Microsoft & Open Source Software

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2 Introduction The seemingly never-ending conflict between open source software (OSS) and fixed source (proprietary) software continues to evolve in nuanced, complex directions, some predicted and some not. Predicting that most OSS would be developed, marketed, and sold by commercial companies was a fairly easy forecast. It is now commonplace that OSS is obtained from commercial entities which use OSS to fuel various business models. The outcome that was harder to predict and much harder given the tone used in the debate is that we now live in a mixed source world. Fixed source software makers are embracing open source technology and development processes while open source projects incorporate trusted proprietary components. Any serious review of software products on the market today will reveal a great deal of OSS code being provided by fixed source software companies and comingled OSS/proprietary offerings. New data support the growing presence of the mixed source model. Research has brought to light surprising new economic realities that correct simplistic explanations for the mixed source phenomenon and substantiate the finding that mixed source has led to increased competition and lower software prices. Microsoft supports OSS and the mixed source model on multiple levels, reflecting the company s continued commitment to supporting developers and customers. This paper discusses a number of trends regarding the mixed source world, with the goal of helping policy makers across the globe engage in fact-based discussions about the software market and how it can enable economic and societal advancement. It s a Mixed Source World The term has a variety of meanings. First, open source is a type of software license (most formally, one that has been approved by the Open Initiative) supporting a development methodology that focuses on the sharing of code between developers and users. Second, OSS enables commercial entities to ship products under open source licenses with the goal of making money through maintenance contracts or integration and consulting services. These products showcase their open source roots as a positive attribute, even if the buyer has little cause to access or change the source code. And then there is a third meaning, the ideologically tinged one. For a number of years, the OSS vs. fixed source debate unfortunately contributed to the false polarization of IT policy discussions. It s an issue that raises passionate feelings, fueled by the politically charged roots of the OSS movement. Professor Richard Stallman, considered the founder of the OSS movement, once said, To prohibit sharing software is to cut the bonds of society. 1 Yet, in reality, the OSS vs. fixed source choice is a false dilemma. As OSS entered the mainstream of IT, it became subject to the pragmatic realities of IT decision making. Pragmatism from customers drove commercial vendors of all stripes toward interoperability and the mixed source world. Today, the state of IT in virtually every sector is one of mixed source. The mixed source reality of the tech world creates a powerful incentive for involvement with OSS for all software vendors. Most agencies and enterprises use both open and fixed source software, combining them to meet their goals. The Comingled Code: Open Source and Economic Development, a book that reports on a fascinating, in-depth study of OSS by the economists Josh Lerner and Mark Schankerman, describes the striking mix of the two technologies. Their survey of 2,300 customers and 1,900 developers across 15 countries in varying stages of development reveals that 67% of organizations use only fixed source software while just 5.9% use only open source. 2 More than 25% of customers are comingling open source and proprietary software. Even in countries that have a high preference for fixed source software, such as Singapore, 12% of the market uses OSS or a blend of OSS and fixed source. We see a similar result in Brazil where there is strong governmental support for OSS: 51% use only fixed source, while 12.9 % use only OSS. The other 36.1% use mixed source Real Impact for Better Government

3 Lerner and Schankerman discovered that developers and users see tradeoffs between OSS and fixed source that lead to combining the two in various ways. For example, a software company may develop and sell proprietary software while also contributing to open source projects to increase support for the software. Users may mix both types of software to work together in a single heterogeneous solution. Developers, for their part, tend to be multi-lingual regarding platforms a capability that enables neutral evaluation of the best technological choice for a given project and to market to as wide a range of customers as possible. Cloud Technology Leads A Mixed Source World Cloud computing reflects the mixed-source world. Cloud providers, both public and private, choose software based on the total cost of providing the services they have promised to cloud users. The result is a mixture of fixed and open source software in cloud services none of which makes much difference to the users. The cloud separates software users from the internal mechanics of cloud systems. The cloud user does not know and probably doesn t care whether he or she is accessing an application or service written using open source, proprietary code or a co-mingled hybrid. Chances are the cloud user is actually tapping into all three at once. Microsoft products and technologies provide support for open source ecosystem tools across all of these deployments. Microsoft s platform cloud, Azure, supports a mixed-source world with the tools and languages that are popular with open source developers. For example, Azure supports three versions of Windows Server and four versions of Linux, the most popular open source server. Another example is the big data tool Hadoop, which was developed in the Apache Foundation forge and is now offered as a service on the Windows Azure platform cloud service. Acquisition Decisions on Quality, Function, and Cost Fixed source software vendors compete in a marketplace that features other proprietary products, community developed not-forprofit open source projects, and commercially developed software that uses OSS as a selling point. Lerner and Schankerman indicate that competition is actually based on traditional product attributes such as function, quality, and price. Microsoft believes that any organization, including governments, should evaluate software based on these familiar factors. Lerner and Shankerman s study reveals that IT managers primarily choose between fixed and open source software for pragmatic reasons related to their specific use cases. For governments, the greatest success comes when they focus on ensuring that they receive the best value for their money on Information and Communications Technology (ICT) purchases. This is accomplished through rigorous use of a Total Cost of Ownership (TCO) analysis and harmonizing and clarifying the way that government specifies ICT system requirements. Governments should further ensure that their policies are designed to leverage the trends that are emerging in the broader ICT marketplace. Lerner and Shankerman demonstrate with real data, however, that while the share of initial software cost in the total cost of ownership is lower for OSS than for commercial software (28% of TCO for OSS vs. 37% for fixed source and that 9% difference is considerably less than commonly believed!), the other elements of TCO are higher for OSS. upgrades, integration, switching (training), and support services for OSS require a higher percentage of TCO than for proprietary software. These findings make it dangerous to predict total cost based on the mere use of OSS or fixed source software. 2 Lerner, Josh and Schankerman, Mark. The Comingled Code: and Economic Development. Cambridge, MA: Massachusetts Institute of Technology, Table 2.1, Page Real Impact for Better Government

4 The record of administrations that have chosen software requiring specific formats - or insisted that all software be available under open source license - has not shown sustainable cost savings. A recent report of the Dutch Court of Audit stated that it cannot be asserted in a general way that the total costs associated with open source software are lower than the total costs associated with closed source software. The Court also did not find a substantial difference in software quality based on the original development or licensing model, with the report commenting, In terms of the quality of the software itself, it makes no difference. Their report stated, There are always costs attached to software use: for the procurement (including the license fee), implementation, exploitation (including management) and maintenance. 3 In the Dutch case, maintenance and related costs were double that of license fees, which were 8% of the IT budget. A related subtext of the OSS vs. fixed source discussion is the idea that reliance on proprietary software confers excessive market power on individual companies, such as Microsoft. This is not a compelling issue, though, as competition and buying power have driven down the initial acquisition price of software in the government sector. The government of the UK, for example, spends just 1.6% of its IT budget on Microsoft products. Custom is Costly In many cases, governments engage in a project to create custom software to support their operations. But custom software developed or licensed by any means is costly to create and maintain. Developers will have to update it regularly and ensure that it works with other elements of the system. This can become a full time job, in effect, with recurring high budget outlays. In contrast, sharing a single application across as many users as possible reduces costs and if those users share information they can improve the software and fix errors quickly. A well-governed open source project can provide this information sharing, as can a fixed source application supported by a transparent and responsive vendor. Successful administrations seem to use custom software only for truly unique use cases. Additionally, governments should consider insisting that all custom software created on their behalf be available for use across the entire government so that the high cost of developing custom code can be shared across multiple agencies. Interoperability of Documents is Key The interoperability of document formats is a topic frequently related to the OSS discussion. There has been strong advocacy for open document formats that follow the open source model in their development and governance. Indeed, documents created by software applications should be compatible with virtually any platform. This is a goal that Microsoft has worked toward achieving, with Microsoft Office supporting the open document format (ODF), open-xml format (OXML), and portable document format (PDF). In some cases, governments are being urged to adopt a single document standard. But mandating a single standard is particularly expensive and reduces the options for access by citizens and corresponding agencies. 4 The government of Helsinki, Finland, for example, conducted a study to compare the total costs of replacing Microsoft Office with Open Office. Its finding was that Open Office was projected to cost 74% more than Microsoft Office over a 7 year period. 5 Microsoft supports customer choice in document formats and believes that mandating a single standard limits governments ability to choose technology meeting their specific needs. All popular document formats (PDF, ODF, and OXML) are standards. And, given that all popular office productivity tools support these standards, a format decision no longer implies a choice of productivity 3 Victor de Pous, Open source computing and public sector policy, Anne-Layne Farrar, A Note on Government Procurement Office Efforts to Standardize on Document Formats OpenOffice Survey Report - City of Helsinki - Economic and Planning Centre IT Division Real Impact for Better Government

5 software. For that reason, Microsoft Office has supported ODF 1.1 (the most common version of the format among current users) since Office 2007 SP2 6 while it continues to invest in OXML. Microsoft offers one of the most conformant ODF implementations available for customers who consider ODF compatibility a priority. Supporting Responding to the mixed source market environment, Microsoft works to make many of its products interoperable with products from both OSS and other fixed source vendors. At a base level, supporting OSS makes business sense for the company. We put the needs of customers first, including the developers that support them. Many Microsoft clients use OSS and demand compatibility, interoperability, and the use of common standards with that software. Microsoft is engaged in open source development. The company supports the CodePlex code forge, which helps engineers contribute to an OSS code base. CodePlex has 28,000 open source projects and more than 300,000 registered users. Additionally, many developers create open source software on Microsoft platforms. For example, in 2009, OSS apps on Windows grew by more than 400% from 80,000 to over 350,000. Twenty-three of the top 25 most downloaded OSS projects run on Windows. Recently, Microsoft announced support for a Git open source project and invited the OSS community to contribute to the project. Git is an integrated management tool and the goal of the new project is to create a new cross platform tool can run on Windows, Linux or Mac OS. The company also contributes to open source projects, following the norms and licenses of the project. Last year, Microsoft was highlighted by the Linux Foundation as one of the top 20 corporate contributors to the Linux kernel 7 and was identified by commentators as a key contributor to Linux. 8 Conclusion It s a mixed source world, a world where no single approach to software development and licensing is able to satisfy the myriad needs of government and corporate clients. Developers today work across multiple languages, platforms and modes of development. The cloud, a major force in computing, renders much of the OSS vs. fixed source software discussion moot as it masks the underlying code and its complexity from end users. Overall, the market requires interoperability, low cost, and support for the software and tools they currently own. This requirement is particularly pressing in the government arena, where budgets are often limited and resource allocations face public scrutiny. Microsoft responds to that requirement with products and support for mixed environments that include open source. Microsoft s support for mixed source is driven by the belief that the company prospers when people use its software and services because they like them and find that they provide stable, reliable functionality. Looking ahead, Microsoft envisions embracing OSS as being even more central to the core strategy as the company s emphasis shifts from on-premise and desktop computing to the cloud and mobile technologies. 6 Microsoft has announced support for ODF 1.2 in advance of its approval as an ISO Standard 7 The Linux Foundation, Linux Kernel Development: How Fast it is Going, Who is Doing It, What They are Doing, and Who is Sponsoring It at (Mar. 2012), 8 Joab Jackson, Microsoft Counted as Key Linux Contributor -- For Now, Anyway, InfoWorld (Apr. 3, 2012), 5 Real Impact for Better Government

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