was the dream of having inexpensive commodity hardware
coupled with free software. For now, they reasoned, open source would leave
the Intel layer alone because it is a hard project that has many technical

O'Reilly argues that instead of a stack that is capped by Linux and Open
Office, we have another stack to consider with LAMP and similar open source
software components occupying the middle. The value has once again moved to
adjacent layers. Looking up the stack, eBay, Google,, and
Mapquest are all building proprietary software on top of open source

Several of these applications have found a way to get users to create data
that is used on their sites, which leads to lock-in by network effects and
not by API. There are more than ten million user reviews on Amazon. That's
not really software but the added value here is the data. Tim asked, once
there's a critical mass of buyers and sellers why go somewhere else? In this
grouping, the "Intel inside" position is occupied by Network Solutions,
which controls domain names. All of the mapping applications are built on
top of Navteq.

The platform is the Internet and not the PC. These applications are built on
top of open source but are not themselves open source. Tim says that's OK
because they have built tremendous value. More importantly, if we want to
move open source forward, we have to understand that the whole model of what
constitutes open source doesn't work. For example, you could give away the
Google code and still not be able to implement Google. If we're thinking of
openness we have to ask what openness means in that context: a world where
an app runs on 100K servers and Richard Stallman cannot run it on his
personal machine.

As you create your web-based applications, ask how you might build a
participatory level around the data in the same way that eBay and
have done. Tim left this topic asking who is going to control the key
namespaces and who will integrate the entire open source stack. He suggests
we think beyond Linux and ask who is going to be the Dell of open source and
make sure that evrything works well together.

Reinventing the Address Book

Tim next turned his attention to social software and asked how many people
in the audience had tried Orkut. Most of the audience raised their hands. He
followed by asking how many people kept using Orkut and very few left their
hand in the air. He said that all the social software services are a hack
because we haven't really reinvented the address book.
Tim showed screen shots from a Microsoft Research project that could answer
questions such as who you communicate with around this particular topic. The
question that follows is how we build tools for creating networks and
managing our contacts. These tools could end up as part of Outlook and
proprietary software, or they could become a connection between Orkut and
GMail. "We have to Napsterize the address book and the calendar so that we
own the data about our social network but we are able to query our friends
about who they know."

There are benefits of thinking of software, as Dave Stutz suggested, above
the level of a single device. Tim offered the iPod and iTunes for lessons
for open source. This is the first application that has done seamless
application from server to handheld device. The handheld is not just a bad
copy of the web or PC interface. When you build an application, consider
what the changes may be when you assume that it runs from a handheld all the
way to the server.

Tim concluded his remarks with the announcement that O'Reilly Media will be
producing the third annual MySQL Conference later this year in Santa Clara,


Daniel H. Steinberg is a developer, a longtime technical writer, and the
editor of both and

Organization: projekt

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