IBM-Red Hat, Microsoft-GitHub Deals Decode the Bright Future of OSS

Mukul Yudhveer Singh

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More enterprises adopting OSS as operating platforms and Big Blues like IBM and Microsoft acquiring OSS companies like Red-Hat and GitHub have made it clear that the future of OSS is worth endless opportunities and billions of dollars

Dwindling stock prices over last five years and declining revenues have not stopped IBM from acquiring Red Hat at a staggering $34 billion. Touted as one of the biggest software deals ever, it also is the biggest in IBM’s 107 years history. Analysts, experts all over the world are busy decoding the deal. While some think that IBM acquiring Red-Hat will put the former back on track, others have argued that the move may not be profitable at all.

But the real question that arises out of this deal is much bigger. It concerns the future of open vs license based software computing, it concerns the future of software companies dealing in licensed/closed source software solutions, and most importantly it highlights the advantages open source will have in terms of profit for the provider and for the enterprises using it.

Is the use of Open Source software the next big thing?

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Jim Whitehurst, CEO, Red Hat in an email shared to all Red Hat employees had said, “We have barely scratched the surface of the opportunity that is ahead of us. Open source is the future of enterprise IT. We believe our total addressable market to be $73 billion by 2021. If software is eating the world – and with digital transformation occurring across industries, it truly is – open source is the key ingredient.”

If one put’s the use of Open Source software in meaning in accordance with the technology adoption curve, then the time has arrived when a majority of enterprises will shift to the same as primary operating platforms. The future of open source computing and cloud usage will define how institutions, organizations and governments function all over the world.

The Government of USA’s ‘code.gov’ project website claims its mission as – “Code.gov leverages the power of code sharing and collaboration to help the US Government cut down on duplicate software development and save millions of taxpayer dollars for the American people”. It even has a ‘progress report’ tab that explains which govt departments in the country have open sourced the codes they use. It is worth mentioning here that most of the big players operating in Open Source software technology are based out of USA.

India, world’s 6th largest economy also focuses on Open Source software. Its railway ticket booking portal, Aadhaar and GST platforms are powered by Open Source software. In fact, several reports have suggested that Bombay Stock Exchange (BSE) has been able to save more than Rs 8,300 crores by switching to Open Source software and support by Red Hat India.

Kersi Tavadia, CIO, BSE, on using Open Source software had said, “Google is using open source. Facebook is using it. Everyone else is using it, and that’s why they’re profitable. They’re not spending resources on proprietary software and hardware. We knew we needed to go in that direction as well.”

Explaining about the advantages of using Red Hat’s Open Source software and support in BSE, Mr Tavadia further said,“ We were able to cut manual activities substantially, so that tasks that once took four hours to accomplish now take less than one hour. Staffing requirements were reduced from 15 people to just 2 people. The cost savings we’ve achieved let us release new products and try new ways of doing things.”

Flipkart, Amazon, Facebook, Google are the best examples of what Open Source software usage can achieve. A survey published by netcraft said that out of 172 million websites around 75,000,000 used WordPress – an Open Source content management system. And out of these 75,000,000 nearly 37,500,000 were using WordPress hosting.

Microsoft, world’s largest licensed-source software provider, acquiring GitHub, an open source developers’ community, further hints towards the bright future of open source software.

What does the IBM-Red Hat and Microsoft-GitHub deal mean for OSS start-ups? Will there be more acquisitions?

The future of start-ups working on providing Open Source software solutions, at least for now looks very promising. The recent IBM-Red Hat deal will make major players including Amazon, Microsoft and Google to carve out ways aimed towards strengthening their market hold in the Open Source field and it’s a very strong possibility that some of these strategies will include acquiring start-ups that have already made a mark in the Open-Source software services and support.

The fact that a lot of big players were interested in acquiring GitHub before it was eventually bought by Microsoft also raises some positive hints that the acquiring game is not yet over and start-ups in Open-Source space should continue doing their best.

Similarly, the Red-Hat acquisition by IBM at a price that is claimed to be six times Red Hat’s market value is a major hint towards the importance Big Blue companies give to OSS start-ups.

But the way a start-up looks at such big players also matters. If the prime aim of a start-up developing OSS solutions and support is to get acquired by a big blue company instead of creating world-class solutions, then the cause may get lost completely. It is a fact that an OSS solution speaks for itself and does not take much time to get noticed.

The focus should also be on long-term usage and benefits rather than on making profits instantly.

What makes open source software special?

Organisations in the world are turning to open source software for curbing operational costs and for increasing profits. India’s Bombay Stock Exchange (BSE) operates on Red-Hat’s Linux based open source. Several reports have claimed that BSE has been able to save over Rs 8,300 crores just by switching to open source software. Similarly, India’s Aadhaar and GST platforms are also powered by opensource software.

A survey by Black Duck Software and North Bridge pointed out that 78 per cent companies use Open Source software. 55 per cent out of these use Open Source Software because they think that it delivers superior security when lined up against proprietary solutions.

Open Source software offers an agency the flexibility to modify codes to fit their specific needs ranging from security patching to measuring vulnerabilities in hours. Additionally, OSS is free and support options are available at prices that are much lower than commercial products. A govt using a proprietary software product usually ends up paying millions of dollars in a year to the vendor. However, with Open Source software, they only pay for support, thus saving a large chunk.

What will be 5G’s impact on OSS?

5G, touted as 100 times faster than LTE and 10 times faster than 4G will help unlock OSS potential to its max. The network speeds will be faster than ever allowing clouds to function with virtually no lags at all. The support systems will get better over time allowing real time diagnosis of errors.

In fact, 5G may make more institutions, governments and companies to adopt Open Source software as their preferred working platforms. The cost of operations will dramatically come down and will result in increased profits.

Developers around the world will get to share insights and developments regarding codes and solutions on a much faster speed than it is done presently. As a result, OSS platforms will penetrate deeper into all verticals of business and life. It will have a positive effect on technologies used in agriculture, health, trading, financial services, IT, communications and more verticals.

Is the end of road for licensed source software providers near?

The trend has cleared that major developers and providers of closed source software services will look out for acquiring open source software communities and companies in order to stay relevant in the future. Though it is impossible to say that institutions and organizations around the world will stop using closed source software completely, it is completely a valid argument that OSS will decrease the dependency on such software dramatically.

Businesses everywhere focus on improving profits by providing better solutions and OSS has already shown its ability to do the same by cutting costs without compromising on the work quality.

Will emerging OSS create jobs?

More companies shifting to OSS platforms will in every way lead to jobs creation. The widespread adoption of OSS will also call for better support services resulting in more professionals required to carry out tasks.

OSS implementation and on-site training will also lead to more job opportunities. There will be more coding jobs as the eco-system expands further.

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