Technology firms that made their names with proprietary software have quietly been moving towards freedom of choice, writes John Collins

Outside the world of geeks and techies most people probably do not appreciate that much of the software that runs the internet is open source. But a significant shift in the way that software is developed, marketed and sold has quietly taken place in tandem with the rise of the internet as an everyday communications tool that has spawned businesses and cultures.

In contrast with the more traditional model of proprietary commercial software that grew with the computer industry in the 1970s and 1980s, open source software is typically associated with free products. The proprietary model involves paying a fee to a company for the licence that gives you the rights to use the software. Other than that, the user has few if any rights.

In contrast, open source licensing is far more generous and even gives you access to the underlying computer code on which the software program is built - hence the name "open source". Anyone can make changes to the code but under the terms of the licence, improvements should be shared with other members of the community of users - typically by posting them to the internet.

"It's not so much free in the sense of not costing any money, it's free as in freely available," explains Simon Phipps, chief open source officer with Sun Microsystems. "One of the side effects of being freely available is that it is available free. "Where businesses sit it's more about freedom of choice. They are concerned about getting the right software for the job, having freedom to choose a vendor, getting the best value for money for service and support."

When open source products first began to be widely deployed in the late 1990s, the common cliché was that open source developers were a bunch of bearded hippies with sandals who couldn't handle working in commercial organisations.

While the open source movement has attracted its fair share of free spirits, an interesting change has occurred in recent years. Commercial companies that have built good businesses out of the proprietary business model have begun to embrace open source.

Take IBM, which has been championing the use of the open source Linux operating system for use on computer servers. It does not sell a version of Linux, but revenues of over $2 billion (€1.6 billion) were attributed to Linux in IBM's 2003 annual report based on a combination of hardware sold to run it, commercial software running on top of it and services sold to help customers implement it.

Adam Jollans, open source strategy manager with IBM's software group, believes that open source is not as new or radical as some commentators would have you believe - although he does admit IBM had something of a Pauline conversion to the open source model in the late 1990s.

"Open source may be relatively new to computing but it's not a new model in the wider world," says Jollans. "It's how academics do research. They share it with the wider community by publishing it and then someone else improves on that work."

Sun Microsystems has committed to making its entire software portfolio open source within the next 18 months - it has already made its flagship Solaris software freely available. Phipps believes the model just means that customers pay at a different point in the cycle.

In the early days of the computer industry, before personal computers, mainframes were delivered with a comprehensive suite of all the software you were likely to need. But when the personal computer became popular customers chose what software they wanted on their machines but had to pay up front.

"Then having licensed the software you'd figure out how to deploy it and make it profitable for your business," says Phipps. "The open source movement is the third phase in the shift of when software gets monetised. It used to get monetised at the point of hardware purchase, then software selection and now it's monetised at the point when value is derived."

What that means is that once an organisation decides to use open source software as part of their business they will generally go to a commercial company for services such as integration, support and regular updates rather than relying on the community.

"The ultimate characterisation of open source business models is a shift away from expecting to get paid when you deliver the bits and a shift to getting paid when you deliver the value," says Phipps.

Last summer Iona Technologies announced it planned to introduce an open source product called Celtix, which plays in the same space as its commercial Artix release. Iona's chief scientist, Sean Baker, describes Celtix as providing a "commodity set of features" while Artix is a more sophisticated product intended for high-end uses by corporate customers.

For Iona it was a matter of positioning itself as an expert in an area where its latest commercial releases play, but Baker adds, "it's better to give our software away for free than have someone else do it."

According to Tony Dunn, a Novell vice-president with responsibility for Linux and open source, his company can deliver products more quickly using the open source model. For the customer there is the assurance of dealing with a technology company that has a long history of supporting enterprise applications. "If you are Eircom or whoever and you are running a mission-critical billing system, are you going to trust that to two men and a dog?" asks Dunn. "You want to deal with a company that has credible services."

The community nature of the new licensing model also means that the creators of the software can no longer be sure of dictating its development. Iona does not control the Celtix project that is now run under the auspices of the ObjectWeb community. As Baker puts it, Iona has adopted a "code wins" strategy (ie the more work that Iona puts into the project, the bigger say it will have in how it is run). IBM's Jollans says that his firm has a similar approach and chooses to get involved with projects that are organised as a "meritocracy" rather than where a single company or organisation controls the code base.

While none of those interviewed believe that open source will totally replace the commercial model, all are firmly of the opinion that the two can live side-by-side. "If you are only going to offer open source or commercial software, you are limiting your opportunities [ and] you are also limiting your customers' choices," says Jollans.

"Most customers are using a mixture. Depending on factors such as business function, reliability and cost, they're choosing whatever best meets their business goals regardless of the licensing model."