Why Larry loves Linux (and he’s not alone)
If you thought open-source software was a threat to big-company profits, think again.
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| Oracle CEO Larry Ellison. Image: Oracle |
Just a few years ago, the open-source software movement was a pariah among big software firms. Shai Agassi, then an executive at SAP (SAP), likened it to socialism. Microsoft CEO Steve Ballmer called it a cancer. The attitude among many in the establishment seemed to be that the “free code” revolution led by software such as Linux would discourage invention and erode profits.
That nightmare scenario hasn’t happened. Instead, the open-source movement has helped lower the cost of computing, and fueled a lot of moneymaking innovation, and not just among scrappy startups. For just one example, consider Oracle (ORCL), which is likely to highlight open-source trends as one of the growth drivers in its business when the company reports quarterly earnings today.
How? Last quarter, the business software giant pointed out that its database market share actually tends to improve when customers move to Linux, which has been a fast-growing server operating system for much of the decade. And Oracle is poised to capitalize on open-source trends in other ways. For instance, the company distributes Linux for free, and makes money by offering support.
So far so good: earlier this year CEO Larry Ellison reported that Oracle is in the early stages of selling high-margin Linux support contracts, some for as much as $500,000 a pop. Ellison claims the open-source strategy is also helping to lure database business away from competitors. “We’re just taking share right away from IBM on mainframes and we’re taking share away from Microsoft using Linux,” he told analysts in September.
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The Linux love-fest doesn’t stop with Oracle. Google (GOOG), which already uses Linux-based servers to power its search platform, also wants to tap its open-source infrastructure to deliver more and more software over the Internet. (Google’s Android cell phone platform will also be based on Linux.) VMWare (VMW) has long been a Linux-friendly shop. Co-founder Mendel Rosenblum has praised it as a natural fit for the company’s virtualization software, which is all the rage these days as companies seek to cut data center costs by using the software that lets one computer do the work of many.
Beneath the surface, the companies are making similar bets on the profit power behind open source. All are wagering that if the cost of a computing platform drops far enough that everyone can afford it, there will be opportunities to make money by helping customers to use fascinating software and services on top of it. In Oracle’s case, it’s profiting from software and support; in Google’s case, from advertising, and in VMWare’s case, from helping people run more programs without buying more equipment.
It still remains to be seen whether the open-source approach has a shot at eventually becoming the most popular force in computing. Some powerful companies still don’t think so. Microsoft (MSFT), which believes it can do better than the open-source community, continues to do well in the server business — there are even signs in the most recent IDC server report numbers that Windows server growth is outpacing Linux. And Apple’s (AAPL) iPhone certainly doesn’t use an open-source operating system –- Steve Jobs likes to point out that it runs the same software as full-fledged Mac computers.
Nevertheless, it clear these days that open-source software is far from the profit killer some feared. Just ask Larry Ellison.
The article talks about companies making money from open source and all the examples are companies using pre-existing open source. There are also a lot of companies making money because they open sourced something. Like MySQL.
The author’s claim that the IDC report states Windows server growth is outpacing Linux is factually wrong. The IDC report states Windows revenue is outpacing Linux revnue. Remember, Linux costs less (sometime free depending on your version) so that makes sense.
I do like the author’s point of the article though.
From Jon Fortt: The IDC report is about growth rates, which appeared to slow for Linux in 2006. It doesn’t particularly matter whether you’re measuring growth using units or revenues, the overall point holds. I’ll personally want to see more data before coming to conclusions about a Windows surge/Linux slowdown, but IDC’s data is what it is.
To the guys claiming OS X itself is open source just because Darwin is, I’d like to point out that Microsoft includes some technologies in Windows that are open source too, but that hardly makes Windows itself open source. The only way an operating system can be called “open source” is if anyone can take the publically available source code, recompile it, and use it to run the same applications as could be run from the “official” version. Neither OS X nor Windows pass this most basic test.
It seems these is some confusion around “open source” here. Is the operating system for MacOSX based on open source software: yes. Is the operating system for MacOSX open source: no.
Not all the open source licenses are viral and place an obligation to keep the code as open source when used in a project.
Apple darwin though IS NOT Apple OS X or the iPhone OS. All open source Darwin Apple OS ended in 2006.
One more variant of Unix. Microsoft Windows SDK has serious documentation problems makes it useless. Latest version of SQLServer has copied all the features of Oracle including snapshots and connect by prior. Oracle can come up with new HTML (HTML6?), just implement SQL*Forms 3.0 with a new mime type, the .inp file show both HTML and JavaScript (event triggers).
“From Jon Fortt: Are you really arguing with my statement that OS X isn’t an open-source operating system? ”
Given the way you wrote your article, yes - your conclusion is arguable. The article points out that Oracle has had success by integrating open source software into it’s business. Then, the last paragraph offers Apple as a counter example - even though Apple has had success by integrating open source software into it’s business.
You need a better example. pretty silly.
FYI, Oracle’s great Linux operating system, let’s not forget, is a near exact copy (minus the trademarked images, etc) of Red Hat’s Enterprise Linux.
You should have done the piece on Red Hat, not Oracle. And please, update your information to reflect the facts.
Mac OS X and the iPhone are in fact open source.
http://www.opensource.apple.com/darwinsource/
OS X is based on BSD UNIX. The source code for OS X has been around for years. Their GUI is proprietary, but everything from the command line is open source.
Your blanket statement ”And Apple’s (AAPL) iPhone certainly doesn’t use an open-source operating system –- Steve Jobs likes to point out that it runs the same software as full-fledged Mac computers.” I believe isn’t factually true. Actually, certain portions of OSX are open sourced:
http://www.apple.com/opensource/
“Major components of Mac OS X, including the UNIX-based core, are made available under Apple’s Open Source license, allowing developers and students to view source code, learn from it and submit suggestions and modifications. In addition, Apple uses software created by the Open Source community, such as the HTML rendering engine for Safari, and returns its enhancements to the community.”
Sure you can argue that the whole operating system isn’t available to be poked and prodded, but I would say this is a good thing. Look at the Linux community - 90 separate choices for distros! I believe this leads to confusion and incompatibilities.
Please stop making blanket statements concerning Apple. Research your facts before writing a story - it’s embarrassing.
From Jon Fortt: Are you really arguing with my statement that OS X isn’t an open-source operating system? Don’t be silly. Portions of a lot of software have been open-sourced, but that’s clearly not the same thing.
oracle is taking mkt share away from microsoft? i think oracle is less concerned about linux vs windows success than it is about Microsoft SQL Server stealing database marketshare from oracle’s database offering. low cost high performance vs high cost high performance…. Larry can do what he wants to ensure that future oracle databases run on linux. the sad news here is that he’ll ultimately lose share to SQL Server which runs on windows exclusively… Databases will become a commodity - and oracle’s relevancy in this space will fade.
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A senior writer for Fortune, Jon Fortt focuses on technology and innovation in Silicon Valley - a subject he's been reporting on since his days as a rookie reporter for the Lexington (Ky.) Herald-Leader. Before joining Fortune in 2007, Jon had reporting and editing stints at Business 2.0 magazine, and the San Jose (Calif.) Mercury News, Silicon Valley's hometown newspaper.
Larry better like open source. Anyone who has ever seen his “iEnterprise” package for Windows vomits! Imagine in his iProcurement, none of the windows expand for fields!! Thats right, if your words or account numbers are too large, you have to enter the fields and scroll right to see the rest of the information. It is absolute garbage that governments and companies are being tricked into buying. Its a pathetic Windows front end on the obiously old, tired, antique Oracle DOS database. Heck, MS Office did more for data entry ten years ago than this Oracle garbage does now.