Richard Stallman, one of the pioneers of the free software movement and the Founder of the Free Software Foundation, once explained the concept of free software, saying, "Think free as in free speech, not free beer.” The basic idea is that all software should be available on a ‘free-to-modify’ basis, but that does not imply that it has to be zero cost.

Free software, and another incarnation of that philosophy, open-source software (OSS), involves software that is developed in a completely open manner and made available for anyone to download the code and modify it as they deem fit – with the expectation that the modifications are given back to the community to benefit everyone else. What started as an experiment in the 1980s quickly grew into a major movement, with thousands and thousands of free and OSS programs developed by the community.

The functionality that these software programs offered was often as good – if not better – than the equivalent software developed under the traditional commercial license model. Examples of successful open-source projects include Linux, Firefox, Apache, MySQL, and Android, among thousands of others. OSS has completely changed the business and dynamics of the software industry. According to Gartner, more than 80 percent of commercial software will include some open-source software by 2012.  

Intel has been active in the OSS space through our Open Source Technology Center.  This group works with open-source software developers to fast-track innovation. Personally, I have also been active in the OSS space for the past seven years. Intel Capital has invested in pioneering companies such as Red Hat, JBoss, MySQL, Zend, WSO2, and Sendmail, among others.

Investing in free software may seem like an oxymoron to some investors, but exits such as Red Hat (market cap: US$9.1B), JBoss (US$420M), MySQL (US$1B), and SuSE (US$210M) prove that free speech does not imply free beer. In other words, these companies have developed innovative business models around free and open-source software. The simplest of these business models is based on development of an OSS project (with the help of a broader community of developers who do it for passion, fun, and learning), and selling consulting, support and subscription services to large and medium enterprises, enabling them to deploy and maintain the software on an ongoing basis.

My initial assumption was that because of their familiarity with the services model, Indian IT companies would jump on the open source bandwagon and, in fact, even lead the parade. The most logical evolution would be for Indian companies to move up the value chain from a pure services model to an intellectual property (IP) plus services model, even though the IP in question is open source. This model is far less risky than a pure IP play. So, what are Indian IT companies doing in this space? Well, other than taking open-source software for free – not much, statistics suggest.

Most Indian system integration (SI) companies have set up an open-source practice where they are building up proficiencies in various open-source projects. This is an addition to their core business of providing consulting around commercial software, such as Oracle and SAP. Statistics for one of the best-known open-source software projects, the Apache web server, suggest that few contributions to open-source projects come from Indian companies. In fact, if you consider Apache as a prototypical open-source software project, even Sri Lanka contributes more code than India.

Unfortunately, if these statistics reflect dynamics in the broader open source community, Indian companies may be missing real opportunities in the open-source software industry. There are a few start-ups that made an attempt, albeit in niche spaces. There was, and continues to be, an incredible opportunity for Indian companies to play a significant role in the evolving software eco-system. It would be a shame if Indian IT companies were to miss out on this opportunity because of short-sightedness, lack of passion for software; the lack of funding for new business models; or simply a lack of motivation because the core services business is still so good. The reality is that such drastic changes in such large ecosystems do not happen frequently. The result of missing this opportunity would be that in the rapidly changing world of software, Indian IT companies might be destined to have no place other than as outsourced service providers.

In the US and a few other countries, open-source methodology is now being applied to non-traditional domains such as biotech, genetics, media and hardware. It is anybody’s guess as to whether this will work. But if it does, large global companies within these domains will find themselves competing with startups – hopefully from India – that have a disruptive business model based on open-source principles. And as we are learning from the software industry, open source competition can be daunting – a classic innovator’s dilemma. I look forward to the next open-source revolution.

(Views, observations and comments expressed by the author in this article are completely his own personal views and do not represent the views of the company in any circumstances.)

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