The history of the open source movement from a business point of view

Common practices of the 60s - 70s

Software sharing has been around as long as software itself. As it my seam unbelievable in todays world of EULA licenses and copy protection source code sharing was a common practice in the 1960s and 70s. [AGP] Back then software was mostly developed and used by scientists and high-tech technicians. Both groups had a rather open culture of sharing their intellectual work and acquiring feedback without some kind of strict legal form. Also hardware vendors didn't view software as an important business asset. At the time a large number of unstandardized computer architectures was present and lacked programming languages that ware portable among them. This made making software that could run on a wide range of then almost impossible. Hardware vendors encouraged source code sharing as it helped at least in porting and improving software on newer machines giving them faster adoption to the market. [POS] Their customer ware willing to collaborate on this as they had to write custom software any way to do their jobs. Raw computing power was more important that feature-full software back then. But as the industry matured, several interrelated changes occurred simultaneously in the 80s and as some say ended the first of three eras of cooperative software development. [TES]

The rise of proprietary software in the 80s

The secound era is referenced as the rise of proprietary software and is a time where software manufactures started to view software as a sell-able good or at least an essential part of its hardware sales. [POS] The two most important factors that brought this change was the creation of high level programming languages and the fact that the market started to focus on few more appealing hardware manufactures. The combination of both allowed you to make your programs portable and give you less computer architectures to consider to get a significant user base. Because of this developing large and future rich software systems become a profitable business. Hardware vendors also realized that the customer value of their products was pushed from raw computing power to available software appliances. This led some companies to begin enforcing intellectual property rights to software to which many researchers, technicians and other firms had previously made contributions. [TES] The most remembered example of this was the AT&T and UNIX operating system case.

These practices broke the circle of sharing software improvements and demotivated the IT community to making more informal commitments. As this trend spreed on most of the software industry few communities (mostly with a academical background) resisted it by not closing their softwares sources. One of them was the Computer Systems Research Group at the University of California, Berkeley which released their Berkeley Software Distribution under a very libre BSD license. It meant that you ware allowed to use their source code both in open source and closed proprietary software. At first the Berkeley Software Distribution was a set of new programs and replacements for the commercial Sixth Edition Unix but it slowly started to turn in to an independent operating system. In the meantime Richard Stallman appeared on the scene and started to become one of the most influent and active personality to resist the proprietary software trend. He quit his job at MIT's AI labs short after they moved to closed source software and started to build a community around the GNU project and the Free Software Foundation. [AGP] Stallman lead those two organizations and created the legal and ideological basis for a the new free software community to arise. A community which could share thair work without the risk of getting their contributions locked by the proprietary software companies again. A manifest of this was the GNU GPL license which give you freedom to use the software and distribute unmodified versions but restricted you when it came to using the source code. This restriction stated that any software using source code or linking with free software had to be also distributed under the terms of the GPL. An important side effect of this restriction is that any improvement made to free software is automatically made available to the original softwares authors so they can insert it in to their official release. Richard Stallmans GNU project which was the first test groud for the GPL rules was far more idealogical than the BSD community. Althoug both had a similar goal which was to create a free unix-like operating system. This difference geive start to the two open source license types: the BSD-like permissive licenses and the GPL-like copyleft licenses (see the License types - levels of freedom and business impacts article for more details).

A the time also first tries to make profit from free software ware made. One of them was by selling free software copies done by Stallman and the FSF. This had some potential in the time before of the Internet boom and later evolved more in selling custom software distributions made for a specific order.

Another example of open source development at the time was the X Window System, a free, network-transparent graphical computing environment. It was developed at MIT in partnership with hardware vendors who had a common interest in being able to offer their customers a windowing system. Far from opposing proprietary software, the X license deliberately allowed proprietary extensions on top of the free core—each member of the consortium wanted the chance to enhance the default X distribution, and thereby gain a competitive advantage over the other members. X Windows System itself was made as free software to establish a simple cooperative environment for several competing business interests to work in a common goal, not to end the dominance of proprietary software. [POS] This help them to drasticly lower development costs on a product that by it self wasn't a sell-able product for them. They however needed it to argument their hardware sales.

Besides the above examples there ware a lot of over less noticeable open source software projects running at the time with yet other open licenses. The diversity of licenses reflected a corresponding diversity of motivations. [POS] Further more some of the programmers who chose the GNU GPL to their projects were much less ideologically driven than the GNU project itself. Some felt a moral impulse to rid the world of "software hoarding" (Stallman's term for non-free software), but others were motivated more by technical excitement and viewed the open source methodology as and effective way of organizing cooperative development. Developers had another reason to stick together as well: it turned out that the free software world was producing some very high-quality code. This tendency to produce good code was certainly not universal, but it was happening with increasing frequency in free software projects around the world. Businesses that depended heavily on software gradually began to notice that. Many of them discovered even that they were already using free software in day-to-day operations as upper management isn't always aware of everything the IT department uses. Corporations began to take a more active and public role in free software projects, contributing time and equipment, and sometimes even directly funding the developers of free programs. Such investments could, in the best scenarios, repay themselves many times over. The sponsor only pays a small number of expert programmers to devote themselves to the project full time, but reaps the benefits of everyone's contributions. Including work from unpaid volunteers and from programmers being paid by other corporations.

The 90s and beyond. Rise of the net, mass collaboration and open source

If you view free software as a development methodology you will notice that its a effective way of rapid collaboration in which various parties work on software from which they all benefit. Open source projects usually happily accept all people who wish to participate in them and don't enforce their members to work constantly on a day-to-day basis. Thanks to this there is a large number of potential contributors spread around the world that might join this type of project. To make use of this potential it is important to have effective tools to reach them and to establish a central point in which the whole community could interact. The main boundary to achieve this ware geographical distances which have just been overcome in the 90s with the rise of the Internet. The net lead free software communities to create tools like file repositories, mailing lists, real-time chats, task-trackers, control version systems, etc. and made then accessible from every part of the world. This allowed them to reach their full potential and begin the third era which continues to this day. [TES]

The tools mentioned above accelerated cooperation among various free software projects and inspired new projects leaders. One of them was Linus Torvalds which started developing the Linux kernel using development tools made by the GNU project. With the help of various developers which found the project on the net Linus kernel matured rapidly. In 2 years after the initial release in 1991 the GNU team decided to use it in their operating system as a stable kernel was the only component they ware missing. Thus in 1993 the Debian distribution was established also called GNU/Linux as it was a combination of GNU development and OS tool and the Linux kernel. This combination proved to be of high value sometimes even higher than in commercial Unix variants. That quality give GNU/Linux distributions recognition in the IT world. As free software gained adoption a new market of commercial support for that software arose and new commercial distributions ware created to meet its demands. Two most successful Novels Suse and Red Hat grow to multi million business and today are well established and profitable projects. The first one almost dominates the supercomputer OS market the secound also with other GNU/Linux distribution gained wide adoption in the web and the application server market. These successes showed the IT business that free software can also be an effective way of making money by simply monetizing your work in other areas then license fees. Like in the the providing related paid services business model which the mentioned Red Hat and Novel business used.

This new trend treated free software as just an effective way of developing and distributing software. Making free software less idealogical and more commercial brought new actors to the scene like Larry Augustin, Jon Hall, Sam Ockman, Michael Tiemann and Eric S. Raymond which started to promote the term open source. By doing this they wanted to cut them selfs off the anty closed software ideology and promot commercial activities in the free software community. Bruce Perens i Eric S. Raymond formed the Open Source Initiative to give substantial and legal support for the new movement. This efforts proved to work and the mentality of CEOs started to change as the new successful companies on the market ware making huge profits from developing open source software. One the most successful ware MySQL AB with its low end database and Trolltech with its Qt developers toolkit. Both introduced a new business model called dual-licensing in which they give their software freely to open source projects but required fees from those who wished to use them in commercial ones. Many commercial companies also started to add some open source products to their offer to up-sell or cross-sell it with their other closed commercial products.

Today it is undaunted that open source can product good software. In almost every IT market segment you look you'll find mature open source software that sometimes is even better than their commercial equivalents. Also there are segments in which open source software dominates like the supercomputer operating systems market we mentioned earlier. However its not obvious which companies gain significant profits from their open source products as they can't be measured by soled license fee based business model and popularity doesn't always rise profit. It's also hard to tell how those projects benefit from companies using open source business model and how both are organized to keep those models going. This are the questions to which we are trying to find some answers in this out research.

References

[1] - Operating system Family share for 06/2009 - TOP500.org

[AGP] - About the GNU Project - Richard Stallman, article

[POS] - Producing Open Source Software - Karl Fogel, book, 2009

[TES] - The economics of sharing: Open source and Beyond -  Josh Lerner, Jean Tirole, NBER Working Paper No. 10956, December 2004