Proprietary entrapment Libre and Open Source "flavor" in software supplier business models Ludovic Schurr Chief Legal Officer

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1 Proprietary entrapment Libre and Open Source "flavor" in software supplier business models Ludovic Schurr Chief Legal Officer

2 : who we are 12 years of experience in FOSS publishing, development, consulting and training Assistance with design of FOSS policy of more than 30 major client accounts in France (esp. Renault, Carrefour, Air France, Société Générale, Thalès) Specific think-tank dedicated to adressing legal and business issues related to FOSS : "Centre Juridique Open Source" (i.e. "Open Source Legal Center") cjos.org (currently undergoing update) We are currently helping a major automotive constructor with their open source governance policy Your speaker: Ludovic Schurr Linagora Chief Legal Officer & CJOS research leader Former attorney at law specialized in Tech, IP & FOSS 2

3 Open source software: core of innovation 3

4 FOSS adoption factors Benefits Vendor independent, not "MISO"-locked (Microsoft IBM SAP Oracle) Integration flexibility and modularity Cost efficiency (no license cost) Standard-based technology Stability & security Frequent drawbacks Lack of in-house implementation skill set Standardization often based on closed standards Unavailability of long-term support 4

5 OSS interventions by proprietary publishers Initiatives / offers Aims Shared Source initiative Some code is shared with clients, partners, dev communities to enrich development Shared code is for example Windows, MSOffice or dev tools such as WiX ou WTL Open Source CodePlex foundation created in 2009, initiated by Microsoft Relay between proprietary software publishers and open source world Inciting proprietary software publishers to contribute to open source projects IBM 2001 free software offer Service and free software solutions offer "Linux Technology Center" creation, with 900 engineers worldwide and 400 working full-time on open source projects Increasing participation in open projects SAP contribution increase to Open Source communities: x100 multiplication of SAP contributions to open source projects according to the R&D executive in charge of SAP Netweaver platform during october 2009 Tech Ed publisher conference Announcement of future participation in Apache foundation Communication / marketing Technological watch Exerting control / stemming the FOSS phenomenon Display of goodwill towards FOSS world Open sourcing of some software - Oracle SQL Developer (graphical development) - Oracle JDeveloper (dev environment) - Oracle Berkley DB Family (databases) - Oracle VM (virtualization software) Eclipse community member (free development environment) 5

6 Supplier selection expectations Clients select suppliers who claim to do FOSS, expecting increased benefits and minimized drawbacks Reality depends on supplier business model Some self-styled FOSS business models incur decreased benefits, and sustained drawbacks BUYER BEWARE! 6

7 Software supplier business models There are five possible software supplier business models Proprietary Scavenger Freemium (aka "open core") Dual-licenser Free-free (aka "pure player") Some combinations are possible (not all though) 7

8 Proprietary business model 0% FOSS Expect none of the FOSS benefits Client situation Subject to proprietary entrapment through the software license Costly Limitative Complete lock-in regarding format & implementation Completely dependent on the publisher and its authorized partner network for support 8

9 Freemium business model Portmanteau word of "free" and "premium" Also known as "open core" Software is only 50 to 80% FOSS FOSS part functionalities are basic & trivial Real added value only in the proprietary part of the software Strong marketing emphasis on FOSS part of the software Baiting the hook with open source "flavor" to catch clients Client situation Proprietary entrapment identical to that of any other client of a proprietary software supplier 9

10 Dual-licenser 2 concurrent software versions FOSS community version, never supported by the publisher Proprietary commercial version, to which any payable support services are linked Marketing emphasis on the FOSS aspect of the software Counting on the open source "flavor" to ensnare clients Difference between FOSS and proprietary versions is kept secret Counting on client fear that the FOSS version does not cover its needs Client situation Proprietary entrapment situation unless client ascertains The difference between the 2 versions That the FOSS version covers its needs 10

11 Scavenger business model Scavenger uses FOSS bricks and components to build his solution Proportion is random and depends on the needs of the software supplier Scavenger only wants to cut costs on his software Software result can be provided under a proprietary licence or an open source license Client situation Depends on the licence If the final result is not FOSS, the client situation is identical to that of any other client of a proprietary software supplier Prime example: ios based on modified BSD-Unix kernel 11

12 Free-free business model The "pure player", and only fully FOSS-compliant business model Supplier Provides the software for free as in both beer and speech Offers services aiming at offsetting the drawbacks of FOSS software Deployment & integration services Training of client personnel services Long-term support services Client situation All benefits of FOSS Minimized drawbacks 12

13 User cases #1 & 2 Major ministry and a major airline Situation: Dual-licensing Clients use Red Hat Entreprise Linux, subscribed to full licence and support offer Analysis Deployment beyond 100 servers, whereas licensing tariffs depend on number of deployed servers Cost of RHEL deployment over 100 servers > support cost of Fedora by a third-party Solution Progressive dual-sourcing Migration to Fedora or CentOS whenever possible + support by thirdparty A very few RHEL servers kept for specific, critical tasks 13

14 User case #3 Major railway company Situation: Dual-licensing, with freemium aspect Uses a dual-licensed DataBase Management Software Subscribed to the commercial offer in order to get publisher support Publisher increases support subscription costs exponentially Analysis Different development cycle between community and commercial versions Solution Commercial DBMS : rolling upgrades Community DBMS : identical to each new major commercial version Migration from commercial DBMS to corresponding community DBMS whenever possible Support of the community DBMS by a third-party Bug corrections If necessary, progressive backport of latter community DBMS technical functionalities in order to achieve iso-functionality between commercial DBMS & community DBMS 14

15 User case #4 MySQL & MariaDB Situation: Dual-licensing with deprecation of community version MySQL was intially "free-free" In 2008, acquisition by SUN, MySQL becomes dual-licensed and the new development process discourages contributions Sun is bought by Oracle in 2009, and there is a strong indication that Oracle is not too supportive of MySQL Analysis An alternative is needed Solution Community developers of early MySQL versions have forked to MariaDB Strong effort of backwards compatibility The community itself can provide solutions to proprietary entrapment problems 15

16 User case #5 Alfresco Situation: Freemium Initially "free-free" but switched to freemium Strongly incites integrators to enter "partnership" agreements so that integrators can only use Alfresco Enterprise Edition for integration purposes (both internal & external) Analysis Alfresco Enterprise Edition can be too costly Alfresco Community Edition can be technically and functionally unsatisfying Solution Progressive dual-sourcing Migration to Community Edition whenever possible with additional support by third-party Migration to an alternative Enterprise Content Management software (Nuxeo or Openprodoc for example) 16

17 User case #6 Embedded open source projects Situation: Scavenging leading to various business models Multiple offers entail a very important market fragmentation Analysis Difficult to select the appropriate project Market immaturity No warranties in terms of sustainability Solution Selecting either a "pure player" or a community project Buying OSS support from said "pure player" or a third-party for the community project 17

18 Warning hints & telltale clues Software combines FOSS base and payable non- FOSS extra Existence of a "Community version" (hints at the existence of an "Enterprise version") Restrictive commercial agreement in combination with a FOSS license Suppliers requires execution of a second license agreement alongside the FOSS licence Supplier is evasive regarding the basic components of his software Supplier offers "Feature Add-Ons" for sale 18

19 What can you do? Identify supplier business models by analyzing Commercial offer structure Technical software architecture Legal supplier agreement clauses Avoid freemium business models like plague Be wary of dual-licensing business models Prefer suppliers with a free-free business model Don't be afraid of selecting community projects or community versions of commercial projects Community projects are no less solid than company-driven ones Several companies, such as notably Openlogic or Linagora, provide Software publisher-like OSS support Bugfixing warranties for community-driven solutions 19

20 THANK YOU Do you have any questions? 20