Eric Raymond on the VA Linux Change of CourseJun 28, 2001, 15:43 (24 Talkback[s])
(Other stories by Michael Hall)
Editor's Note: A few hours after the news broke regarding VA Linux's decision to leave the hardware business in favor of concentrating on its SourceForge OnSite software and its OSDN web properties, we wrote Eric Raymond with a few questions. Mr. Raymond, in addition to being a "noted open source evangelist," also sits on the VA Linux Board of Directors, so we were able to get his take not only on the immediate picture from the ground but the broader picture of just what VA Linux's decision means for Linux and open source software in general. We also asked a question or two about yesterday's other big story: Microsoft's decision to support FreeBSD in its .NET initiative.
Mr. Raymond couldn't answer a few of our questions without making forward-looking statements... something he's constrained from doing as an officer of VA Linux.
LT: What does this mean about Linux-oriented hardware specialists? Penguin Computing is still in place while a couple of smaller and more specialized operations have either not made announcements recently enough to indicate that they're really still in business or simply dropped out altogether. Will the industry ever need a Linux hardware specialist? Does VA Linux's inability to succeed in this area represent uptake of Linux by the real giants (Compaq, IBM, and Dell) on a scale that precludes the need for Linux "pure-plays"?
ESR: The world used to need Linux hardware specialists, but times have changed. In 1998 stuff like server-ready SMP motherboards was still exotic hardware and Linux was still novel; having expertise in either was unusual and being able to sell the combination was an attractive business, especially with an Internet buildout in full roar.
But a funny thing happened on the way to the bank. Linux succeeded too well, and attracted too much money. VA helped that happen; it built damn fine hardware, it subsidized a lot of open-source projects, sponsored a lot of shows, and did marketing into places the Linux community never reached before. I'm proud to be associated with the company that did those things. We're glad we helped make Linux a thumping success.
But the result of that success was that established companies with a lot more financial mass started hunting the same customers VA was after -- offering Linux on their boxes and cultivating the community in the same way VA did. VA's hardware business got increasingly squeezed between the likes of IBM and Dell on one hand, and lots of tiny screwdriver shops on the other.
Even with that problem, I think VA's original business plan might have gotten it to profitability on schedule. While the technology boom was still booming, there was enough demand to go around for everyone -- and the dot-coms, mostly run by bright young people who liked Linux, loved VA.
In fact, the dot-coms very nearly loved VA to death. When the bubble popped, a big chunk of VA's customer list evaporated. The company tried to refocus on selling hardware to larger customers, and probably would have succeeded given time. But lots of time is a luxury you don't get when you're spending VC money -- and especially not when the whole economy has gone into something very like recession.
VA's customer base outside the dot-coms is pretty loyal, too -- it's a company people feel good about doing business with. Given another nine months of economic boom, I think the company might well have grown enough to make the hardware business work even in spite of margin erosion and the competition.
Instead, VA's hardware business got double-whammied, once by the side effects of Linux's success and then by the macroeconomic bust. It's really sad. We had the people, we had the drive, we had a lot of good karma. We just didn't get the time.
LT: On a broader level, what does this mean for Linux in general? A couple of years ago, it seemed as if the question many were asking wasn't so much whether Linux and open source software could get a piece of the pie: people seemed more convinced that there was a whole new pie to be carved up. Now there's been some culling and attrition, and companies are either specializing in order to cater to the needs of larger companies (like SuSE working so closely with IBM on high-end computing) or they're diversifying (Red Hat making big moves in embedded computing while introducing new services offerings and a database product). In other words, it seems as if we've returned to a sense that there's really only one pie after all, and that the Linux market has a constrained piece of that pie. How much of the contraction we're seeing in Linux companies is a result of broader economic forces, and how much is a cooling of enthusiasm over Linux?
ESR: To quote some politician or other, "It's the economy, stupid." :-)
Don't take that personally, because you're asking an intelligent question that doesn't have a simple answer. Yes, I think there has been some cooling of the initial enthusiasm for Linux -- Wall Street's trendoids are notoriously fickle that way, always looking for the next buzzword.
But I think that has only been a minor factor in the recent troubles at VA and elsewhere. All the market surveys and projections still show Linux as a technology doing extremely well against its competition. The trouble is that capital spending is in collapse, hardware is commoditizing, and it's getting increasingly hard to find decent profit margins anywhere you turn. It's tough all over, and Linux companies aren't the only or the worst affected.
In a macroeconomic rainstorm like this, the best you can do is hunker down, minimize the burn rate, work on getting the close-to-profitable bits of the business really profitable, and hope the sun comes out soon. That's what VA is doing. We want to be there for our stockholders and stakeholders, with our skills still sharp and our commitment to open source still powerful, when the next expansion begins.
LT: On a related note, aren't the same forces that caused VA Linux to find itself in trouble on the hardware side similarly arrayed against it on the web content side? While no one's going to buy into a "ZD-Dot" or a "Fresh|Net," aren't the same risks of widespread acceptance present -- the risk that a larger, better established player will just say "we're going to cover Linux and open source computing in general as another piece of the industry puzzle" and simply keep their existing reader base intact by saying, effectively, "we know you're interested in this 'new' technology, and we're covering it with n reporters?"
ESR: I'm not sure I ought to answer this one. Backing off from VA's business position a bit, I'll just observe that it's a lot harder to corral Web audiences than it is to boost hardware market share. Financial mass doesn't help in the same way; you can't buy audience share by lowering the margin you'll accept. Once a web community like eBay or Slashdot has reached a certain critical size, it's hard to lure people away from it to a competing service that's technically equivalent because most of the value to them is in *that particular community's* traditions and its trust network.
LT:And here's a tangential question:
In addition to VA Linux's announcement, there was an interview on O'Reilly's new .NET site with a Microsoft manager regarding the fact that FreeBSD is a sort of "approved platform" for .NET -- that the company doesn't have a beef with open source software provided it isn't GPL'd. On the same day, there's a report that for at least the Visual Studio .NET betas, Linux is a target platform we may see a .NET runtime produced for. Miguel de Icaza of GNOME has reportedly called .NET "best of breed" and programs in C#. What do you make of all this? Should open source developers be looking at .NET? Is Microsoft's "stamp of approval" for a BSD and BSD licensing sincere or is it an attempt to frame Linux out of the picture under the pretense of licensing issues?
ESR: I'm sure Microsoft's stamp of approval for BSD is very sincere, and I'm also sure it's an attempt to frame Linux out of the picture. The Windows TCP/IP stack is built around BSD code; from Microsoft's point of view, the BSD crowd are a bunch of suckers begging to be exploited again and again. I'm certain Microsoft would love for the entire open-source world to turn into an acquiescent source of free R&D for its monopoly.
That may sound like I'm lining up with those who think the GPL is the open-source world's only defense against being co-opted by greedy monopolists. But actually I think that both Microsoft and the GPL zealots underestimate how powerful and how subversive open-source development truly is. It's a profoundly disruptive technology, much better matched to a world of commodity hardware and cheap communications than the proprietary closed-source way.
Oddly enough the people who seem to grok what this means most fully aren't techies but economists, people like Clayton Christensen (author of "The Innovator's Dilemma") and Dan Shapiro and Hal Varian (authors of "Information Rules"). What they get is that the whole proprietary-software industry is probably a transient phenomenon supported by high hardware profit margins. It's had thirty good years, but the combination of open-source development and Moore's law probably won't allow it many more. If this is true, the BSD way would be the doom of Microsoft just as surely as Linux; it just might take a little longer and involve less overt confrontation.
As for looking at .NET? Sure, we should be looking at it -- the same way the Samba guys look at SMB file shares. C# is a weak language design, a sort of pale imitation Java. But that just makes it easier to co-opt.