Matt Asay, the founder of the Open Source Business Conference, discusses his views on the conference and open source businesses and products. Matt works at Novell as director, Open Source Strategy. Prior to Novell, he worked with Lawrence Lessig at Stanford and subsequently at Lineo.

LinuxWorld Magazine: Why did you initiate the Open Source Business Conference (OSBC)?

Matt Asay: No one seemed to have an answer to the question: How to make money with open source? I set up the OSBC by working nights and weekends to try to bring together a group of smart people to discuss how to make money with open source. We started out primarily as a vendor conference discussing how to create strategies for viable businesses around open source.

LWM: When was the first conference?

MA: The first conference was in March 2004 in San Francisco. Now there are two events: OSBC West and OSBC East. The Western event has settled in San Francisco and so far the Eastern event is being held in the Boston area. We are considering one in Europe and maybe one in Japan. We brought in IDG to offload the logistical work so that we could focus on content. The OSBC has morphed into being more than just a vendor strategy conference. Last year we had a 5x increase in IT executives and quite a few CIOs. The CIOs like the show because the conference tries to maintain an objective stance to provide a forum where participants can openly argue issues. So we don't have a back and forth between Linux and Microsoft people.

LWM: Who attends, should attend OSBC?

MA: We have four tracks: venture capitalists and early stage startup folks who are given help in finding out where the good investments are; attorneys (they make up 15% of the attendees) who address the legal issues around open source; CIOs and other director-level and above people; and vendors - IHVs/ISVs. Over 80% of the attendees are director-level and above - decision makers.

LWM: What value do the participants who attend OSBC receive?

MA: We find that there is a lot of cross pollenization - attorneys attending business tracks and business people attending attorney tracks. Attendees can walk away with a good understanding of the legal issues and how to deal with them in and around open source. They will also understand the trends of open source, and the companies pushing these trends will be there to meet with people who have questions. For the first two OSBC events, many of the startups, now funded, were there still in stealth mode - startups such as EnterpriseDB and SpikeSource. Someone walking in can see what their peers are using for business models. There are frank, open discussions at the event where people talk freely about their business strategies. OSBC brings the open source community to the business community.

LWM: Are most attendees knowledgeable about open source?

MA: On average, people tend to be knowledgeable, but we get different classes of folks: attorneys, startups with people experienced in their industries, but who don't know much about open source - they come to learn about business models and meet the players; experienced people from HP, IBM, etc., and other people from vendors who are looking to get their feet wet attend as well. On the IT side, the buy side, attendees tend to be CIOs. We don't assume a deep level of understanding of open source from them. So the CIO track is pretty much the nuts and bolts of what are the trends, who's using it, how are they using it, and case studies.

LWM: How are open source companies going to fare over the next few years?

MA: There are some promising companies such as MySQL and JBoss. The business models are maturing and the companies are maturing. The dual license model seems to be working. The mixed source model works - SugarCRM, Novell, etc. The future for open source businesses is bright. Some view open source companies as just service and support business models that are low on innovation. This may have been true five years ago, but the more interesting companies that are being funded right now aren't support model companies.

My feeling is that there will be fewer companies following the model of generating revenue from support and service and more of the companies with hybrid models where they are mixing open source and proprietary codes. Alfresco (provider of content management) didn't start as an open source company, but what it found is that the big enterprise license sale is not going over very well with CIOs any more. They want subscription-type pricing, more intimacy with their vendors. They want something that works, and they want to spend as little time as possible worrying about their IT. It turns out that open source, versus closed source, is a very good way to reach their goals. Microsoft will thrive for several years with its integrated innovation policy of tightly integrating components. The downside of that is that unless you are willing to buy into Microsoft 100%, it's not a very good model. There will be loosely coupled business models of the world that will pull together open source products without having to buy into one infrastructure such as the Microsoft model. Many CIOs are pushing back on Microsoft because they want choice. I think that the future is very bright for open source.

LWM: The first wave of open source products were infrastructure based and the business application companies such as Zelerate, etc., failed. Are the open source business application companies set to succeed now?

MA: The first wave of successes was Linux and Apache. The next wave included databases and application servers. We are now in the third wave - the business application wave. Applications didn't work out before because they were still application projects struggling to make it on their own: whereas what we are seeing now in the third wave are companies launching projects, the influx of the company component - a company going out there and using open source as a distribution mechanism to lower marketing and sales costs.

Linux and Apache were driven, at least initially, by the community. Companies such as JBoss and MySQL are driven less by the open source community. For example, MySQL does 90-95% of its own development. It employs the engineers who do most of the development. They get language packages, bug fixes, etc., from the outside. But what they get most from open source is distribution - 10 million downloads, some of which come back and buy support. JBoss does about 85% of its development and the rest comes from open source. MySQL and JBoss were never truly open source projects. I'm not sure that there are "true" open source projects out there, at least not the big successful ones. There has always been a heavy corporate component to them - certainly to the extent that they became relevant to the enterprise. We had some angst about it for a year or two, but now we realize that it is okay for companies to be profiting from open source. It's great when SugarCRM releases valuable code into the open source community. Now that the perception of capitalism in open source has softened, we see the third wave of business applications, ripe for development, and it will be companies doing it more than the open source projects doing it.

LWM: Do you see companies that claim to be developing only an open source stack being able to make it long term?

MA: I don't know. I don't think that CIOs really care. They buy open source because it is less expensive; they have a large choice of hardware; and it lowers the barrier of trust that they have to have with their vendor because they don't have to count on the vendor being benevolent or around forever. In addition, they have access to the source code. I'm not sure that any CIO buys open source just because it's open source. CIOs want flexibility, choice, etc. The companies that have an open source-only stack may struggle over time, struggle internally to develop the best software out there, struggle to build it all themselves purely on open source because they don't believe in some of the other models.

LWM: Linux versus Microsoft?

MA: For the next few years, UNIX will be migrated to Linux. Eventually Linux and Microsoft will become engaged in a massive battle after boiling beneath the surface for a few years. At some point, CIOs will have to decide who they want to control their data centers. Some will say, I don't want to be bothered with it, and they'll let Microsoft have control. The other half of the world will say, we want to control our data centers; we are willing to invest the time and open source is maturing.

I think the eventual split will be about 50-50. I tend to think that the people who buy into Microsoft will feel increasingly frustrated and as long as the open source side does its job well and makes it easy to deploy a Linux data center, Linux will keep taking a healthy share of the business. It's up to the Linux/open source side not to screw up. We tend to think, on the open source side, that we can do no wrong. Microsoft does some things very well. They make computing much easier for the average person and, at the end of the day, most of us are average people. Linux has to get out of its development shell, where developers are writing code for other developers. We are well along this path, but we need to do better. I think that the data center will eventually be won by Linux, but it will require something like bringing down the bar on the skill set required to make that happen. We are going in that direction.