Open Source Software and the Future of Business

Tim O’Reilly is one of those few people who can step back, look at the current state of things, and then predict where it’s all headed. In this cause, the topic is computing, open source software specifically. He recently wrote an article called The Open Source Paradigm Shift, in which he talks about where computer software is headed in the years to come. He believes that just as personal computer hardware became commoditized with the IBM PC architecture, software is being commoditized by open source technologies and applications. What does that mean? It means that in the future, the real money really won’t be in making computer software in the way Microsoft does. Instead, money will be made by utilizing open source/open standards to create services that can’t be easily duplicated. This transition is already taking place, and can probably be best demonstrated by Google. To service the huge number of search requests it receives everyday, Google uses something like 100,000 very cheap computers that run the Linux operating system. That infrastructure can easily be duplicated by any company. The Google search algorithm, however, is the “secret sauce”, and is what makes Google what it is.

Another example that comes to my mind is TiVo. TiVo appliances are really just stripped down PCs using an old generation of relatively slow microprocessors, but with a specialized audio/video coder/decoder. As for software, the unit itself runs on a modified version of the Linux operating system, which is very well hidden from all but the most curious of TiVo hackers. The TiVo user interface sits on top of Linux and provides a very intuitive and easy to use experience, for which TiVo charges users $12.95 per month. I could have built a DVR system from scratch using a cheap PC, a video encoding card, and open source software such as MythTV, but that would mean spending countless hours building, configuring, and tweaking. Even then, the experience wouldn’t even come close to that of using a TiVo. My family, along with most others, would rather pay a couple of hundred dollars for a specialized appliance that “Just Works” and then pay a monthly fee which is the equivalent of a single fast food meal for two. That includes seamless updating of program schedules, software updates, and, within the last month, remote (web-based) scheduling of shows and the ability to stream music and photos from another computer on our home network. Well worth the $13 bucks/month in my opinion.

Google and TiVo are just two examples of many, which include Amazon , eBay and Salesforce.com, among others. The main point is that while it might not have been the goal of the open source software movement, they are succeeding in changing the very nature of the computer software industry. Open source activists may never succeed in getting everyone to switch from Windows or Mac OS X to Linux, but they don’t have to. Every person on the Internet who uses Google is already using Linux, whether they know it or not. Remember, it’s not the software itself that matters, it’s what’s done with it that makes the difference.