A couple of weeks ago, Microsoft Azure CTO Mark Russinovich wouldn't rule out the notion that Windows might go open source. In fact, he said it was “definitely possible.”
While the idea might seem laughable, now would be the perfect time for Microsoft to open-source Windows. After all, whether Windows is open source or proprietary no longer matters. With so much of our lives moving to the cloud, who cares?
In fact, were Microsoft to open-source Windows, it could prove to be an exceptionally rational way to drive more business to its cloud services.
Billions of reasons to stay closed
Let’s be clear: Microsoft has been actively contributing to open source communities for years. Within Redmond, open source isn’t new. It’s routine.
Sure, that wasn’t always the case (cue the “open source is a cancer” walk down memory lane). But as Microsoft learned that the lifeblood of successful software -- developers -- demanded source code, it complied in a big way.
Most recently Microsoft open-sourced .Net, a major coup within the company, if insufficient to move the industry. The .Net action is the culmination of a long shift toward more openness, started under Steve Ballmer but accelerated under Satya Nadella.
Yet Microsoft has shown no interest in open-sourcing Windows or Office, its two big cash cows. Why would it? Its financial foundation rests on these profit machines. Even making Office run on open source Linux has been verboten within the company.
While Microsoft has been open to open source, it has been selective about how it's applied. As such, the company has been willing to open-source complements to proprietary products, but decidedly closed on open-sourcing core revenue generators.
Until now ... maybe.
The money’s in the cloud
By acknowledging the possibility of open source Windows, Russinovich said far more about software value than about changing feelings regarding intellectual property within Microsoft.
One of the primary reasons developers flocked to open source: It improved agility while lowering costs. But now those same benefits are delivered even better by the cloud, as RedMonk analyst Stephen O’Grady highlights:
[F]rom a convenience standpoint, open source does not enjoy the same advantages over its [cloud] services counterparts that it did over proprietary competitors. Open source is typically less convenient than service-based alternatives, in fact. If it’s easier to download and spin up an open source database than talk to a salesperson, it’s even easier to download nothing at all and make setup, operation and backup of that database someone else’s problem.
This has led to the broad, accelerating adoption of cloud services by developers and the companies that employ them. Amazon Web Services is already a multi-billion-dollar business and Microsoft Azure is starting to catch up.
But it’s not only public IaaS that's minting money for vendors. Indeed, SaaS companies such as Salesforce and Workday are making even more. No matter which forecast you choose, the cloud is gargantuan -- and growing.
Which makes it comparatively easy to justify open-sourcing Windows, right at the point when it no longer promises to persist as a cash cow.
The new lock-in
Think about Microsoft's strategy up until now: open-sourcing complements to proprietary products. But today, the client is merely a complement to drive more cloud services, which is where the money is going forward.
Why? Because that’s where the new lock-in resides, as O’Grady declares:
[V]endors...have not forgotten one of the primary lessons of the proprietary software market: locking in customers is good for business. As Shapiro and Varian put it 1999, “the profits you can earn from a customer – on a going-forward, present-value basis – exactly equal the total switching costs” (emphasis theirs). Put another way, then, the more it costs to switch, the more profits it is possible in theory to extract.
It turns out switching costs in the cloud are equal to or greater than what they were in the on-premise era. Once I build my app on AWS or, more poignantly, dump my corporate data into Salesforce, the likelihood that I’m going to be able to easily switch is less than zero.
The cloud, in short, is sticky.
It's also profitable. Ever wonder why Google is so keen to give away Android? Not because it’s generous and good, but because it collects advertising cash from Internet users. The more people with a smartphone, the more Google’s top line swells. The core is the advertising business; Android is a complement.
In like manner, Microsoft has been open-sourcing .Net and other development tools because this drives more adoption of its proprietary products like SQL Server. In like manner, open-sourcing Windows may end up driving more adoption of Office 365, Azure, or other cloud services.
This is not to suggest that Microsoft is being duplicitous in how it approaches open source. Rather, it’s merely to say that Microsoft is finally, consistently being rational in its approach to open source.
After all, it has always been the case that open-sourcing a company’s complements was good for business. The problem for most so-called open source vendors is that the core and complements are the same, so they end up open-sourcing away their ability to sell anything. Microsoft has simply caught up with the state of the art for building 21st-century software businesses -- and is making the cloud the core.