FUSE on the german autobahn - listing to a CAOS podcast

For private reasons I had/have to spend some time in Germany these days. The house of my parents is about 45 mins away from the office, means I get to listen to some podcasts while I am doing 160 miles/hour on the german autobahn. One of my favorite podcasts is the CAOS Theory podcast from the 451 Group.

Yesterday I was listening to one that discussed the current state of affairs with respect to the Open Source Middleware space. One of the conclusions was that FUSE will probably benefit from the Progress acquisition, because Progress made a clear commitment to Open Source and will increase the investment in FUSE.

Just for the record: These conclusions are correct.

FUSE Quickstart - a sneak preview

Yes, we are busy to add new content to FUSEsource :). First we published a/the first set of FUSE TV videos and next we are going to publish a set of "FUSE Quickstart" screen casts. Take a look at the sneak preview and/or wait for the high-res versions to become available on FUSEsource later on this month.

Tip/Hint: The best way to get the sneak preview is to subscribe to the podcast and download all videos into iTunes :).

Open Source Marketing - and what it got to do with the Michelin brothers

Open Core Licensing and the business model behind it is not (really) new. When you look at it from a history/marketing point of view there are lots of examples, where money is/was made with a "handle-blade" model.

From a marketing point of view the most famous example is probably Gillette. They give away the handles and make a lot of money with the blades. This works because they have a very strong brand and because they "own" the interface between the handle and the blade.

Open Core Licensing uses some aspects of this idea. It gives way the core (handle) and wants to make money with add-ons (blades), but there are also a couple of very significant differences.

First, the handle in the Open Core Licensing model has a value on its own. You can use it to shave yourself. It is working. Out of the box. No blade needed.

Second, Open Source customers would probably never accept a handle, with a proprietary  "PlugIn-API", which would force you to buy your blades from "a/the" company that owns that interface.

Means the blade-handle picture is going to get us only so far.

But there are other pictures we might want to take a look at that do not need a "proprietary" interface. In 1850 two brothers were running a rubber factory in Clermont-Ferrand. They were called Eduard and Andre Michelin. The business was not going well, because producing rubber was getting commoditized, resulting in lots of competition and low margins. But then they had a good idea and a brilliant idea. First they realized that making rubber is not good enough anymore, but that they knew a lot about rubber and they figured that they could become their own customers and build something out of rubber. But what? This is where genius struck the first time: They realized that cars and bicycles would benefit from rubber tyres. The beauty of it is that you sell a blade (tyre) on a handle (car) that will wear-off when you use it. And this is were genius struck a second time. Eduard and Andre concluded that they have to find a way to make people drive and what better reason there is for driving than food or even better good food. As result they decided to put together and publish a guide on (good) restaurants and give away this guide for free (at least initially). What a brilliant idea!

Again Open Core Licensing uses some aspects of this idea, but not all of them. The main point is that Michelin did not own the interface, means they expected that sooner or later more people will be able to copy-cat their idea and produce tyres. As a result they focuses much more on making the car a success and making people drive, betting on the fact that they had an (first-mover) advantage in the resulting tyre market, because they were the first ones in the market and that they could make more money being "a" player in large market, rather than being "the" (only) player in a small market. To map this to Open Core Licensing we maybe have to think up-side down, means the integration market is the car and we have valuable add-ons (tyres) for this market, that people occasionally buy. How about creating a guide/solution for good integration, that will make people integrate systems? And give it away for free and benefit from the resulting (larger) integration market?

Again this picture is only going to get us so far, but it can at the same time give interesting insights into the dynamics of open source business models.

Open Core Licensing - moving from "bait-and-switch" to "suggest-and-complement"

The Open Core Licensing discussion is really refreshing! Lots of good ideas and lots of good energy. Obviously the "earlier" versions of the model were more oriented towards a "bait-and-switch" approach (get a good stack for free, but then if you want to do real/serious enterprise computing, you have to to buy the real thing :)). Right now the models have evolved into more mature "suggest-and-complement" models (aka. Open Core Licensing). And I am using the word "mature", because talking about it (the desire the make money with open source) like this, should be the norm and not the exception.

Yes, I am working for Progress (the software company, not the vacuum cleaners :)) and we have an Open Core Licensing Strategy (looking into the "Open Source is not a Business Model" report it is debatable, if Progress (formerly known as IONA) may also fall into the open-closed category) and I am proud of it.

The important part for me is freedom (of choice for customers) and value (for customers). We are suggesting to use our integration-core, -platform, -stack (whatever you want to call it) to do JAVA-based integration and if you are happy with it, we are happy too. We then offer consulting, training and support for it (by the way, our distribution is called FUSE), but the choice is always yours. It is complete and has a value on its own. There are no "hidden features", that will cripple the distribution to create an "artificial" up-sell opportunity.

There you have it. Great value for money.

But wait there is more: We already have or will integrate this core with lots of interesting add-ons, which will complement the core and will make the resulting platform even more valuable (e.g. Mainframe integration, C++ integration, .Net integration, data integration, ...). And yes, we are looking for ways to get our fair share of the generated end-customer value. But that should be a win-win. The secret is in the add-ons. They must bring a significant, additional, unique value to the table, that would otherwise be hard to get (e.g. implementing it yourself :)). If the add-ons are structured like this, everybody will be happy to pay money for it/them (given you need them :)).

And there you have it again. Even more value for money.

But the biggest value of all is for me that with this model customers stay in control. It is a pay-as-you-go model, means nobody is forced to spend large sums of money upfront to get something done. And this creates good, value-oriented, customer-vendor relationships. 

I like it.