Matt Asay visited the SAP campus today and had a good number of SAP employees attend his presentation. For the folks who don't know Matt, he is the General Manager of the Americas for Alfresco, one of the leading open source Enterprise Content Management solution. Prior to Alfresco, Matt was a founding member of Novell's Linux Business Office, founded the Open Source Business Conference, and ran embedded Linux vendor Lineo's Network & Communications division. Matt earned a JD from Stanford Law School, where he studied open-source software licensing under Larry Lessig, his thesis advisor. He serves on the board of the Open Source Initiative (OSI) and is an advisor to SugarCRM, MuleSource, Loopfuse, Openbravo, JasperSoft, Volantis, and other open-source companies. Matt writes CNET¹s open source blog. Matt was recently named one of the top open source business leaders for 2008 (LinuxWorld).
The basic message in Matt's presentation was that the last century saw the rise of scarcity-based business models for software, as the software industry sought to replicate the tangible world of "real property" in an intangible, online world of digital property. The new model on the other hand is based on Abundance and a Non-Zero Sum game.
So, in short, the equation is Old Economy vs New Economy which equals two models against each other, Scarcity vs Abundance. In the Old Economy, Money was made by creating a product and assuming its scarcity by controlling its access. The New Model is where the value is going to be driven from Abundance as opposed to Scarcity.
Google, Red Hat, and others have shown, that the new models going forward aren't based on scarcity, but rather around abundance. The future belongs to those companies who can figure out ways to make money from the abundance that free software provides. Google is changing the game where they are making all their softwares and services are available for free.
Matt cited Red hat as another Google like example where they succeed while giving away their software where Redhat charges for certified version of their software, patches and service packs.
On the other hand Matt pointed to Facebook as an example of how not to take advantage of the Economy of Abundance. Facebook fails to get the trust factor where you don't know if your friends are really your friends. Facebook as a community has the same problem as E-bay where trust is an issue. Matt pointed out that a model such as that of a Craigslist is more useful where trust is key and allows the community to develop. Facebook created abundance but trust is where it fails.
While talking about Opensource, Matt pointed out the usual model that is used by Opensource which is the model of software for free and cash for support is useful and will have to be adopted in its current form or some changed shape by big size companies.
A very important point he made was about Charging for proprietry extensions that are delivered to TARGETED Customers and not at random. This was a very important point and is worth considering further. Matt pointed out in response to a question from the audience, that Adoption led market or Adoption led Economy is the way to go instead of expensive sales and marketing focus on early adoption through traditional sales model.
The Abundant adoption however has certain demands where for instance,
1. Building exceptional software is much more of a priority.
2. Modularity is important.
3. Great initial code base and an open and transparent Governance structure for the code is going to be paramount.
4. The more open the code is the more successful it can be.
5. Documentation for code has to be rock solid
A very interesting discussion on Open Source with very vibrant questions about the base and customers of Opensource.
Great analysis and post. Some good points raised. I do not agree about his comments about Facebook. I think Facebook has the trust element, which for instance myspace does not.
Posted by: Nauman | March 07, 2008 at 03:42 AM