WWW.LINAGORA.COM

Proprietary entrapmentLibre and Open Source "flavor"

in software supplier business models

Ludovic SchurrChief Legal Officer

lschurr@linagora.com

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: 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

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Open source software: core of innovation

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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

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OSS interventions by proprietary publishers

• 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

Initiatives / offers

• 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

• 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)

Aims

• Communication / marketing

• Technological watch

• Exerting control / stemming the FOSS phenomenon

• 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

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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 !

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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)

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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

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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

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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

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Scavenger business model

● Scavenger uses FOSS bricks and components to buildhis 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

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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

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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 third-party

● A very few RHEL servers kept for specific, critical tasks

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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

– Commercial DBMS : rolling upgrades

– Community DBMS : identical to each new major commercial version

● Solution

● 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

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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

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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)

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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

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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

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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

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THANK YOUDo you have any questions ?