by Bryan Kirschner on June 04, 2007 03:28pm

OSBC made me think. There were some simple highlights (like introducing myself and being recognzied as “a Port 25 blogger”…my 1.5 minutes of fame).  And certainly a lowlight was the concern many people expressed around whether Microsoft’s open source strategy has changed (no, it hasn’t, another reason why going to OSBC and having those conversations is important).

But what really started me thinking was the experience of being at the Microsoft Open Source ISV Forum held the day before.  Simply and accurately described as an event specifically tailored to open source companies on “How to be profitable on the Microsoft platform,” it was attended by—I don’t have the exact count handy—folks from give or take 50 companies.  They represented an incredibly diverse set of approaches to building a business (and cultivating a community) around open source.  Fast forward later during OSBC to a long presentation Eben Moglen gave called “Copyleft Business Models: Why it’s Good Not to Be Your Competitor’s Free Lunch.” 

These two things drew a broad connection:   many different parties, each, in their own ways, “trying to balance being a good community citizen with getting paid” (appropriately enough, a quote from OSBC’s founder Matt Asay)—whether your pay is a financial transaction or non-financial contribution.

The companies who came to the Forum literally did get a free lunch—but there’s a more important point.  Microsoft’s business strategy, overall, not specific to open source, is to be generative:  with 750,000 partners (including ISVs, OEMs, systems integrators and consultants and so on), 96% of Microsoft’s revenue is indirect (meaning somebody among those 750,000 partners gets paid before Microsoft does). 

Harvard’s Jonathan Zittrain described the concept I am borrowing-- Zittrain describes “generative” this way (emphasis added):

The much-touted differences between free and proprietary PC Oss may not capture what is most important to the Internet’s future. Proprietary systems can remain “open,” as many do, by permitting unaffiliated third parties to write superseding programs and permitting PC owners to install these programs without requiring any gatekeeping by the OS provider. In this sense, debates about the future of our PC experience should focus less on such common battles as Linux versus Microsoft Windows, as both are “open” under this definition, and more on generative versus nongenerative: understanding which platforms will remain open to third-party innovation and which will not.

Sometimes this means what you can see (free as in open code - simple example WIX), sometimes what you can do (free as in beer SDKs).  But this commitment (or, you could even say, dependency on) generativity means there is a risk of serving a competitor more than a literal free lunch: partner programs like the one offered at the Forum are set up so any ISV who meets the requirements can get business and technical assistance from Microsoft.  Whether or not your business is built around software that competes with Microsoft products isn’t a criterion: from Oracle to SugarCRM ISVs that partner with Microsoft to build applications on Windows also compete with other Microsoft products.   Nor is what type of development, business model, or licensing approach you have chosen.  You really can’t have the benefits of being “generative” without accepting these conditions. Conversely, you obviously can be generative while competing to some degree with those same partners, whether with SQL Server or Dynamics.

This is really a point I wish I could go back to every person from an open-source based company I talked to about “Microsoft’s open source strategy” and re-reemphasize.  From an ISV or partner you’re an “equal citizen” as a potential partner.  That commitment (or dependency on) generativity is one that predates the popularity of open source in the broad market and remains a core component of Microsoft’s business success.

That’s “business as usual” as well.

(I would be remiss if I did not mention the Forum without thanking our speakers:  Stephen O’Grady from Redmonk; Andrew Aitken from  Olliance;  John Roberts from  Sugar CRM; and Marc Lind from  Aras.  In addition, the awesome VC Panel members were informative & thought provoking : Larry Augustin, Peter Sonsini, Philippe Cases, Nicolas Kardas, Kim Polese. Thanks all for a great day.)