The NOSE

Linux Inc.

This week's Business Week profiles Linux and its founder:  "Linus Torvalds once led a ragtag band of software geeks. Not anymore. Here's an inside look at how the unusual Linux business model increasingly threatens Microsoft."
This is a good article on open source for several reasons.

First, it emphasizes open source as a method of developing software rather than licenses or "free" software. "Indeed, Linux Inc. has emerged as a model for collaborating in a new way on software development, which could have reverberations throughout the business world. Its essence is captured in one of the mottoes of the open-source world: Give a little, take a lot. In a business environment where efficiency rules, that's a potent formula -- maybe even strong enough to knock mighty Microsoft down a peg."

Second, it describes how at a crucial phase of the project five years ago Linus Torvald had to change his management style:  "The crisis came to a head during a tense meeting at McVoy's house, on San Francisco's Twin Peaks. A handful of Linux' top contributors took turns urging Torvalds to change. After an awkward dinner of quiche and croissants, they sat on the living room floor and hashed things out. Four hours later, Torvalds relented. He agreed to delegate more and use a software program for automating the handling of code. When the program was ready in 2002, Torvalds was able to process contributions five times as fast as he had in the past."

Third, although Linux Inc. is not a company, the project is managed professionally with a high degree of coordination: "Little understood by the outside world, the community of Linux programmers has evolved in recent years into something much more mature, organized, and efficient. Put bluntly, Linux has turned pro.

curiosity and leadership

If you inhabit Boston or New England, you are likely to have heard of Bill Belichick: the great football coach of the New England Patriots. Here is how Tucker Ingraham, a long-time friend of Belichick, describes him:

"Perhaps his most unheralded virtue, but one that explains plenty to me, is his innate curiosity," Ingraham wrote in an e-mail message. "Bill wants to know what makes things tick, and when applied to his passion for football, this extends to every facet of the game: 'What makes this blitz work? How do you counter this blitz? How can you disguise this blitz? How can we vary this blitz? Who can I call tonight to talk blitzes with?'

"You get the picture," Ingraham added. "No stone goes unturned because his curiosity drives him to learn everything he can, which he then absorbs, thinks about, mixes into the boiling pot with the other ingredients and ultimately prepares to dish out on some poor unsuspecting sap. It's been said that he's not Mr. X's and O's, but rather Mr. A to Z, the complete package. I believe that his curiosity has been the catalyst in bringing all this together. Not unlike some other accomplished gents throughout history!" (NYTimes, George Vecsey, January 30, 2005)

the big blue bang

IBM's announcement today (let's call it the "Big Blue Bang") that it will place 500 technology patents in the "commons" is bold and far reaching. This step will undoubtedly help the open source movement, but more importantly will spur innovation across the board in the IT industry. The timing of IBM's announcement could not be more welcome. The concept of "patent commons", which underlies IBM's strategy here, sets the intellectual property debate on its head. At a time, when the entertainment industry, companies like Microsoft, and even many Universities--- who should know better---continue to promulgate a narrow and extreme view of intellectual property, IBM has redefined in one fell swoop the terms of the debate.

Why would anyone give away its intellectual property, especially to its potential competitors? IBM is banking on the time-tested notion that true innovation, especially across an industry, depends on both competition and cooperation. It's in my interest to share if  we can grow the pie together for the whole industry while also creating a richer ecology for new products and services.

IBM's Big Blue Bang also aids the open source movement by launching a pre-emptive strike in the looming patent wars. It's a small first step, but it points us in the right direction.

identity and social networking

What is identity anyway? Cogito ergo sum. It can be argued--- with some justification--- that Descartes had a very thin notion of identity. There is a new social networking web site worth checking out. 43 things is based on the concept that what we are, in a deep sense, is based on our goals and activities, a truly Hegelian insight. The site connects you with people who share the same goals.

We are seeing a thousand flowers booming in the social networking space and 43 things is worth checking out. George Doriot, one of the pioneers of venture capital, observed that the beginnings of companies and people tend to be the same: filled with "hope, measles, failures, mumps, reorganisations, scarlet fever, executive troubles". We will see the same in the social networking space. Check out 43 things: it's a very cute child.

Via Commoncraft and Kathleen Gilroy.

Does a Cheap Macintosh Desktop Make Sense?

Does a cheap Macintosh desktop make business sense? 

Given IBM's retreat from the commodity hardware business, one would think not. But consider the following questions posed by Jonathan Schwarz in "Making Sense of IBM's Departure from the PC Industry - and Network Economics" :  " How much did your cellphone cost you? What's the average price of a handset? What's the average operating margin for a carrier's handset business?"

Schwarz makes the point that the value proposition for the carriers is in their subscription business and they are willing to subsidize the handset accordingly. The same point can be made about satellite dish and cable top box subsidies by satellite service providers and cable companies. In short, "the spot margin is less interesting than the number of subs, ARPU, churn - and longer term EBITDA. Terms the PC industry will learn to respect, it's inevitable."

So, if Apple decides to get into the low end PC business it will not be because they see an opening to sell more Macintoshes. That's not the point. As Schwarz predicts: "So what's happening to the PC industry? It's moving from the old world, in which one buys a PC and cares a great deal about its comparitive (sic) hardware features (does it have a DVD player?), to one in which the hardware is nearly identical, and the value's moved to services available through the device. Over the network." With a cheap Macintosh desktop Apple might be poised to create and deliver an exciting mix of entertainment, productivity, and education services using the Macintosh as just another a "handset."