Microsoft: Open source not cheaper

By selling software through the traditional commercial model, Microsoft has been seen in some circles as the odd man out when it comes to the popular open source movement. But the company argues that it has a place in the open source model and that open source does not necessarily mean less expensive than Windows. At the recent Open Source Business Conference, Paul Krill met with Jason Matusow, manager of Microsoft's Shared Source Initiative program, to discuss Shared Source, Linux, and Windows.

Q: Please describe Microsoft's Shared Source program and its relation to open source and give some examples of code made available through it.

Matusow: We provide Windows 2000, Windows XP, Server 2003, all versions, all service packs, all betas (through our Shared Source program). This isn't just a few lines of code, this is well over 100 million lines of software. It's arguably the largest source-sharing in the industry today, just by sheer volume. Some people would say, "Well, that's because the software is too big." But our software deals with things like backward compatibility and the growth of technology over time. And there are a lot of arguments you can put in that vein, but let's not digress. This is a reference grant; you can look at the code but you cannot modify it. It is not an open source license, it's a Shared Source license. And the idea here is that people have the source code.

Q: When you say reference grant, do you mean they're not paying for this?

Matusow: No, they don't pay us a cent for this. They have existing support contracts and services and they've paid for the software in a binary form. But there's no fee associated with this. We've been doing Shared Source for three years, since May of 2001.

Q: You mentioned during your presentation how very few people want to modify source code.

Matusow: If you were to go and interview Linux users, very, very few are ever looking at the source code, never mind trying to modify it.

Q: Do you see open source as a revolt against Microsoft?

Matusow: No. I think open source is a development model that is a good way to write software and there have been very interesting technologies that have come of it. I think that there is a great deal of business strategy that is been applied to the open source model.

Q: A Microsoft Distinguished Engineer recently asked how you are going to have a software industry if everything is free through open source. After that story appeared, people started sending me e-mails pointing out Microsoft released Internet Explorer for free.

Matusow: There's a difference between a binary release and a source release. Software companies, not just Microsoft, release technologies at no cost all the time to attract developer communities or user communities. Do you remember the software game Doom? They distributed the first three levels of Doom at no cost to everybody in the world who wanted it, saturated the market with a game that outdid other people's gaming opportunities, and then charged for the next seven or 10 levels. We gave something away for free to attract a community. That's a long-held tradition in the software industry. Relative to open source, the reality is people have the right to license their software how they choose and the business model that they choose to pursue is also a choice that they have.

Q: What is the end game? If everybody starts expecting their software for free, what do you have to sell?

Matusow: But it's not for free. Is Linux for free today, really? If I'm going to do a commercial implementation of software, any software, I have certain risk mitigators that I'm looking for. Have the hardware and software been tested together? Are there services partners associated with it? Is there backward compatibility being built into it? Is there a strategic road map that I can turn to? Is there a support contract that I can have with service-level agreements? These are very commercial desires for customers to have, very rational desires. Red Hat (Inc.) says now that 20 percent of its gross revenue is applied to R&D, just like all other software companies. Microsoft runs about 17 percent. Why would they do that? If it's free, why would you be putting 20 percent of your gross revenue back into that? Because they're adding value. They are testing hardware and software, they are providing support contracts with service-level agreements. Those are things that require commercial investment in order to help customers feel more comfortable. If you want Red Hat Advanced Server and you want those risk mitigators applied, you're going to pay on a per-server basis with an audit clause, you're not going to be able to modify source code. It is a commercial agreement between you and Red Hat.

Q: If you buy Red Hat, does it still work out costing less than if you bought Windows?

Matusow: We argue it does not. All of the studies that we are looking at say that it is in fact not (the case), that we are still offering better value. The reason for that is as you look at costs -- never mind just the straight price point cost, which we feel is almost equivalent now with the server licensing models that they are coming with -- the total cost of ownership actually is all about the big numbers, not the little numbers. Software tends to be between 3 and 5 percent of the overall cost of the solution. Sixty percent to 70 percent is the cost of management and maintenance. We feel that with our integrated innovation in Windows, we're able to drop the big numbers by a much greater percentage than our competitors. So you can drop the overall cost associated with your software solutions based on Microsoft technologies.

Q: But don't you think that free software is going to put commercial software out of business?

Matusow: I do not.

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