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Copyright 2008 Strategies and Advantages of Software Livre In An Economic Crisis by Jon "maddog" Hall Executive Director Linux International
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Copyright 2008
Strategies and Advantages of Software Livre In An
Economic Crisis
byJon "maddog" HallExecutive DirectorLinux International
Copyright 2008
Who Am I........and Why Should You
Listen?● Thirty-nine+ years in the computer industry
– Mainframes 5 years– Unix since 1977– Linux since 1994
● Programmer, Systems Engineer, Product Manager, QA, Technical Marketing, Educator, Consultant
● Large systems to very small ones
● Vendor and a customer
Copyright 2008
The World Is In Economic Crisis!
● Financial Institutions failing● Large Manufacturing and Retail
companies failing– “Big Three” auto– Sharper Image
● Companies laying off people
Obama keeps talking about SMBs and “spreading the wealth”
Copyright 2008
Small and Medium Business
● In USA:– Small business – less than 100 employees– Medium business – less than 500
employees
● Globally, 40-50% of all GDP is SMB● Major advantages:
– employment potential and low capital cost– innovation– higher growth rate
Copyright 2008
More USA Statistics on SMB
● 99.7 per cent of all employer firms● 50% of all private sector employees● Almost 45% of private sector payroll● 60-80 per cent of all new jobs● 40 per cent of high tech employees● 52% are home-based● 97.3% of all known exporters● 28.9% of all goods exported
Copyright 2008
Survival Rate of SMBs
● 66% more than two years● 44% more than four years● 31% more than seven years
SMBs employ people, make products, create services!
Copyright 2008
Are Large Companies the Only Ones Sustainable?
Sure! Just ask....● Apollo● Wang● Data General● Digital Equipment Corporation● Compaq Computer Corporation● Enron● General Motors
Copyright 2008
Large Business
● Monopoly potential– Hard to have competition– When they fail, they fail badly
● “Big Three” car makers● Wall Street
– Government often “held ransom”– Consumers often “held ransom”
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Computing In The Beginning
● Hardware expensive, computers few
– Software hand-tailored, from beginning– Not “computer science....computer black
magic”– “Punched cards and FORTRAN all you
need”● 1980s – Hardware was becoming less
expensive
– Software was manufactured● 2007+ Hardware is incredibly cheap
– Software should be tailored again
Copyright 2008
The Economics of Mass Production
● Meets 70-90% needs of 70-80% of market– .70 x .70 = .49, less than half!
● Create commodity products– What is a commodity?
● Corn?● Cars?● Money?
– Are business situations a commodity?
Copyright 2008
Imagine Trying to Fill a Round Hole
● Proprietary software is a square peg● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008
Imagine Trying to Fill a Round Hole
● Proprietary software is a square peg● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008
Imagine Trying to Fill a Round Hole
● Proprietary software is a square peg● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008
Imagine Trying to Fill a Round Hole
● Proprietary software is a square peg● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008
Imagine Trying to Fill a Round Hole
● Proprietary software is a square peg● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008
Imagine Trying to Fill a Round Hole
● Proprietary software is a square peg● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008
Imagine Trying to Fill a Round Hole
● Proprietary software is a square peg● No matter how many square pegs you
use, you can never really fill the hole● Source Code allows you to sand the
corners of the square peg
Copyright 2008
Imagine Trying to Fill a Round Hole
● Proprietary software is a square peg● No matter how many square pegs you
use, you can never really fill the hole● Source Code allows you to sand the
corners of the square peg
Copyright 2008
Sometimes I Speak To Hundreds
Of Businesspeople....
● Who has ever had a problem with closed source programs?
● Who has turned in a problem report?● Who has gotten a good answer back?● Who has had to change their business?
Copyright 2008
Wall Street Loves Production Software
● High Profits, low investment● Few jobs, non-local● Production software is like printing
money– Who calls the treasury for assistance?– Who calls a farmer?
It is in “their” best interest.
Copyright 2008
80% of All Software Written...
...is NOT prepackaged, production software
● Systems Admin software● Embedded Systems Software● Manufacturing Software● Other
Copyright 2008
Software In 1977-1980
● Economies of scale made “shrink wrap” software possible
● Companies Started up– 100 engineers– 1000 customers– 2000 reports– 20/engineer
No problem!
Copyright 2008
It Is Now (Almost) 2009
150 engineers, 4.5 million customers● 9 million pieces of paper● 60000/engineer
See the problem?
Copyright 2008
Closed Source Functionality Gap
“What You Need vs What You Get”
● Unstable software● Late bug fixes● Not in your language● Does not support your hardware● Does not do what you want
Copyright 2008
1977 vs 2009
1977
● Expensive Hardware, Software
● Few computers
● Large training
● English Language mostly
● Small volume of gap
2009
● Cheap Hardware, Software
● Computers “Everywhere”
● Less training
● Many languages needed
● Large volume of gap
Copyright 2008
Volume of Gap
● 1977 - 5 USD of loss per day per computerized knowledge worker
● 2009 – 5 USD of loss per day per computerized knowledge worker
● Same rate, larger loss
This is bad today with only 1,000,000,000 computers
Copyright 2008
Total Cost of Ownership (TCO) vs Value
Don't be fooled!
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Most People Do Not Want Products
● Cars and Food● People want service● Making software do what people want
The “help is far away” problem
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Not the Functionality I Want...
....what the company thinks I want...
Copyright 2008
How Did We Get Here?
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I Was A Product Manager At Digital Equipment
Corporation
● 550 engineers● 650 product requirements● 50 of the top ones, 1-2 more further
down
Copyright 2008
Financing
● The average person in China makes about 3 USD a day– different financing for different economies
● Governments with long-term vision/funding are few, getting fewer
● Investment cycles getting shorter● Increasing value of Internet to business
one way of financing for everyone● Micro-financing – business for everyone
Copyright 2008
To Start A Business Today
● $$ in computer equipment● $$$$$$$ in computer software
– to say nothing of contract negotiations
● $$$$ in telephony equipment (PBX?)
Copyright 2008
Proprietary Software vs Software Livre
● Buy software and pull software from box
● Install software and try to get it to work
● Call support line and stay on hold
● Pull software from Internet (no royalty)
● Install software and try to get it to work
● Find source code on Internet, fix it yourself
Copyright 2008
Software Livre!
● Helps with Balance of Payments– Local jobs help local economy
● Allows you to start business with less up-front investment
● Allows you to change parts of software to meet your needs– bug fixes– particular enhancements
● Focuses your investment
Copyright 2008
Sustainability
● If it is not here tomorrow, it did not really get here today.
● Long term business plan, not “get rich quick”
● Re-evaluate ways of doing business● Make sure everyone makes money● Products as a managed service
– Remove complexity
Copyright 2008
Jobs● Programmer
● Systems Analyst
● Systems Administrator
● Product Manager
● Technical Marketing Manager
● Teaching
– Commercial– Public
● Consultant
● Integrator
Copyright 2008
Service
● Highly trained and skilled service– Like a brain surgeon– Like a lawyer
● Not just packaged product installers
Copyright 2008
May Not Have Electricity:Or A Different Value System
Copyright 2008
Open Certification.......Linux Professional
Institute● Certifies Linux Systems Administrators● Worldwide● Distribution Neutral● Vendor Neutral● Does not compete in training area● Non-profit● Advisory board
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Free Software Is A Business Enabler
● Your own language● Your own culture● No lawyers needed● Local advertising● Paid Free Software people
– Systems administrators– Internal programmers– government programmers
Copyright 2008
Co-Operatives“Single person...what can you do?”
● Bring together multiple people– Different expertise– Shared resources
● Legal● Administrative● Sales
● Legal entity– Longevity– Professional Insurance
Copyright 2008
Thanks● Koolu, Inc - www.koolu.com (Who pays
my salary)● IBM – who helps with sustaining funds● Linux New Media -
www.linuxpromagazine.com/pawprints● The Free and Open Source Software
Community● You
Copyright 2008
Questions?
