“To understand our position in more detail, it helps to start with the assertion that open systems win. [...] They are competitive and far more dynamic. In an open system, a competitive advantage doesn’t derive from locking in customers, but rather from understanding the fast-moving system better than anyone else and using that knowledge to generate better, more innovative products.”

This sounds great, doesn’t it? But the premise, that competitive, dynamic markets generate more profit, is inherently untrue. Competition and rapid change sap profitability. It costs a lot more money to win when lock-in is impossible. When all you’ve got to beat your competitors is brains and hard work, you have to continuously invest big money just in staying ahead.

Gartner’s Brian Prentice offers a pointed analysis of Rosenberg’s article, in which he sums up the revenue picture quite well:

“The truth is that closed systems still win. Open systems, practically speaking, are basically good for making others lose.”

True, but also misses the key point. Google is not trying to crush their competition in search advertising: they already have.  Their biggest problem isn’t competition, it is market saturation. The market for search advertising can only grow as fast as the demand for searching, which in turn grows along with the use of the Internet, and Google’s ability to index ever more of the Net. Another way to put this, is that Google’s addressable market is driven by adoption of the Internet itself.

“Open” is an incredibly important strategy for Google, because it drives greater adoption of the Internet. The money quote from Rosenberg:

“Our commitment to open systems is not altruistic. Rather it’s good business, since an open Internet creates a steady stream of innovations that attracts users and usage and grows the entire industry.”

Bingo. Google understands the adoption-led business strategy better than any other enterprise today. With their enormous scale and technological might, they relentlessly develop new, seminal Internet infrastructure that digitizes and shares more and more of the world’s information. And then they open that infrastructure. Remember: they don’t sell maps, books, document storage, music, collaboration, or mobile phones (yet). They sell search advertising. The more adoption of the Internet for accessing all of these newly digitized artifacts, the more and better targeted search advertising they can sell. They don’t sell the things they open, they sell something else that scales with adoption of the open stuff. That is the genius of Google’s business model.

Google doesn’t do “open” to compete. They do “open” to drive adoption. But if you sell something that Google offers for free, tough luck! It sure feels like competition! Google Docs feels like competition to Microsoft. Android feels like competition to Symbian and Palm. Chrome feels like competition to Mozilla, and Google is Mozilla’s biggest benefactor!

Rosenberg says that “An open Internet transforms lives globally. It has the potential to deliver the world’s information  to the palm of every person and to give everyone the power of freedom of expression.” He is absolutely right. But Google doesn’t do “open” because it is some benevolent force for the good of humanity. But if closed and bare-knuckled competitive warfare would drive more adoption of the Internet and thus more search advertising, Google would be doing that instead.

Another quote from Google’s article:

“We can do these things because they are information problems and we have the computer scientists, technology, and computational power to solve them. When we do, we make numerous platforms – video, maps, mobile, PCs, voice, enterprise – better, more competitive, and more innovative.”

Why won’t Google, in the spirit of transparency, tell the truth, which would read something like this (my words, not theirs):

We do these things because we need more and more of the world using the Internet in new and different ways, so we can sell more ads and continue to grow. We’re genuinely gratified that doing so makes numerous platforms – video, maps, mobile, PCs, voice, enterprise – better and more innovative. We’re not trying to compete in these areas but the effect of our adoption-led strategy is to make it very hard for others to make money doing these things. Still, it is fortunate for both end-users and for us that Google’s search ad prosperity is driven by Internet adoption. We reap great rewards for delivering awesome technology and information to the world, for free!

Those are my words, not Jonathan Rosenberg’s. But really, wouldn’t a transparent explanation of their business model be a better message?

“We have to get over this idea that open-source software will produce companies that look just like their proprietary counterparts. I owe much of my career to venture capitalists, but if they are expecting the same returns from the proprietary software portfolio’s that they had in the 1990s they are crazy.”

Exactly true I think. Chris Anderson’s “Free – The Future of a Radical Price“, posits that you can make plenty of dough pricing your digital assets at zero. Much of the pointed criticism of his book point out the brutal truth: there aren’t many examples of this working, outside of a few well-known famous examples that are very hard to copy.

The software industry is fast consolidating, commoditizing, and morphing into a mature industry with low margins and competition based on partnerships, product line extensions, and marketing, rather than technology and innovation. Software is no different than any other industry in that regard. It is an inexorable fact of life, driven by the structure of the world economy and the nature of technology diffusion. But FOSS accelerates and institutionalizes this rapid maturation. Free, the price, is a direct consequence of Free, the licensing  paradigm. This fact should change our expectations, shouldn’t it? Has it changed yours? Or do you think there is plenty of room left to monetize innovation and technology in the wide world of software?

How obvious! And yet how hard to put into action. Why? Because trust is earned over time, with consistent, principled behavior that values long-term success over short-term profit. And trust is so easily trashed – one shortsighted decision, a few ill-conceived words, and you’re in the doghouse. Wreck your karma and you’ll be rebuilding that trust you so swiftly demolished, and maybe never getting it back.

I hear you saying “Yeah yeah of course! Developers trust us! We’re the good guys!” But are you? Turns out that the very things that developers look for as markers for mistrust are often the things you do to make money. And actions speak louder than words.

Remember Movable Type, the once popular blogging platform from Six Apart, Ltd.? Back in the day, MT was the bee’s knees. Six Apart had always offered a free version, allowed users to modify the code, hosted a public repository, encouraged contributions, patches, and plugins. They built a community of passionate developers and users who enthusiastically recommended MT to their friends, and helped create a groundswell of adoption. That is how it is supposed to work! Six Apart was the leader in blogging tools, launching TypePad (hosted blogging) and with leading market share in both self-hosted and hosted service blogs, because they were the good guys. Because they painstakingly had built their good karma.

Then on May 13, 2004, developers and users woke up to discover they’d been fooled. MT 3.0 was still free for one author and up to 3 blogs. More than that, and you had to pay. Whats wrong with asking for money for something valuable like blogging software? Nothing, unless you have built your large, enthusiastic developer and user base on a promise to make MT free, with source code, and then once they’ve adopted your platform you renege on that promise. MT 3.0’s passionate community felt duped. Their passion turned to scathing anger and disgust. They had trusted Six Apart, and that trust was destroyed with one ill-conceived decision, born of the need for Six Apart to monetize their hard work.

That’s bad karma.

With the 3.2 release, Six Apart restored an unlimited number of blogs for all licenses. With 3.3, MT was once again free for unlimited non-commercial use. Still not enough…. on December 12, 2007 Six Apart relicensed MT as Free Software under the GPL. But the damage was done.

Where did MT’s community go? Mostly to WordPress, which was far behind MT but rapidly caught up in features and sophistication. WordPress has been under the GPL license from day one. There are over 7000 plugins that extend it in almost any way imaginable. All plugins in their repository are GPL or compatible with GPL and open source. The WordPress community is enormous. Customizable themes can make WordPress sites look like almost anything you want (disclosure – I use WordPress for this site). WordPress is Free Software but the leading hosted WordPress service – wordpress.com – is run by Automattic, Inc., who’ve established a fast growing business built on making WordPress effortless for the non-technical blogging world. Automattic is a key contributor to the WordPress project itself which, with three releases/year is accelerating its innovative pace and developing an aura of cool as it is used by marquee Web 2.0 commentary sites like GigaOm and TechCrunch.

How is Six Apart doing now with their karma? A blog back in March 2008 by their chief evangelist, titled “A WordPress 2.5 Upgrade Guide” opens with the line:

As you might know, WordPress 2.5 is about to be released, and we wanted to encourage WordPress users to upgrade. To Movable Type.

More bait and switch. This time, baiting WordPress users trying to upgrade with an article bound to pop up in search results. That kind of bare knuckle competition may seem like business as usual but in the developer world, where cooperation and community are valued above all else, it generates more bad karma. Many comments to the post had this flavor:

Comparing your product to a competitors by putting them down is not going to hold you in good stead (as I’m sure you’ve seen by now by the posts on TechCrunch and Twitter conversations), even though you might feel the need to make direct comparisons to pull people.

Another example, this time about Six Apart’s hosted service, TypePad in a comment to Mashable’s October 2009 “Blogging Faceoff: WordPress vs. TypePad” article (in which WordPress got an overwhelming 87%, TypePad 9%, and 4% called it a tie):

My big beef with TypePad is that, when I switched to WordPress, TypePad held my graphics hostage. They would not allow me to transfer them with the other content in my blog.

More bad karma.

But what does all this have to do with adoption? Does it really make a difference? See for yourself:

TypePad vs. WordPress.com (hosted blogging)

Movable Type vs. WordPress.org (blogging platform)

Ok, visitors doesn’t equate to platform adoption. But even the most jaded metrics maven would likely conclude from these statistics that WordPress in both cloud and platform versions is trouncing Movable Type.

If you think that platform adoption is critical to your ability to make money, you ignore your karma at your peril.

Thanks to Dalibor Topić for the example idea used in this post. Now there’s a dude who really has good developer karma!

Bill walked the audience through an economic argument as to why the most successful app developers will target multiple platforms, not just the iPhone. He’s right – if you’ve got the money, the scale, the know-how and sophistication to manage a big porting and test matrix, a lot of partner programs and distribution negotiations. His point is that the more handsets and end users you can target, the more money you can make. But there comes a point of diminishing returns, even with automated porting and testing tools. The question is not how much revenue you can pull in, it is how much profitable revenue.

Jason Jacobs, founder of RunKeeper and a successful iPhone app developer was also on the panel. When asked about his plans to port RunKeeper to other smartphones, he said he’s thought about it but right now is quite happy with his success on the iPhone. Jacobs says that the fastest route to greater profit for RunKeeper has been to expand his existing market through community building features, global reach, and product extensions to new sports and training methods. For RunKeeper, the point of diminishing returns has already been reached with just one target platform. Jacobs did not rule out porting to other platforms in the future, but he’s focused on profitability, not just maximizing revenue.

The iPhone is different from BREW in some very important ways. BREW has always been perceived as tied to Qualcomm’s CDMA-centric focus and to Verizon Wireless in particular. The iPhone is on the most broadly deployed network technology – GSM. The BREW certification process is perceived as complex and costly, designed to facilitate operators’ “walled garden” models. Verizon Wireless’s announcement today of a Google/Android partnership points to the end of that sorry era. While the App Store approval process gets dinged for being arbitrary and opaque, for most iPhone apps it is fairly smooth sailing by comparison. And lets face it – BREW never has had sex appeal – targeted at more low-brow feature phones. The iPhone fairly reeks of it. In an earlier post, I’ve talked about some of the ways the iPhone is disrupting the mobile ecosystem. You can see that disruption in action, watching Apple and AT&T’s competitors scramble.

The iPhone adopted the best elements of BREW: nearly zero fragmentation and integrated distribution, and ditched the bad bits – narrow network, small subscriber footprint, weak marketing and branding. Android has adopted both the best and worst elements of Java ME – broad footprint, open platform, fragmentation and a “wild west” competitive landscape.

Bill Scott said that fragmentation is an inevitable cost of the mobile marketplace, and that successful developers must just learn to live with it. With over 2 billion apps downloaded, Apple is disproving this bit of conventional wisdom. Google needs to manage their platform’s “diversity” if they hope to catch Apple in this very new world.

Several great blog posts from Simon Phipps (I commented), Stephen Walli (I also commented), and Matt Aslett debate the question of whether there is such as thing as an open source business model. Everyone agrees – vehemently – that there is no such thing. But this whole debate on what you call business models involving giving away software for free misses the point.

Open source has accelerated the commoditization of software. If you’re competing with an open source code base, it won’t be easy for you to charge a license fee. You can offer commercial service and support, training, professional services, blah blah but Red Hat, the poster child for this model, reported $650M in revenue this past fiscal year. Oracle, at $23.3B revenue, is nearly 36 times larger. You can make a tidy sum with this approach but you probably aren’t going to be the next Google ($21.8B and they give their software away). Realistic expectations are in order.

It doesn’t matter what you call it. Making money giving away software isn’t easy. If it was, there would be a lot more Googles and Red Hats out there.

“With MOTOBLUR we are differentiating the Android experience for consumers by delivering a unique mobile device experience designed around the way people interact today,”

Hooray! Motorola is differentiating the Android experience! Can you hear the screams of Android application ISVs? Oh yes – MOTOBLUR is a “skin” and doesn’t reimplement the virtual machine at the core of Android. Applications written to Google’s SDK will likely run. But if you want to really integrate your app with the Cliq and other MOTOBLUR phones, you’ll need to code up something special. And Motorola is gearing up to give you that rope, as Mr. Jha proudly announces in an interview with PC World:

“Over a period of time–we’re not there yet–we’ll allow the APIs to be available so people can develop many more applications than we can think of ourselves, but it’ll take us a little bit of time to mature ourselves to a place that we could open up APIs.”

And that’s just Motorola. HTC has an Android phone or two or three or four. LG and Samsung are getting in the race too. The Open Handset Alliance (what an ironic name!) has 47 members. Pretty soon Android is going to fragment into a thousand implementations. Goodie for Google, right? Android will beat that pesky iPhone through sheer diversity and market momentum!

Ah yes, the iPhone. Two versions! Black, and white. But only one API. Apple exerts absolute, iron-fisted control over their platform as the sole handset OEM, turning back all entreaties (except perhaps from China) to build variants specific to to carriers and geographies. By nearly eliminating the cost to port applications and handling deployment through a single mechanism – the iTunes App Store, Apple has dramatically improved the economics for application developers. With over 75,000 apps available, its been a huge success.

Android is already fragmenting, and fast. Google knows this, and knows it is a big obstacle to developers. It just makes it more expensive to create Android applications, and makes it likely that Android developers will target only a subset of the market. Chris DiBona, Google’s open source program manager said as much at this year’s OSCON Conference:

“We think it’s really important that we spend a lot of our time trying to reduce fragmentation from an the application stand point – so when you code the G1 it’ll also run on later platforms from Sony Ericsson and Motorola and all the rest – and that’s a huge challenge.”

Huge challenge indeed. Can Android succeed if it ends up with hundreds or thousands of different implementations each subtly different from the others, as Java ME sadly ended up? How much fun will it be for consumers to hear about the latest cool application for Android phones, visit the Android store, select their phone (which model is it again? the XV7845a or XV7845c?) and find out that the app doesn’t run or has unpalatable limitations on their handset?

The moral of the story: if you give your partners the ability to “differentiate” your platform, you had better understand the implications for developers and the end consumers of your software. Google has a lot of smart people and they’ve made the calculation that it is better to get Android on a zillion handsets across all the carriers, and that the inevitable price to pay is fragmentation, the OHA’s “non-fragmentation agreement” notwithstanding. It is a huge gamble, and history is not on their side. Is fragmentation inevitable? Is openness worth the price? How valuable is differentiation when it dramatically raises the cost of application development? Who does it benefit, anyway? Consumers? Will MOTOBLUR really help Motorola regain their mojo? What do you think?

This is causing some consternation among open source and free software advocates, who are concerned mostly about MySQL falling into Oracle’s clutches and being summarily dispatched. I’m not savvy on open source DBs so I’ll leave commentary on that one to those who know something. What might happen to Java though?

Ars Technica’s Ryan Paul thinks Oracle will be good for open source Java:

Sun’s dictatorial control over the evolution of Java has been widely criticized by other stakeholders and is generally viewed as detrimental to the language’s growth and adoption potential. The Java Community Process (JCP) has been a particularly thorny source of controversy and friction.

Oracle could finally democratize the JCP by making it more transparent and inclusive. Sun’s overt hostility towards the Apache Software Foundation’s Harmony project, which seeks to build an Apache-licensed Java SE implementation, could also finally be brought to an end.

Bad, bad Sun! Now the community can rejoice! But wait… Here’s Glyn Moody of ComputerWorld who thinks overall it will be good but perhaps not so great for open source:

The downside is that Oracle’s feelings about open source – and hence its advocacy – are probably more ambiguous than Sun’s. In particular, it seems to have very little truck with the more idealistic leanings of the free software side of things. Pragmatists might rejoice at that, but it does mean that Oracle will be aiming to use open source as a tool rather than see itself as an evangelist with a mission to convert.

Canonical’s Mark Shuttleworth, in a report on a press conference after the Ubuntu 9.04 launch, is sanguine:

“I’m sure Oracle has carefully thought through everything it committed [itself] to [and] there will be no reversal of the idea that Java should be widely available and available as open source,” Shuttleworth said during a press conference today to launch ubuntu 9.04 upgrade.

“It’s a one-way trip,” Canonical chief said about the process of making software open source. “What is interesting [about the Oracle-Sun deal] is that it really cements the idea that free and open source software is the profound driving force in software today. ”

Shuttleworth is correct. Once a code base has been open sourced, the community has the power to take the code and run, if they don’t like the direction a project is headed. Having had first-hand experience with the power of community thought leaders to influence even Java, the largest and most corporate of code bases, this is a lesson Oracle will learn. Either they’ll learn it the hard way, or they’ll learn it from people at Sun who understand this stuff deeply, and whose expertise could save Oracle a lot of trouble.

Redmonk’s Stephen O’Grady sums up the most likely scenario of all:

However the politics resolve themselves or not, though, the Java landscape is characterized as much by its inertia as anything else. Ergo any potential shifts in the landscape here are likely to be glacial in pace. I’d expect something very akin to the status quo for the foreseeable future.

Time – lots of it – will tell.

Is the iPhone really that compelling? Why were most of the 400 attendees at this event so focused on a single smartphone device and ecosystem? Its not like there is no choice – there’s Symbian and Windows Mobile and RIM and the new Palm Pre and Google Android… the list goes on. What makes the iPhone the juggernaut of the mobile world, turning business models and established wisdom upside down?

All along, mobile platforms have been built by and for carriers and OEMs, to maximize their returns. Carriers have been intent to lock down applications and content on their offered devices so that consumers purchase nearly everything through the carrier – from apps to ringtones to music to additional services. Each carrier has its own mobile software, method to deploy applications, collection of devices each with different capabilities, even within a carrier. This fragmentation of the market and complexity of development and access has served carriers well up until now, concentrating market power and control in their hands.

Apple came along with their unique perspective on this market, and demonstrated that the real power in the mobile industry, as in most other consumer-focused markets, is with the end-user consumers themselves. Apple built a device that consumers wanted. Their design sense is so strong that even with the iPhone having been on the market for several years, only now are other handset makers rolling out new products to rival its sex appeal and ease of use. If you bring to market a product that is easily seen to be superior to its competition, you force change. Consumers needed the iPhone example to let them see the value of having the Internet in their pocket. Now that they see how useful it is for their personal mobile device to have access to all the world’s digital information, their expectations have changed. This is not dissimilar to what happened to walled-garden information services like Compuserve, AOL, and Prodigy when the World Wide Web burst on the scene. Once people experienced the breadth of content available outside the wall, they became dissatisfied with what any one service could bring them, no matter how comprehensive.

But Apple didn’t stop with bringing the Internet to people’s pockets and palms. The iPhone has revolutionized things for application developers as well. There is only one API, one device to target, and by all accounts, an exceptionally simple and high-level programming model with Objective C. None of the fragmentation across devices and carriers seen with other mobile platforms. And getting your application onto the phone, and getting paid for it is just as revolutionary and easy. Apple eliminates negotiations with carriers, establishes a set percentage of revenues, handles quality control, billing, deployment, and pretty much everything else a developer needs to deliver powerful applications directly to consumers, with minimal muss and fuss. Bottom line – it is much less expensive for a developer to create a showcase application for iPhone and get it in the hands of customers than on any other smartphone platform.

Consumers love it. Developers, and content creators love it. Apple surely loves it. But carriers are rightly spooked, because this new model cuts them out of the content business and accelerates their inevitable slide into the abyss of commoditized, dumb data pipes, where price and low cost are the only things that matter, and margins get razor thin. But the carriers should have seen this coming. No matter how much control carriers exert, if what they deliver is more about their profits than satisfying end-users, they’ll eventually be attacked by someone who understands that consumers have the ultimate power, and that developers and other content creators are the source of most of the value to those consumers. The iPhone was inevitable. Or rather – a consumer and developer friendly platform that beats the carrier-centric approach was inevitable. Given Apple’s consumer electronics savvy, its not a surprise that they saw the opportunity and ran with it.

At Monday’s event, Google’s Rich Miner highlighted the biggest perceived weaknesses in Apple’s strategy – Apple’s “control freak” grip on application approvals and closed-source black box platform, and touted Android’s solution – a consumer-driven rating system that will let people filter out junk, virus-laden adware, and other scourges, while giving developers free rein in approvals, and code to hack. I’m as big a believer in open development as anyone, but in this case I think Google is missing the point. Fragmentation is extremely costly for developers. The Java ME platform has run aground largely because of it, and other mobile platforms have significant fragmentation. Android, as an open source code base, will likely see as much or more fragmentation as any of the other platforms out there. And consumers don’t want to shoulder the burden of doing their own quality control – they just want stuff to work. Miner pooh-poohed fragmentation as an issue, but… he has to. Developers are just sick and tired of it, and are jumping to iPhone as a result.

Sure, developers are going to grouse about Apple’s heavy-handed slow approval process. But the alternative is the chaos they’ve grown to loathe with other platforms. They’ve spoken with their fingers – 25,000 applications for iPhone, and growing fast. And now everyone is scrambling to match the App Store’s simple model and instant deployment. Carriers are headed down a one-way path toward commoditization. The iPhone demonstrates where things are headed. Consumers and developers are gobbling up market power that carriers have hoarded for a long time. This trend bodes well for the public, but it will force a complete reset in business models and strategies in the mobile marketplace. A good friend and very knowledgeable expert in mobile business told me on Tuesday not to count out the carriers just yet. I think this shift will take time but I also think it is one of those inevitable, unstoppable shifts that are more a consequence of how the global economy works, than the doing of any one company, even Apple. This was going to happen. We just didn’t know how it would really start, or the details. Now we know more.

There is a heckuva big investment in Java software across the IT industry, and so it is interesting to think about where this platform might go if Sun, the inventor and “steward” of Java, gets swallowed by IBM, the company that has made the most money on Java over the years.

IBM has bet a big piece of its software strategy on Java. A long-term licensee, IBM has been a leader in the JCP, built and then contributed to open source the most popular Java IDE (Eclipse), has long marketed one of the leading Java-based middleware product lines (WebSphere), and builds lots of well-regarded Java plumbing, including virtual machines, Java EE implementations, tools and embedded versions – the works. Even as IBM and Sun have cooperated in promoting and advancing the Java platform, they’ve competed on implementations and have at times not seen eye to eye on where the Java standard should go, and how the platform should be governed.

Sun’s software strategy over the past few years has been to intensively open source its marquee software platforms, including Solaris, and Java, in order to drive platform adoption by developers. Sun’s FOSS platforms are free as in – zero cost to acquire, and Free – as in, built by a community of developers and licensed to eliminate proprietary lock-in. The hope is that developers, and the enterprises they work for, will adopt Sun technology as the plumbing on which they build their critical business applications and processes if acquisition cost is zero, and their investment in time and effort are protected. Once ready to deploy, some fraction of these customers may choose to buy support. Oh… and gear to run it on – software DOES still require a computer to run it, even in the cloud.

All of this is spelled out in Jonathan Schwartz’s blog, and is party line and marketing message. But there’s a bit of subtlety that isn’t apparent until you actually try to use the FOSS Java code, especially in embedded applications. Sun has done well over the years licensing its Java ME software to those building devices. The company has a legitimate business interest in maintaining these significant licensing revenues (pdf – see pg. 6). The GPLv2 license without the Classpath exception, chosen for Java ME can be impractical for an embedded device maker to use, as it includes a “copyleft” provision requiring that modifications to the code, or other code linked to the GPL code must also be published as source code, under the GPL license. So, the recipe to any “secret sauce” must be freely available under the GPL. Hardly something that excites a handset maker, for example. Why not use Java SE then – since smartphones and other advanced devices have the power to handle it? Not so fast! There are some even more mind-bendingly complicated licensing issues for Java SE that riled up the Apache Software Foundation, related to this embedded device revenue. Ever wonder why Google’s open source Android platform – which looks startlingly similar to Java SE in many respects, is nonetheless not based on Sun’s open source code, but rather on Apache’s Harmony project? One can speculate…

IBM approaches open source platforms differently. Rather than monetizing open source only by selling support for deployers, or by choosing licenses that drive commercial licensees to keep paying, IBM distributes FOSS code that comes from elsewhere – often non-profit foundations such as the Apache Software Foundation – but licensed in such a way that IBM can bundle proprietary extensions with the FOSS code. This lets IBM add value, create something unique, and yet leverage the open source development model and the momentum of FOSS adoption for the bulk of the code they ship. Good idea! Get the benefits, and still sell stuff and make money. This approach doesn’t annoy licensees, and keeps communities happy and burnishes IBM’s FOSS credibility by contributing to independent FOSS projects. Seems to work for them too.

What would Java look like, if it was ideally suited for IBM to profit from it, using the same approach? Maybe IBM would donate Java to ASF, making it an Apache project. Or donate it to Eclipse? Perhaps they might spin it off as part of a “Java Foundation” or something equivalent, licensed under the ASL, or perhaps the EPL – the Eclipse Public License. It is interesting to think about the role of the JCP if Java were to become a code base built within a non-profit foundation, rather than controlled by a corporation as it has been with Sun. Would the JCP even be needed anymore, and if so, who would pay for platform JSRs? How much code, and staff, would IBM contribute to help the platform evolve? What commercial extensions could IBM sell? What would embedded Java look like as an IBM product? Would Google still need Android as a separate code base? Or could they adopt “real” Java under such conditions? Could IBM unify the fractured Java ME ecosystem?

IBM is much less of a charity than Sun. Perhaps that is why they’re making money and Sun is shopping for a suitor. But under IBM, it seems to me that Java is likely to remain FOSS, under a very liberal license – arguably even more liberal than GPLv2. Of course the existing code will always be available under GPLv2 as well.

Would IBM be a good steward of Java? What do you think?

Stephen nails it when he says that Sun is engineering driven, and that is the root of its problems. And he almost gets it when he says about balancing engineering and business model driven culture:

The point here is not to advocate one approach at the expense of another, but to recognize that both have their time and place, and that an organization that is dominated by either an engineering or business model culture is likely to be one sided.

He is absolutely right that both have their time and place. Engineering driven culture’s time is early in the technology adoption life cycle, when innovation drives value for customers. Business model driven culture’s time is when technologies mature, and relationships, service, product line extensions, and capitalizing on economies of scale determine who wins. So which culture is right for here and now?

There was a time when raw innovation could determine who got the purchase order in enterprise computing infrastructure. That time is long past, as this industry has matured. IBM recognized this shift back in the early 1990s, encouraged by nearly missing its payroll. They hired a cookie salesman to be the CEO, whose brilliant insight was that computers and cookies follow the same rules of business. IBM restructured, leveraging their size to deliver relationships, services, and product line extensions. Smart move – but it takes a businessperson and outsider, not an engineer, to have that insight and execute on it.

Cloud computing is a business model innovation, not a technology innovation. Jonathan Schwartz recognized this trend years ago when he called computing a commodity, and rightly forecast its delivery over the network, just like electricity. Unfortunately for Sun however, Jonathan is also engineering driven. Here’s his conclusion:

As I pointed out in some of my earlier musings, there’s a sense of dysphoria among those that see computers as commoditizing, a belief that no one can make any money if the technology’s interchangeable. In my view, the great thing about commodities, whether financial services, telecommunications, oil and gas, and now computing – is that the companies whose business it is to monetize those commodities, along with the businesses that supply the technologies necessary to compete in a commodity market, are among the largest on earth.

Vodafone, Citigroup, Exxon Mobil. What do they have in common?

1) They’re among the most valuable businesses on earth.
2) They’re primarily technology companies. 3) They’re among the largest buyers of technology in the world. And
4) They’re all in commodity businesses.

And how do they all thrive?

Innovation.

This is all 100% smack-on correct except for the very last word. Leaving aside that some of the companies Jonathan cited aren’t thriving right now because of other issues, these companies have done well not by innovating on technology, but rather by innovating on business model in their own markets, by relentlessly executing to reduce their costs, and by leveraging immense economies of scale. They buy a lot of computers. But computing isn’t the product they peddle, it is a raw material. They treat it like any other raw material – they buy it as cheaply as they can.

What should Sun do, then? Is it too late to turn the rich technology and human assets still part of the company into profits? Perhaps not, but time has nearly run out, and the changes necessary for Sun to profit as an independent company in today’s mature market would turn it into a very different entity than it has been. In the world of computing infrastructure, the time for innovation as the primary driver of value has passed – at least until some radical new breakthrough displaces today’s technology. I don’t know if the current management of Sun – engineers all – have the stomach or the skills needed to save the company. Sure, one can run down the list of technologies at Sun – Java, Solaris, SPARC/CMT, open storage, MySQL, OpenOffice – the list goes on and on, a testament to the brilliant minds who’ve worked at Sun over many years – and talk about what to do with each one of them. But that exercise misses the point.

Engineers really do believe in the better mousetrap. But well-worn truisms such as the technology life cycle can’t simply be declared irrelevant. These patterns are  the consequence of human behavior over time, writ large in a globally interconnected, capitalist economy. They’re bigger than any one company, technology, or industry.

Sun’s woes stem from managements’ belief that Sun’s technology and markets are exempt from the laws of economics and business, and that innovation will always be the most valuable differentiator. This is no more true for computing infrastructure than it was for autos, steel, electricity, printing, air travel, or any other industry. The computing infrastructure business is a classically mature, low differentiation, fragmented, standardized industry in which commoditized hardware, open source and free software, standardized protocols, low brand loyalty, minimal switching costs, and a proven ability for customers to integrate backwards into vendors’ markets all reduce supplier market power and force vendors to compete on price, relationships, marketing, service levels, and distribution. Sun is a product innovation machine, but is outclassed by its competition in all of these other areas that today determine the winners.

What should Sun do? I don’t see an answer to that question that preserves Sun as we know it.