Will Google Kill Open Source? (And Do Open Developers Have to Be Underpaid?)

Wednesday Jul 25th 2007 by Rob Enderle
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As Google, built on open source, grows ever more powerful, it shapes the tech business profoundly. Will the last programmer left please turn out the lights?

All of us who have worked for big companies know that executives don’t like bad information and have a tendency to shoot the messenger. Often problems that cripple a company are known, but covered up, for years before the result is so evident it can no longer be covered up.

I wrote one of the postmortems for IBM’s fall in the ‘80s. The problems I reported were largely mirrored by Microsoft in the ‘90s and I think we are seeing the beginning of these same problems with Google. Given people migrated many of these problems as they left IBM and moved to Microsoft in the ’90s, and that people are moving from Microsoft to Google, and that Google is moving very fast, I think we’ll see this business cancer likely to progress at record speed but, perhaps, not peak until Google is vastly more powerful than any other technology company has ever been.

The problems I’m talking about relate to the need for company executives to only want to hear that which is consistent with their existing views and to attack anything that is inconsistent. A better example would be with Iraq and the U.S. government; you may recall that early on the chief military officer testified there weren’t enough troops to protect that country after it the U.S. took it over. He was fired after being widely criticized disrespectfully by the administration for these views, which are clearly now known to be correct.

But Does the Same Trend Apply Broadly to Open Source?

Open Source is about sharing, but is it about candor? I’ve often compared Open to Transparent and I wonder if when we talk about the first we forget that it is the second that is the more important. Microsoft’s issues surrounded trust, and that speaks to transparent more than it does to whether or not you could see their source code. (And, coincidentally, you have to admit given their recent financials, they appear to be recovering nicely.)

People being people, why wouldn’t the same kind of problems that plague companies who have a tendency to cover up and conceal problems also apply in the Open Source community?

So what are the two topics with Open Source that should concern us but, because the discussion would trigger the famous Open Source FUD response, are being avoided?

1. What does Google’s extreme future dominance mean and, given Google’s success is significantly enabled by Open Source, will the outcome actually be better or worse, in the sense of “Freedom,” than it was during either IBM or Microsoft dominance?

2. Is Open Source part of the cause for what appears to be a continued trend to shift software intellectual capital and jobs, with an adverse impact on salaries and employment, to lower cost countries and cheaper technical labor?

The Rise of the Uber-Monopoly: Google

With SCO in the headlines and Microsoft on the offensive, Open Source was getting a massive amount of publicity, and vendors who wanted the related visibility appeared to embrace the underlying ideals. But that is marketing, and for way too many people, marketing and reality have very little connection to each other.

During the upswing companies like Red Hat were the poster child for the industry, but Red Hat has never been that profitable, at least not when compared to Google, who appears to be the primary beneficiary of Open Source, and companies like Novell have found profit elusive.

The true poster child for Open Source is Google, which makes its money not by sharing technology but by using it effectively to reduce technology costs to incredibly low levels. If everyone were to follow Google’s example much of the existing technology industry, from Sun to Microsoft, would simply cease to exist. Google’s long term plan would appear to be to become more powerful than AT&T, IBM, and Microsoft combined. And even though they are having a little trouble controlling costs, the company is executing on this plan at an impressive speed.

Will a world dominated by Google – with more power than the combined power of the firms they displace – be better or worse than it is now? That will depend on Google, but clearly companies that achieved a fraction of that kind of power in the past (do no evil policies aside) have not handled it well, and I doubt Google will either. Because inside the search giant are people, many of whom came from the same companies that had issues when they dominated their respective segments.

But, and here is the kicker, if Google wins as they intend, Open Source effectively is dead in much of the market as is Free (as in Free Speech) Software. In other words Google will define what you get and don’t get and they likely will define much of what you see as well. Granted much will be Free, as in Free Beer, but I wonder if the cost of this “Free” will be more than any of us now intend to pay. You could call this collateral damage.

Is OSS Inadvertently Killing the Software Job Market in Developed Nations?

Or, put a different way, should part of the mission for OSS advocates be to assure the incomes of those who code? With a heavy focus on “Free” as in “Free Beer,” and folks like Richard Stallman driving the movement, who don’t believe people should make money, there would appear to be a connection to declining incomes that I think we have all observed that goes beyond economics, because it speaks directly to the human resources focused on Open Source.

Back in ‘80s and ‘90s the value of software, and the compensation for those who wrote it, were tied to marketing and sales organizations which, when successful, maintained or increased the related prices, thus providing funding for programmer salaries. But, in the Open Source world, companies like Red Hat don’t generate enough cash to attract top sales people and have no budget for marketing, at least not to the level a firm like Google does, and Google redefines marketing because they increasingly choose the ads you see.

In addition, those that have adopted Open Source generally find line managers focused like a laser, not on getting down hardware or software cost (which is already as low as it can go, and you can’t get blood out of a stone), but on getting down labor cost, resulting in off-shoring or foreign labor being brought in at discount rates. There really is nothing to support the compensation for OSS developers like there generally is in the proprietary world.

About 70% of the people I knew who were OSS advocates 5 years ago are no longer in the software business; that is clearly not scientific, but it should concern someone. Granted, if you bring this up folks hold their hand over their ears and sing the FUD song, but that doesn’t fix the problem, now does it? What is fascinating to me is that people writing me over the last several months, after singing the FUD song, confirm they are actually thinking of getting out of the software business. These people represent themselves as avid OSS supporters.

While this may seem inconsistent it is, however, consistent with what large companies do when they are told information they don’t want to hear. They ignore the information even if, personally, they may be planning to react to it. (I can recall a report I put out years ago at IBM talking about turning around a problem business unit. Executives vocally disagreed, but then generally left the company a few weeks after reading the negative report).

Even technology publications are hurt, if OSS companies can’t afford to market they don’t advertise and tech pubs live off of advertising. At some point the market better realize it’s killing itself by not ensuring a solid return on the labor invested in it. In many ways, I wonder if OSS may be a late casualty of the dotcom years.

Dotcom History

For those of us that covered the dotcom years the problem came down to one big thing: a complete avoidance of financial fundamentals. People were building products and services that either didn’t have defined customers or revenues that ever could exceed costs, often both. Free was in, everyone was running around saying they could provide the next big thing and Netscape was the example, a company that largely gave away their product and still was successful, for awhile anyway.

Of course, in Netscape’s case, they actually were trying to sell something and collapsed when they actually shifted to Free and belatedly learned that the right model was closer to what Yahoo and Google adopted, with minimal focus on the browser and a lot of focus on what the browser was connected to.

Open Source grew up during this time, and many who support it undoubtedly benefited from the rise, but the concept of Free, as in Free Beer, should likely have been abandoned or at least enhanced to ensure that people earned a fair return for their contribution to the effort. That wasn’t done, and with regard to the people actually building the Open Source stuff there are still a lot of very strong contributors who help make companies like Google successful but don’t share in that success. And I doubt will continue to do so indefinitely.

Look At the Outcomes

If you look at what appears to be the outcome of all of this OSS focus, Microsoft is still reporting record revenues but is just as clearly not the power player they once were. That spot has been taken by Google, a company that makes massive amounts of money from Open Source software but doesn’t seem to contribute back any more than Microsoft does (and no I don’t think Free Search and Google Apps count).

With North America apparently bleeding jobs along with much of the developed world, I wonder if there should be less focus on creating really cheap software and more focus on ensuring programmers, who provide the kind of value companies like Google are clearly getting, are compensated for that value.

In the end I don’t think Free is just killing OSS, I think it is killing one of the primary incentives to create great software in the developed world. Free should be Free as in Freedom. Free as in Free Beer works for some things but applied globally it substantially appears to reduce the value of the people creating software.

Wrapping Up

Open Source advocates, executives, and people in general, often do whatever they can to avoid looking at things they disagree with. Whether it is ignoring indications that a politician they like isn’t honest, or a product they advocate (Linux) isn’t really for everyone, we as a race often put on blinders and avoid the bad news. When that is done in business you have the kind of problems that have plagued a number of big companies eventually including Google. When it happens to an initiative like Open Source the unintended consequences and collateral damage can be painful enough to drive the supporters out of the industry over time.

I don’t argue it is nice to hear good news, and you’ll note I’m actually not suggesting any change in buying behavior. I’m just suggesting there are likely things you too don’t want to hear that you need to listen to that probably go well beyond this subject. And there are always people who want to dictate what you can and can’t hear. Keeping others from controlling your information sources and closing that information gap could do a great deal to prevent the kinds of problems I’ve pointed out above.

My advice, as is generally the case, is simply to make your own choices based on information that is worthy of your trust and thus self assure your own success. That is as true of Open Source software as it is of any choice you’re likely to make.

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