Red Hat: Open source benefits from U.S. unpopularity

Foreign countries do not want to pay U.S. 'IP taxes,' Red Hat President/CEO Jim Whitehurst says

The unpopularity of the United States has IT users in foreign countries happy to use open-source software, Red Hat President/CEO Jim Whitehurst said at the InfoWorld Open Source Business Conference in San Francisco on Tuesday.

This way, they do not have to pay "intellectual property taxes" to American companies, he said. Outside the United States, open source is seen from a public policy perspective as a fundamental good, Whitehurst said.

"I never thought I would say this but actually, being very unpopular in the world, as frankly the U.S. is these days, is a huge benefit to open source," because people are resentful of sending billions of dollars back to the U.S. in IP taxes, Whitehurst said. They also do not want to pay it to Western Europe, he said.

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Whitehurst said he has met with government officials in countries like Russia and China. Moving to a model not shackled by U.S. IP laws is extraordinary, he said.

But an audience member asked if Red Hat, when meeting with officials in countries not wanting to pay American companies, urges them to follow the GNU GPL (General Public License) and share code. "There is a ton of GPL violations going on," the audience member said.

Whitehurst responded he did not see some deep conspiracy over this issue but stressed the relative newness of the problem. "Absolutely it's an issue we need to watch and to manage," he said.

Whitehurst also discussed Red Hat's business model, which relies on subscriptions and support. "Fundamentally, our business model is to create enterprise editions of open source projects," he said. "We have created an enterprise version of Linux that you can sleep on [at] night knowing that it does not go down," he said. Open source also means having to work every day to keep customers happy, Whitehurst said.

More needs to be done to get enterprises involved in the open-source community, Whitehurst said. "We do a lousy job of getting enterprises involved in the community," he said.

Whitehurst said Red Hat has an 80-plus percent share in Linux with a little more than $500 million in revenues. "The dollars in open source relative to what we do are relatively small," he said.

Also at the conference Tuesday, officials from several open-source ventures, serving on a panel about the future of open source, contended that a turbulent economy was good for open source.

"I do think it's going to be good," said Roger Burkhardt, president and CEO of Ingres. "The question is when will the benefits come."

But resulting IT staff layoffs during economic downtimes means fewer people are able to start an incremental project, he said. MySQL's Zack Urlocker, vice president of products, countered that project teams without a budget will just find open-source software to get their projects going. "Sometimes the CIOs or CEOs just aren't even aware of it," he said.

Belt-tightening will be good for innovation and particularly for open source, said Mark Shuttleworth, founder of Ubuntu. "I think the absence of money is the biggest spur to innovation than the presence of money," he said. 

Open-source attributes were pointed out, such as lower acquisition and maintenance costs, freedom from vendor lock-in, and access to community developed customizations. The use of open source is becoming a first option, according to Shuttleworth. "I think we're pretty close to the point where proprietary software has to be justified instead of the other way around," he said.

During an introduction to the conference, Matt Asay, vice president of development at at Alfresco, pointed out that roughly $2 billion has been invested in open-source software since 2000 and in one year, it has all been given back through acquisitions like Sun's $1 billion acquisition of MySQL.

Open source has moved beyond CRM and content management systems, Assay said. "Can open source innovate? I think the answer is demonstrably yes," he said.

At another panel session the future of the operating system, Google's computing model, in which everything is hosted on the Internet and accessed via a thin-client browser, was questioned by an Intel official

"The Google model really scares me," said Dirk Hohndel, chief Linux and open-source technologist at Intel. The model gives a third party control of data, which cannot be accessed on an airplane, he noted.

Sun's James Hughes, chief technologist for Solaris, said very large companies are looking at outsourcing their applications to Google but he has not seen it actually happen. "I don’t see anybody doing it, but maybe they will," he said.

Hughes also pointed out differences between Solaris and Linux, which are vying in the open source OS space. "There's than one OS out there, and if Solaris strives to be Linux, why bother," Hughes said. Solaris is differentiated by features like DTrace, for dynamic tracing, he said.

"In general, I don’t see it as Unix versus Linux versus whatever. We've gone to a model of open source," Hughes said. Solaris, though, has had a challenge because it underwent 20 years of closed-source development before going the open-source route, he said.

Copyright © 2008 IDG Communications, Inc.

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