Not just a barking dog: Open-source developers grow to embrace software as a service

The open-source movement has a history that captures both its community spirit and renegade impact. Sometimes, that history even involves a yapping animal.

In Linux, the “biff” command notifies users when mail arrives and identifies the deliverer. Was “biff” a cleverly conceived acronym for a remarkably sophisticated programming language?

No. It was named after a dog owned by the developer of Berkeley Software Distribution or BSD, a Unix-similar operating system built in the 1970s. Biff used to run out and bark every time the mailman showed up.

Open-source code has moved way beyond its early days as a barking dog in the computer world. Today, open-source companies are commanding huge multiples on Wall Street and major players are opening wallets, as evidenced by IBM Corp.’s purchase of Red Hat Inc. in October for $34 billion.

“I would argue that open source has gone from fringe to the epicenter of all software development today,” said Peter Levine, general partner at the venture capital firm Andreessen Horowitz, who cowrote an extensive blog post on open source with Jennifer Li published Friday. Speaking during a presentation in San Francisco on Thursday evening (below), he added, “The market is far bigger than we have realized or yet created. As software eats the world, open source eats software.”

No repeat of Red Hat

In 2014, Levine published an analysis of the open-source world in which he predicted that there would never be another Red Hat. He based his prediction on a demise of the very thing that made Red Hat and much of open-source successful: giving away the software for free and charging for installation and support.

Image: Andreessen Horowitz

Image: Andreessen Horowitz

The problem Levine foresaw was that large, well-capitalized companies would co-opt the code base as more open-source projects became successful. The better way was to package and sell open-source software as a service — in other words, follow the software-as-a-service movement. It was small five years ago, but could turn out to be a major force in the industry.

Levine’s analysis turned out to be quite prophetic. SaaS spending will hit $100 billion by the end of 2019 and is growing at more than 30% per year.

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“Skip on-prem,” Armon Dadgar, co-founder and chief technology officer of open-source tool provider HashiCorp, said during a panel discussion on Thursday that followed Levine’s remarks. “Go straight to SaaS and save yourself.”

Open-source pivot

Behind Dadgar’s comment is a hint of the friction that exists in the startup open-source community today. Survival depends on a successful SaaS strategy because when it comes to open-source deployment, the big companies are moving in.

From left, Das Rush of Andreessen Horowitz, Peter Levine of Andreessen Horowitz, Armon Dadgar of HashiCorp and Ali Ghodsi of Databricks. (Photo: Grace Ellis/Andreessen Horowitz)

From left, Das Rush of Andreessen Horowitz, Peter Levine of Andreessen Horowitz, Armon Dadgar of HashiCorp and Ali Ghodsi of Databricks. (Photo: Grace Ellis/Andreessen Horowitz)

That has forced many open-source entrepreneurs to pivot from a model such as the one successfully leveraged by Red Hat to an approach where they must read the needs of the market and build a viable business around how enterprise developers actually use the free software.

That was the path followed by Databricks Inc., a company founded in 2013 by the original creators of Apache Spark. Today, Databricks provides a Unified Analytics Platform powered by Spark that helps enterprise teams build data products.

“Everyone was adopting Spark and established vendors were taking credit for the product,” said Ali Ghodsi, co-founder and chief executive officer of Databricks, who spoke at the panel discussion. “We started building all of the other things that they needed to have a managed solution for enterprises.”

Dance with cloud providers

The other reality that has rubbed some open-source developers the wrong way involved the power and influence of major public cloud providers. Much of today’s cloud runs on open-source software and providers of those tools are dependent on the cloud to monetize their products.

Some leaders of the open-source movement have been critical of public cloud providers for exercising control in the mass market using software someone else wrote. Yet, as co-founders such as Ghodsi are quick to point out, running a cloud service can be complicated and time-consuming and demands specialized skills. Open-source firms are not eager to become cloud providers too.

“It’s actually extremely hard to offer a cloud service,” Ghodsi said. “Maybe the cloud vendors are better than us at hosting our open-source software? It’s just that you suck at running cloud services.”

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Competing software products

The next year is shaping up to offer a delicate dance among major tech behemoths, the developers those big firms covet and the innovation engine that is open-source software. A hint of how this might play out can be seen in one of GitHub’s largest open-source projects: Microsoft Visual Studio Code.

In the Integrated Development Environment or IDE, a competing open-source product called Eclipse was available from the Eclipse Foundation. Microsoft released its own IDE into the open market to draw users for its growing development platform. Microsoft eventually will benefit through building on the integration of its Visual Studio tool with its other key platforms like Azure Cloud, if it can do so without antagonizing either developers or the open-source community at large.

Ultimately, the current path still leads the open-source community back to SaaS. And from there, it’s anybody’s guess.

“What is the next real business innovation in open-source?” asked Andreessen Horowitz’s Levine. “I don’t know exactly what that is. At some point SaaS will look like Red Hat and there will be this next generation of innovation on the business side.”

Image: mohamed_hassan/Pixabay

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