European Businesses Organize to Promote Use of Open Source Software

August 2002

Open Forum Europe

Until recently, the principal users of Open Source software have been researchers, both in universities and in government. A recent example is the Pacific Northwest National Laboratory supercomputer soon to be installed by Hewlett-Packard for the U.S. Department of Energy at a cost of US$ 24.5 million. It will cluster 1400 Intel 64-bit processors by using Linux.

But readers of these columns know that Open Source is also steadily being picked up by businesses and government agencies for production use. The refinement of Linux for research purposes, for instance, has enabled grid computing (use of distributed processors) to grow to the point of becoming interesting to businesses who want to harness their spare computing power. And on the other hand, businesses have contributed notable improvements to Linux, such as file systems.

Both government and businesses are sponsoring a new group in Europe called Open Forum Europe (http://openforumeurope.org/index.php) "whose objective is to accelerate and broaden the market take up of Open Source Software (OSS) including Linux," in particular "the acceleration in usage of Open Source in the business community." To better inform businesses about Open Source software, the group commissioned a study by the British firm Trend Consulting (http://trend.co.uk/), entitled Market Opportunity Analysis For Open Source Software (http://openforumeurope.org/docs/OSS_Management_Summary.pdf). The February 2002 study supplies the reason why we have been seeing the progress of Linux in the financial sectors and retail sectors: both are transaction-intensive industries whose margins are pinched by fierce competition. Some examples of banks and financial firms from London to New York to New Zealand using or converting to Linux were covered in the December 2001 and May 2002 columns. This demand in the financial sector is causing new businesses to spring up to serve it, such as Egenera (http://egenera.com/), which supplies Linux servers to the financial sector. Each server has 24-blades, and each blade has at present two Intel processors; prices range from US$ 250k to $1m per server.

The report did not refer to another sector that suffers from low margins and heavy competition: the travel industry (http://www.informationweek.com/story/IWK20020418S0034). Now that the major U.S. airlines have ceased to give the agencies a percentage of the price of each air ticket that they sell, the agencies are trying out more computer-intensive business methods. While some will continue simply to connect to the airline mainframe computers and then add a fee to the customer's ticket price, others are going to use new software on their own computers to continually comparison shop ticket consolidators and on-line ticket sites with a flexibility impossible with the airline mainframes.

It is difficult to tell from the article how much Linux is involved, but one on-line ticket site, Orbitz (http://www.orbitz.com/) does run on Linux. The AgentWare mentioned is probably the TravelConsole software (http://agentware.net/travelconsole/index.php4). Like Syndicator from the same company, it very likely runs on Red Hat Linux, besides other platforms. The Fairlogix software cannot be identified.

The Trend Market Opportunity Analysis did point to telecommunications as a field that is warming to Open Source, and a short time after the report was published the Open Source Development Lab, sponsored by numerous large technology businesses, announced work on a standards project called Carrier Grade Linux (http://osdl.org/projects/cgl/). At about the same time, IBM announced a telecommunications server running Linux (http://news.com.com/2100-1001-868651.html)

In its discussion of the advantages of Open Source software, the Trend report noted that licensing costs are a component of Total Cost of Ownership (TCO), and that the retail sector was particularly liable to high licensing costs because of its many point-of-sale (POS) devices, such as cash registers and card scanners. A recent example is the Paint Stores Group of the Sherwin-Williams Company (http://www.sherwin-williams.com/default.asp), which is paying IBM to replace its SCO UNIX retail system with 9700 Turbolinux machines in some 2500 stores (http://news.com.com/2100-1001-921024.html).

The report also noted that IT departments could reduce costs by centralizing purchasing across the company (including licensing), but also saw that the presence of Open Source software within a company was a bargaining lever to use with other software vendors. But Trend Consulting did not go the final step of the way and point out that Open Source itself, by supplying source code with products, gives IT departments the ultimate in bargaining power: vendor independence. Only expertise and superior service will keep an Open Source vendor on the job if the customer is able to call in another company, much as householders call in another plumber when the first one is unsatisfactory.

It is true that there are many businesses who do not demand customized software, and that have no interest in re-writing source code, but these businesses will doubtless find attractive the vendor-independence benefit of Open Source. It is governments, however, to whom the availability of source code is particularly important. Several earlier columns (January, February, April, June-July) have dealt with the keen interest of governments in Open Source: low cost, portability, vendor independence, national pride, and particularly security and the potential to foster a local software industry are the motivators.

More Pressure on Peru

Last month's column mentioned Peruvian Congressman Dr. Edgar Villanueva, sponsor of Bill No. 1609, "Free Software in Public Administration," which will mandate the use of Open Source software if at all possible in all national agencies and offices in Peru. Microsoft's response is the same as it was when Mexico moved in the direction of Open Source: make a donation (http://biz.yahoo.com/ap/020715/microsoft_peru_1.html). Microsoft Chairman Bill Gates flew to South America to appear with Peruvian President Alejandro Toledo to announce a Microsoft gift of US$ 550,000 in cash, software, and consulting services to further computer education and connectivity in Peru.

Microsoft had already arranged for the U.S. ambassador, John Hamilton, to write to the president of the Peruvian legislature to object to the Villaneuva bill (http://www.wired.com/news/business/0,1367,54141,00.html). The direct political pressure was particularly galling to Dr. Villanueva, since his bill is designed partly to enable Peru to ease from under the tightening grip of Microsoft. The issue of the ability of countries to control their own software is coming increasingly into the open around the world.

Update on Microsoft Licensing

Your own business might benefit from more independence from Microsoft. Now that July 31st has past, there are no more price breaks for upgrading software, just the standard package prices. According to Gartner Group, the price rise is from 33 to 107 percent.

License plan changes and pricing have been discussed repeatedly in earlier columns, but this month brings news of subtle changes in the licenses themselves. First, Microsoft sent out three patches to close security holes in the Media Player. According to one user (http://bsdvault.net/article.php?sid=527&mode=&order=0), the license agreement for the security fixes contains this wording:

* Digital Rights Management (Security). You agree that in order to protect the integrity of content and software protected by digital rights management ("Secure Content"), Microsoft may provide security related updates to the OS Components that will be automatically downloaded onto your computer. These security related updates may disable your ability to copy and/or play Secure Content and use other software on your computer. If we provide such a security update, we will use reasonable efforts to post notices on a web site explaining the update.

The user who accepts the license in order to install the security patches thus gives Microsoft the right to alter the behavior of his operating system and applications by means of future updates.

Microsoft then issued Service Pack 1 for Windows XP, this time with a provision to allow Microsoft to enter the user's computer at will in order to change the behavior of the operating system and applications (http://www.theregister.co.uk/content/4/26517.html). From that point forward, the user will not be able to choose or schedule Microsoft's changes to his system: they will simply be executed on his machine on Microsoft's schedule. There is no warranty that the changes will not harm the user's system or data.

Some users complain that this is extortion by the vendor, and that European courts will not countenance it. You can expect to read more about this licensing issue in the future. It is certainly the ultimate vendor lock-in, and one that will avoidable only by switching operating systems. Are you ready?

 

Copyright © 2002 by Donald K. Rosenberg, Stromian Technologies (http://www.stromian.com)

 

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