The Stanford Business Reporter

      Dr. Gates might be one of the thousands of open source software developers who work “the back forty”--the forty hours weekly when they’re not sleeping or clocking time at tech companies--to write nonproprietary source code. Among their projects: a free version of Microsoft Windows.

      Despite an ardent following and recent embrace by IBM, Sun, and Intel, open source has yet to prove its point: that freedom to write and disseminate code is as inalienable as the right to free speech. 

      Open source advocates believe that corporations have the right to profit from this speech, just much less than they are doing now. But, no one can say how a community whose stated goal is to destroy Microsoft can partner with other tech giants, most of which are the company’s partners. Add the lack of venture capital for new open source businesses, and it seems unclear why the big boys should regard open source as anything but a faint threat.

      Or should they? 

      Source code is the stuff that makes computers run, web pages respond to a mouse click, and e-mails get sent to the right address. Typically, companies profit mightily by protecting code, a string of words that, with a quick copy and paste, could disintegrate customers’ need to pay. 

      Born in academia in the 1970s, the open source movement grew with the Internet in the 1990s, launching familiar applications like Linux and Perl. By 2000, Linux had captured 27% of the market in server operating systems, behind only Microsoft Windows at 40.5%.

      Open source is both a product and a process. Eric Raymond, author of the widely quoted open source treatise The Cathedral and the Bazaar, describes the open source development process as a bazaar in which throngs of programmers simultaneously exchange goods (code) and services (debugging and programming). Patches of code sift through the Internet mailing lists, and are pieced together by a chief architect. Projects typically gather momentum when a large population of developers sees value in developing the code.

      Raymond contrasts this with the command-and-control development process of most private corporations, where small developer teams take orders from a lead designer, corporate executives, and shareholders.

      The result of this “cathedral” approach is that companies write code that only they can read. Some developers compare this to Herman Melville writing Moby Dick for the sole audience of a company’s employees.

      Richard P. Gabriel, a Sun engineer, stands before a class of MBA students in Profs. Robert Burgelman and Andy Grove’s class at Stanford Business School. The question in the air is what motivates open source developers to give away their source code. “Marxism!” he cries to his bewildered audience of capitalists.

      To benefit from open source, corporate executives need to win developers over, says Gabriel. This means conceding certain types of basic code to the public domain, while profiting from more complicated applications.

“There’s a floating line that constantly changes what should be proprietary,” said Gabriel. “By opening stuff up and coming to a meeting of the minds, developers will start to work with you and not badmouth you to their friends.”

      Corporate executives also need to understand developer motivations. Like academics, they gain prestige by being the first to solve a problem, doing so in the most elegant way, and putting solutions into the public domain where they get cited and passed on.

      Like artists, developers have a flare for fantasy, leaving practicality on the drawing room floor. “A lot of developers are into role play games and science fiction,” said Gabriel. “There’s a kind of magic associated with getting a computer to do something with software.” 

      Developers’ politics tend to challenge the status quo. Stallman is a self-proclaimed libertarian, championing civil liberties in the wake of September 11. Gabriel sees a parallel between developers and Native Americans; both had property stolen from them in a capitalist land grab. In the developers’ case, it was basic code like compilers that “should be like the air you breathe.”

      Like their proprietary peers, open source developers also simply like putting useful software in people’s hands.

      The open source community also attracts novice developers, offering a safe place to cut their teeth, according to Gabriel.  “No one cares if you’ve screwed up,” he said, “It’s like a writer’s workshop.”

      Gabriel acknowledges that corporations face a business challenge greater than just understanding the psychology of software developers: finding a way to make it profitable.

Open source advocates point to several benefits, including speed. According to an internal Microsoft memo sizing up the open source threat, “the ability of the OSS process to collect and harness the collective IQ of thousands of individuals across the Internet is simply amazing.”

      Dispersing responsibility for development means lower overhead by allowing companies to cut developer staff, according to the Open Source Foundation.

      Since most open source software is developed for technically savvy programmers, rather than the average user, open source brings companies closer to their customers, who often find bugs and provide the solutions to them.

      A final proposed advantage lies in the licenses that accompany open source code. Many open source projects are licensed under “copyleft,” a license that requires that all alterations to code be made freely available to anyone who requests it. According to open source advocates, this leads to the “viral” spread of code as more and more people adopt it, making it a de facto standard.

      Critics contend that copyleft also offers no protection to corporations seeking to build on and profit from open source code.

      While open source advocates claim they serve the customer better by providing lower prices and quicker innovation, corporations argue that open source sacrifices reliability.

      Another challenge is confusion about who is ultimately responsible for an open source project. Companies and customers want to know who is responsible for fixing a bug or coaching a novice user.

      Despite these concerns, companies have begun building business models around open source. The most successful is Red Hat, a 500-person firm that offers a branded version of Linux and support services. Others have built proprietary software around open source.

      Open source developers describe the business model as “giving away the recipe and opening a restaurant.” Clients pay for great customer service, extra toppings, and a seal of approval on products that are, at their core, commodities.

      Whether the dot-com meltdown will help or hurt open source remains to be seen. According to Gabriel, open source benefited from the new economy belief in permeating boundaries between the company and its customers.

      “I think that there’s a lot to be said for this boundary disappearing being good for capitalism,” said Gabriel, pointing to e-commerce and supply chain management, which allow customers and suppliers to directly access inventory and coordinate market forecasts.

      “One of the things I worry about is that there’s a backlash against tearing down these borders. I don’t want Corporate America to back off and become closed again,” he said.

      Others believe that the downturn could have little impact on the open source movement. “I think a lot of loose capital was ultimately fueling the speculation around the new economy,” said Philip Meza, a case writer at Stanford Business School. 

      Although the meltdown has made many companies hesitant about changes of any kind, let alone exploring newfangled open source business models, the open source community is ultimately not driven by financial considerations, Meza observed.

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