SiliconRepublic.com Ireland's Technology News Service

For the past decade the open source software (OSS) movement has been gaining momentum, and in the past three years has gained a level of acceptance that is set to change the software industry worldwide forever. This could have far-reaching consequences for people working in the industry and the people at home or in the street that use it.

For a country like Ireland, with close to 100,000 people employed in the IT industry, the changes brought about by the introduction of OSS could be felt keenly, either creating jobs or restricting growth. In fact, it could be argued that these changes are already happening under our noses when we log on to email at university, deal with the government or pay a visit to our local bank branches.

The majority of the next wave of internet portals ranging from MySpace to YouTube and Flickr are all based on OSS. And overall two thirds of the non-computing element of the technology industry have open source embedded in their products, claims Rhishab Ghosh, a senior researcher at the UN University in Maastricht.

According to Ghosh, the notional value of Europe’s investment in free/libre or open source software (FLOSS) today is €22bn, representing 20.5pc of the region’s total software investment. Spending on OSS stands at €36bn and accounts for 20pc of software expenditure in the US.

But before we can assess the potential economic impact of OSS, it is important to explain what the movement towards OSS is all about. The open-source principle refers to software where the source code is available to the general public so that users can read it, make changes to it and build new versions of the software incorporating their changes.

OSS tends to be created by a development community in a collaborated effort rather than by a single software development company and as a result it differs from traditional software development models in that the intellectual property developed is released under an open software licence allowing the software to be redistributed freely.

In a report on open source trends and business models last year, state agency Forfás pointed out that this has implications for a software development company because sources of revenue and business models will be different from those dominating the proprietary model.

Citing research from sources such as IDC, Forfás noted that 2005 revenues for OSS grew by 48pc over 2004 numbers. Compound annual growth to 2009 is forecast to be 36pc; by contrast, the total software market is predicted to show just 6pc growth over the same period.

Noting the opportunity for Irish companies, Forfás also pointed out that service revenues for OSS are set to reach US$7.6bn this year and will reach US$16.8bn in 2009.

The rise, and rise, of the open source movement by stalwarts like Red Hat and Linux is normally portrayed as a threat to the traditional technology industry hegemony of global blue-chip firms. It is usually portrayed in the media as a movement by anarchist revolutionaries attempting to take on the established order. Decisions such as the high-profile move by the mayor of Munich to deploy open source have been enough to shock proprietary vendors to their very core and get defensive. It has been suggested that a significant portion of An Garda Síochána’s PULSE system is built on open source and the Health Service Executive (HSE) is about to reveal a country-wide deployment of open source.

But portraying the movement as a rising of many against the powerful, privileged few is not only romantic but also incorrect, says one observer, who believes it is more an evolution of the way software is created. “Such arguments are tired, boring and fatuous,” he stormed.

Indeed, software giants like Microsoft appear to have accepted the place of OSS in the IT world. In November long-time sparring partners Microsoft and Novell joined forces in an agreement to make Windows and Linux operating systems work together better. “We have customers who use a mix of technologies to manage their businesses and they demand strong interoperability amongst all their systems,” said Ballmer at the time.

At a recent intelligence briefing in Dublin organised by Open Ireland, Ghosh said the impact of OSS is growing in areas like telecoms, where 60pc of the industry claims to employ it. “Linux has a 23pc share of the business smart phones on the market today and is growing at a rate of 85pc year. Most of the Chinese mobile manufacturers use Linux on their phones.”

Assessing the economic impact of open source on the IT industry, Ghosh said the open source industry was doubling in size every 18-24 months and worldwide an estimated 26,000 people, less than half of them developers, are involved in open source.

Ghosh estimated that OSS products could account for 4pc of European gross domestic product (GDP) by 2010. To get a feeling for the importance of this in terms of the overall European IT industry, Ghosh estimated that the IT industry will account for 13pc of European GDP by 2010.

He does not believe that OSS will lead to a reduction in IT jobs. “The present opportunity for IT developers with OSS stands at €3bn. In terms of jobs being created we see a 70:30 overlap in the share of job postings today, for every seven job postings in IT a further three are looking for OSS skills.”

A practical example of the role of OSS in technology today can be illustrated by the recent development of the Nokia N800 handheld internet browser, which was based on Linux. “Nokia wrote only 2pc of the software itself, and 12pc by other large companies, the remainder was done through OSS. The company saved €900m and such large savings allowed it to invest in other elements like the screen, camera, Bluetooth and navigation and it was able to put the device on the market for less than €300,” said Ghosh.

But how can Irish companies profit from the introduction of OSS? Els Compernolle is a senior policy analyst at the Enterprise and Communications department at Forfás. Speaking at the recent Open Ireland intelligence briefing she estimated that out of the total IT industry in Ireland, the indigenous software sector employs 24,000 people and accounts for 11pc of total ICT exports out of Ireland.

In a climate that has seen a fourfold increase in State R&D through the activities of Science Foundation Ireland, the economic contribution OSS can make towards product development by indigenous firms can’t be underestimated.

Comparing product development in a proprietary software environment she said: “If you are working on a source code from someone else the original licence will put limitations and will also have a strategic impact on the commercialisation route and determining the appropriate licensing route.” She highlighted Irish software company Iona Technologies as one company that has managed to do this to its advantage.

Employing 350 people and in recent months reporting its most profitable year since 2000, with 17pc revenue growth to US$77.8m, Iona is one of the indigenous software sector’s primary stars. Speaking with siliconrepublic.com last year, Iona’s chief executive Peter Zotto explained that some 25pc of his company’s R&D push is in open source. He predicted that at least 5pc of Iona’s total revenues will come from OSS in 2007.

Practical advantages to local firms going down the open source route, Compernolle said, are obvious. “The country’s industry is small scale, but OSS can help firms to quickly build a user base and target new market segments. If you’re a start-up, customer support can be handled online or automated with a small number of personnel needed.”

In recent years much of the OSS movement has been driven by the rollout of IT infrastructure products like Linux and Red Hat, but much of the growth in coming years, it is believed, will come from actual software applications. One example of a local firm thriving on developing actual applications is Dublin-based OpenApp, led by Silicon Valley veteran Mel McIntyre.

McIntyre’s company has developed training materials for StarOffice for the European Computer Driving Licence (ECDL) in collaboration with the Blackrock Education Centre, which will be rolled out at 800 ECDL centres across Ireland. His company is also involved in a country-wide open source project that is currently being implemented at the HSE.

“A lot of companies are involved in open source from a systems integration perspective,” McIntyre explains, “but there’s a big difference between implementing open source for directories and security and actually writing software applications.”

He believes that the argument that the open source movement is a direct affront to such organisations as Microsoft is a little tired. “Open source will be a balance against monopolies and monopolisation. People will retain the freedom to create technology the way they want. Software creation is an intellectual thing and the open source movement has a real impact on people implementing IT.”

From an inward investment perspective, there is evidence that OSS is already contributing to job creation in Ireland as opposed to taking away from it. Sun Microsystems’s European Software Centre in East Point in Dublin employs 200 people. According to Robert O’Dea, a director with Sun in Ireland, some 75pc of the workforce is involved in OSS creation of some kind.

“It would actually be a mild exaggeration to say that all of our employment in Dublin is based on open source,” explains O’Dea. “The open source community worldwide is a community of thousands of developers and the open source mantra of having the entire community look at a problem means the problem becomes simpler. This approach means better quality is the end result.

“All the Web 2.0 companies, including Amazon, Google and YouTube are using OSS such as Apache web server and software like PERL to create compelling sites.

“OSS can be regarded as disruptive, but over time it is gathering the support that allows it to compete with traditional products. There is competition between OSS and proprietary products but in practice implementation tends to be blended because most large-scale IT deployments involve some kind of system integration that involve tailoring.

In recent weeks 12 new jobs were announced when rapidly growing Silicon Valley software firm SugarCRM revealed it was in the process of establishing its European headquarters in Dublin. One of SugarCRM founders, Clint Oram, explained that the company has built itself on the back of the open source movement and the company has grown to employ 100 people and has over 1,000 customers, including Portugal Telecom.

Oram says that without the open source model a company like SugarCRM may not have come into being. “We built a customer base around the core technology, using the referral model, and it keeps growing. We don’t have salespeople dialling for dollars because the business comes to us. We’ve had over 1.5 million downloads of our software, 30pc of it from Europe.”

He disagrees with the notion that open source is a threat to the IT industry. “OSS is a development, marketing and distribution methodology, not a religion.

“At the end of the day it is just like any other business area, with firms with sales quotas and who have to build a product. And just like any other business you’ve got to have happy customers,” Oram adds.


Case study - Banking on open source

Anyone looking for proof that big businesses are taking open source seriously as a viable IT investment can look no further than their local AIB branch.

The banking chain has been perhaps the highest-profile example of the use of open source technologies by business in this country.

The bank had opted for a mixed source technical architecture using Novell open source and proprietary software for security as well as the Sun Java Desktop and proprietary software from Oracle and SAP that will be used by the bank’s 35,000 employees in Ireland.

Mark Duggan, a systems integration engineer with Sun Microsystems in Ireland, explains: “AIB put out a tender for its branch banking platform and stipulated that it wanted an open source desktop that would work across a thin-client enterprise network.

“It opted for open source because it wanted to easily and flexibly customise what it had rolled out and it reckoned it couldn’t do that with a closed source proprietary platform. With open source you can take the software and shape it any way you want,” Duggan adds.

By John Kennedy