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Oracle Wants Proof That Open Source Is Profitable 393

Posted by Soulskill
from the show-me-the-money dept.
An anonymous reader writes "Since Oracle's acquisition of Sun, all open source projects that now have Oracle as their primary sponsor are worried about their future, and FUD is spreading quickly. Very few public statements have been made by Oracle executives, particularly regarding OpenSolaris. The community is arguing about the difficulties of forking the code base when most (if not all) of the developers are employed by Oracle. Now Oracle wants the community to prove that open source can be made profitable. What arguments can the Slashdot crowd provide to convince Oracle about that?" Reader greg1104 tips related news about licenses for Solaris. According to an account manager, "Solaris support now comes through a contract on the hardware (Oracle SUN hardware)."
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Oracle Wants Proof That Open Source Is Profitable

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  • by NReitzel (77941) on Friday April 16, 2010 @03:49PM (#31876090) Homepage

    Open source is not profitable, per se. If you require beancounters to add up direct income from the product itself, that's a non-starter. If you have a little more leeway and count service contracts, that's a little better.

    By and large, though, open source benefits the community and not the captalist. It's simply too hard for accountants to add up all the indirect benefits to society, and then, also indirectly, to themselves. Having a solid code base that can be -- and is -- improved by thousands of eyes is akin to trying to ennumerate how Van Gogh failed to profit from his pretty pictures.

    Fork the code base. While we still can.

  • Dear Oracle (Score:2, Interesting)

    by Thermick (1791784) on Friday April 16, 2010 @03:50PM (#31876096)

    Don't fuck up where IBM is making money.

    Sincerely,
    Open Source

  • by garyisabusyguy (732330) on Friday April 16, 2010 @04:00PM (#31876244)

    Honestly, I do not know what passes for 'knowledge about Oracle', but your comments seem pretty naive.

    In the Oracle applications stack, about 90% of code (stored procedures, triggers, table structures etc...) are plainly visible on an installed application stack. The rest (Java runtimes) can be decompiled with readily available tools. Plus, if you have a current support contract, almost everything (technical reference manual, support notes, bug reports, white papers, check lists, etc...)is available on Metalink.

    My point is that Oracle has been behaving _mostly_ as an open source company (Ok database executables are a different story) for quite a long time.

    The hard part is putting it all together. I have been up to my elbows in this (as a developer) for 15 years, and I only really grok about 15% (prolly less) of the apps.

    This is where the Oracle Service and Support revenue model comes in.

    Trust me, they get OSS, they are just trying to figure out how to wring more out of the business model.

  • Larry, Larry (Score:3, Interesting)

    by WindowlessView (703773) on Friday April 16, 2010 @04:01PM (#31876256)
    ...just think of it as the America's Cup of software. It's about the competition and the pride...
  • by Locke2005 (849178) on Friday April 16, 2010 @04:03PM (#31876282)
    I'm curious as to why a company would spend a lot of money making something that other people will give away for free. IBM had a traditional business model that involved giving the OS away for free to leverage hardware sales, and did quite well with it. IBM supports Linux because it can still be used to leverage hardware sales, but the support costs are much less -- all they really need to do is support the drivers specific to their own hardware. Sun and Apple also used software to leverage hardware sales.

    Oracle, as a traditional software-only vendor, does not understand this. However, I believe the best strategy for Oracle going forward is to sell databases pre-installed on hardware they control. This both allows them to charge a lot more (see Network General Sniffer) and lowers their software support costs.
  • Re:Seriously? (Score:3, Interesting)

    by mrjatsun (543322) on Friday April 16, 2010 @04:13PM (#31876414)

    Sure, good for itself, but RHAT is in a much different league.
            RedHat's total revenue for the last quarter was $194.3 million
            Oracle's total revenue for the last quarter was $6.5 billion.

    Before being bought by Oracle, Sun's S/W business did better than Red Hat..
    I was just lost in the noise since H/W is such a big component of revenue.

  • Re:Not from FOSS (Score:4, Interesting)

    by MightyMartian (840721) on Friday April 16, 2010 @04:21PM (#31876556) Journal

    Let's face it, OpenSolaris was a Johnny-come-lately in the open source OS field. Yes, it had some neat features, but it's hardware support is abysmal compared to Linux and the BSDs. For Oracle, to my mind, it would make better sense to support what's there rather than continuing Sun's experiment.

    To my mind the future is looking dark for Sun's open source projects. I suppose MySQL will survive as a low-end RDBMS solution to market along side Oracle's other solutions, but stuff like VirtualBox may have an iffier future. Maybe the FOSS community can keep it going, or maybe what's useful and transferable will end up in KVM. Who knows...

  • by NReitzel (77941) on Friday April 16, 2010 @04:26PM (#31876622) Homepage

    It is indeed. Companies that support open source projects make money in other venues, often supported at their base by the very non-profit open source that they support.

    Other companies buy up projects to kill them. After all, it's also hard to pay employees for your very expensive database when a more-or-less free one does a more-or-less good job.

  • Re:Seriously? (Score:3, Interesting)

    by hweimer (709734) on Friday April 16, 2010 @04:26PM (#31876624) Homepage

    Profit Margins, Revenues, Market Capitalization, Earnings, P/E Ratios, Earnings per Share, Revenues Per Share, Cash Flow, and most other measure of the "success" of a company are all significantly higher for Oracle (ORCL [yahoo.com]) than they are for Red Hat (RHT [yahoo.com]).

    Unless you are a shareholder [stockcharts.com].

  • Re:Dear Oracle (Score:5, Interesting)

    by Tanktalus (794810) on Friday April 16, 2010 @04:34PM (#31876780) Journal

    What is IBM making money on, the open source software or the hardware it runs on and supporting same?

    Yes.

    IBM makes money by selling the hardware that runs your open source software.

    IBM makes money by deploying the hardware, and the open source software.

    IBM makes money by upselling the open source software with proprietary versions (Apache -> Websphere, Jazz -> Rational Team Concert, ...)

    IBM makes money by selling entirely new applications based on open source frameworks (nearly anything based on Eclipse).

    Oracle can sell their new hardware to run OSS. They can sell services to help deploy said hardware and OSS. They can sell their own versions of apps to complement OSS. They can use OSS to complement their proprietary apps (e.g., getting wikimedia to run on Oracle, though that might be a bad idea, I'm giving it as an example of the concept). Seriously, can't they just look at their competition to see what they're doing?

  • PgSQL != cathedral (Score:4, Interesting)

    by tepples (727027) <{moc.liamg} {ta} {selppet}> on Friday April 16, 2010 @04:35PM (#31876794) Homepage Journal

    Companies that support open source projects make money in other venues, often supported at their base by the very non-profit open source that they support.

    I can see how one could sell support contracts for certain kinds of software like MySQL and Solaris. But not all categories of free software are as amenable to support contracts. Examples include computer games that aren't massively multiplayer.

    Other companies buy up projects to kill them.

    Oracle may be planning to do this to MySQL, which was largely developed within the MySQL AB cathedral [wikipedia.org] that Oracle acquired. On the other hand, PostgreSQL's major contributors [postgresql.org] are too diverse in organizational affiliation for this to be an easy job for Oracle.

  • Re:Not from FOSS (Score:3, Interesting)

    by aztektum (170569) on Friday April 16, 2010 @04:43PM (#31876910)

    RedHat, is ... the only company that's making money doing that.

    Not entirely true. There are small consultancies I have dealt with that only deal with OSS which are doing wonderfully. Even in this crappy economy.

  • by kandresen (712861) on Friday April 16, 2010 @04:44PM (#31876930)

    1) Open Source is mainly a replacement of "built in house/customized software" than packaged software. You are approaching people who want full control rather than a generalized solution.
    2) By returning the changes to the community, they can ensure other improvements done can be implemented cheaply in the future.
    3) Other people and organizations may find that the new base is a start point for their organization too, and use it with or without modifications.

    These steps are valuable for consultants, companies who want control and save money, etc. However, when a project grows quickly or is of a kind that is critical many people would desire someone to ensure them that next time they upgrade their solution it does not cause problems, or can be quickly resolved by someone, or someone who are liable to fix the issues should they occur in their system, then it might go to a new level for the maintainers:

    4) The real money for a development company will not be there until sufficient amount of people or organizations want to pay for support.

    Face it - Open Source is about mass customization. It is also about making the common a commodity - do not expect to sell things that are common needs for everyone for a massive price forever (word-processors, base operating systems, etc), The money will only come from supporting these application when the base is big enough.

    Assuming you can sell your software to enough companies, you might not be interested in Open Sourcing it out - a large part of it all is weather you believe you will gain more on support by obtaining a larger number of users, or if you think the selling to and supporting less people bring more value.

  • by Envy Life (993972) on Friday April 16, 2010 @04:50PM (#31877042)
    Oracle has a unique business model for being one of the two biggest software companies in the world -- you can download most of their core products easily and try them out at no cost. Some of the products are flat out free (JDeveloper, Oracle SQL Developer). When you license them, it's not because they are limpware, that they are expired, or need a serial number... because they don't. The incentive is primarily for purchase of security updates and support. This is completely Unlike the other big software company, which doesn't allow downloads, no try before you buy, have to use serial numbers, restrict upgrade paths, and install phone-home services to keep them aware of who is running legit copies of their software and who isn't.

    The thing is, this topic seems to be more about what to do with Solaris. Oracle used to use Solaris as their tier 1 development platform in the 90's, then turned to Linux years ago. Now that they're in deep with both, which open source *nix OS do they focus on? Is there any value in Solaris over Linux? They know that Linux is both open source and is profitable (Red Hat). Oracle knows there is money in open source software or they wouldn't have purchased MySQL properties, attempted to purchase JBoss, even thrown around talks with a Red Hat acquisitionetc. This may be more about trying to figure out how to focus so they can supply turn-key servers to their customers rather than general "is oss profitable."

    At this point what's to tell Oracle that Solaris is better than Linux, because, I'm not sure they're convinced?
  • by kavehmz (755591) on Friday April 16, 2010 @07:25PM (#31878756)
    Last year when the Oracle's contract had not been finalized, we chose PostgreSQL over MySQL and this kinds of doubts that Oracle will be proper place for projects like MySQL was one of the reasons. It seems Oracle has indeed problem adapting the new approaches required for working on Free Software projects.
  • Re:IBM (Score:3, Interesting)

    by timmarhy (659436) on Friday April 16, 2010 @10:21PM (#31879884)
    your is about the only insightful comment yet.

    ive been involved in oracle's style of management before, where they say they are about the money, yet when you present them with a money making scenario that goes against their ideals they simply ignore it.

    If i was oracle and i bought out sun, i'd put maybe 10 software engineers on open solaris, adding features and drumming up community support. it'd cost them maybe 1 mil a year to run, fucking chump change.

    THEN, i pour cash into beefing up the hardware, marketing sparc as the only game in town if you have enterprisy demands. i'd sell them managed contracts where you get the hardware/software/database with support, or rented as businesses love to do. I'd give them the hardware at 10% markup and the software for free, and MILK them on the database.

    SUN should be treated as a vehicle to get some vendor lock in happening, not as a money spinner on it's own.

  • by sweenus (1665081) on Saturday April 17, 2010 @02:36PM (#31882832)
    This isn't only about solaris. It is about virtualbox, mysql, Open Office, and god knows how many other open source products had been developed by sun. As a user of these programs, I say that it would be a terrrible shame to see them go down.

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