Wednesday, October 25, 2006
Red Hat, Oracle and (again) dual licensing
A week ago I was writing about RedHat... Quoting myself (I feel can do it, since just a week passed, otherwise I would look like a old grumpy man ;-) "They [Red Hat] do not control it [Linux]. There is nothing they can do about it. They then take it and wrap it around as Red Hat Enterprise. It is still GPL (they have no chances, they must release it as GPL, they do not own the IP of Linux) and people can take it even for free and build an identical product (see Centos). The only way Red Hat can defend itself is by enforcing its copyright on the Red Hat logo (and they are really aggressive on it, rightly so). Pretty weak but it seems to be working well for them - for now."Well, pretty weak it was a week ago... Working well - for now - a week ago... Today Centos became Oracle... Red Hat price collapsed (their market cap is half of what it was six months ago). Oracle has a bigger support organization than Red Hat... They will support the same exact identical precise code. At half the price (!). Now it is very weak and not working well... That's scary stuff if you are an investor in Red Hat.
Honestly, I am not convinced Oracle can really do it. Taking a product from someone else and support it is not an easy task (although this is what Red Hat is doing with Linux...). My bet is that Mr. Ellison is going to let Red Hat stock price slip a little bit more, than buy it with another hostile takeover. That will make him quasi-Microsoft, which has always been his goal. And he will buy JBoss in it, which would be a nice revenge.
Anyway, my point is that - once again - dual licensing is the only viable option to build a defensible business with open source. Anybody can take Funambol Community Edition, but I can give mobile operators my Carrier Edition and be sure that nobody will hijack my business. The mobile operators will get the source code, not my competitors. It is licensing, not just support.
As Marten once said (I guess it was him, I have a veneration for Marten so anything smart must come from him), my mobile operators want the source code of my product as much as they want the airbag in their car. It must be there (who would buy a car without airbag?), but they hope they will never use it. What's the point to give them the instructions to build the car? Just give them the airbag, which is what they want. And your competitor will not benefit from the instructions to build the car...
Let me just be clear. That does NOT apply for the Community Edition. There, the source code is everything. We are building the city car together, the one that everybody needs, cheap but reliable. On top of it, we are taking that design and we are building a race car for the mobile operators. That's what they need. They race cars. They do not build them. They do not care about building them. They want the fastest, most affordable, most secure, most reliable race car. They will pay top dollars for it. Our community is different from our customers. That's my honest dual licensing. Not weak and working well (hopefully for a while ;-)
Walking the tight-rope walk in open source is everything. Building a defensible business model is the only way to get open source companies to the famous billion dollars in revenues. Being disruptive is cool, but being smartly disruptive is better. That is, I guess, what Mr. Ellison is all about.
Posted by Fabrizio at 21:26
5 Comments:
Hi!
This is more about the positioning of your products, than licensing:
Are you only selling the Carrier Edition to operators? For companies, such as us, wishing to go out and install+sell your product with all the whistles, is it possible or not?
If you sell the Carrier Edition only to operators, you sure are missing revenue big time.
//KariM
Comment Posted at 11:06
Fabrizio said...
If you are bundling the Community Edition with your code and distribute it (even in ASP), you MUST open source everything around it, with the HPL license. If you do it, that is cool with us. You can still get support from us, though (since you might need some help).
If you do not like the idea of opensourcing everything around our Community Edition product, you can still get a commercial license from us. It is called Network Edition, and it includes some support as well.
With regards to the Carrier Edition, yes, we are selling it only to mobile operators only. But it is a commercial product with a lot more features than the Community Edition, and it is specifically targeted to mobile operators.
Comment Posted at 19:36
So, with this article and the one You wrote about RedHat a few days ago, You simply say that Your company, just like MySQL, makes money from CLOSED source, and that the open source part, the community editions, are there to be visible?
Ciao,
R
Comment Posted at 18:10
Andrea said...
I think your analisys misses on one point: Red Hat has in its payroll a lot of the core kernel hackers, and it makes a key difference when weird problems arise.
And it's Red Hat that dictates the directions of the development of its distribution, CentOS/Oracle can only follow.
Cheers,
Andrea
