Marius Moscovici
In the new economy, it’s not the code that matters — it’s how you use it to connect people to things they need. From 3D printers to Docker, open-source-based innovation is fueling some of the hottest digital capabilities of our time.
Finally — the golden age of open source has arrived.
Companies 20 years ago built monopolies on licensed software; today, free and open–source code fertilizes economic growth. The way to win at tech is no longer to own code, but to serve customers — and service has open source at its roots.
Like cloud storage and hardware components, coding languages hold little value by themselves anymore. The services around the code are what differentiate commodity companies from those with market value in the billions. Tesla released all of its patents to the public in 2014, jump-starting a new ecosystem of electric vehicles without threatening its own dominance.
Facebook’s entire data-center architecture is available via Open Compute, and its Apache Cassandra, released into the wild, has become a cornerstone of many an enterprise database. And that didn’t stop the social giant from reporting $12.46 billion in revenue last year.
Companies aiming to win in the new marketplace must either build or buy their way into a thriving open-source-driven service — or risk falling too far behind.
It’s not just about free updates, cheap compute capacity and efficient production. It’s about positioning yourself in an economy where the ownership model has fundamentally shifted, and becoming the go-to service in a world that values sharing.
The Golden Age Of Open Source
When the notoriously proprietary Apple announced in June that the company will open source the next version of its programming language, Swift, it became apparent that the wonders of open-source technology are no longer optional, even for the world’s top companies. The move by Apple had people buzzing, because it was a powerful acknowledgement that the app ecosystem has diversified to the point that forcing a language to specific platforms no longer makes sense.
There are plenty of other recently created open–source programming languages that are fighting to rise to the top — Google open sourced its Go language, Mozilla released its language Rust and Facebook is experimenting with Hack and D. Even Microsoft took early steps in the open source world last year when it decided to open source its .NET platform, giving developers the go-ahead to create outside the Windows ecosystem.
The collective unlocking of coding doorways opens opportunities to take advantage of data and compute capacity in new ways. This has birthed a rash of startups, and also forces enterprises to change their success strategies, whether they feel ready to or not.
Business In The New Economy
The economic value of open source lies in its ability to help businesses understand, empower and serve their end users. Uber, which has Python, Node.js and other open–source systems on the back end, harnesses the connected economy to put the entire taxi industry on edge. Red Hat gives away all of its code, and generates value with a suite of specialized enterprise services and partnerships.
Using commodity code to create high-value connections, intelligence and, above all, services is how the new generation of companies wins.
On-demand services like Amazon and Netflix have changed consumer behavior to the point that users expect high levels of service from everyone — and open source is the secret sauce behind getting to know consumers. It’s too expensive to use a proprietary system to collect, store and access enough data to accurately delineate customer archetypes or paths to purchase.
Open-source tools are cheaper, faster and more powerful, and they let companies apply data in unheard-of ways. The new batch of data-driven services will force mass production into a niche. Five years from now, customers will order and receive products and services anywhere. Company workers will change their activities to align with the company data feed.
It’s easy to build a startup around these new realities, but steering an entire corporation on a new heading is a different matter. Smart companies, however, are already adapting.
Keeping Up With The Open–Source Jones
Big enterprises, which by their nature cannot move as quickly as startups, are playing catchup in the form of mergers, acquisitions and partnerships. Corporate investment in startups is at an all-time high.
There’s a special technique to integrating an open–source player. Like MacDonald’s former ownership of Chipotle, the approach is to stay hands-off so as not to dilute the purity of the brand. Microsoft acquired Revolution Analytics earlier this year, but the smaller company assured customers it will continue to support and develop the Revolution R products, including on non-Windows platforms.
The partnership between IBM and Spark, to name another, “represents a potential competitive threat to San Francisco startup Databricks,” whose main commercial product is a cloud service that runs on top of the Amazon Web Services public cloud. But Big Blue remains a remote benefactor, quietly supporting Spark and many other startups that have built their software on top of it.
A New Form Of Ownership
Amazon owns the service that lets users instantly view, investigate and select products. Uber owns the service that connects people immediately needing a ride to cars that will take them to their destination. What service does your business own, and who and what does it connect? Therein lies the secret to monetization, and ultimately long-term success.
And it can only be done effectively with open-source software.
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