Subject: 100 Acre Software...a look back
From: Michael Tiemann <tiemann@cygnus.com>
Date: Sat, 26 Jun 1999 11:56:44 -0700

It's been a while since I posted a new thread to FSB, but that's because
it's been a while since I had a new insight that I wanted to share (as
opposed to the same old ideas I've posted so many times before). 
Gumby's reference to 100 Acre Software reminded me of the early days of
Cygnus strategy and tactics, back when Open Source seemed more like a
crazy idea than an inevitable conclusion.

As an unfunded startup, we faced the paradox that we needed to both
legitimize our strategy to the public while at the same time remaining
far enough below the radar that other, better-funded startups, could not
swoop in and eat our lunch.  When 100 Acre Software and Ready-To-Run
software started doing commercial releases of GNU software, we were both
validated and threatened at the same time.  Most importantly, we were
challenged to really examine whether these new companies could take the
work that we were doing and commoditize us out of existence.

Both companies offered distributions and support pricing way below what
Cygnus was charging.  100 Acre seemed to focus on support and low-cost
consulting (our bread and butter) while RTR offered inexpensive,
professionally packaged releases (with support) that could be purchased
via credit card (a market we viewed as the end-game).  Both companies
started taking business from us.

We decided that the best defense was a good offense: step up the rate of
innovation, better advertise our technical contribution and leadership,
and get the major companies (semiconductor companies and systems
vendors) to declare that Cygnus was the commercial standard when it came
to GNU.

While 100 Acre and RTR continued to win business here and there, some of
their early customers started to call Cygnus.  We were advancing GNU
faster than these intermediaries could keep up, and I think I remember
that their technical knowledge, while non-zero, was also not close to
what we were providing for free on gcc2@cygnus.com.  By 1994, they had
waned, and I don't think I heard of them again after 1995.  The lesson
we took away was that it was vital to be a majority contributor if you
were going to build an open source business.

Which leads me to my second observation.  When Yggdrasyl (sp?), Red Hat,
and other Linux distributors hit the scene, we completely dismissed
them.  Sure, Linux was open source, and yes, if the AT&T vs. BSD thing
didn't end soon, there might be a market for Linux.  But these
distributors violated the lesson we learned in the 100 Acres war.  They
were doing packaging, not development.  We didn't see the long-term
position in that.  Did we learn the wrong lesson from 100 Acre?  Or will
Red Hat have to completely invert their business model (from
distribution to development) in order to survive?  Or will Red Hat (and
the other Linux distributors) escape death because no company can create
a single definitive _commercial_ release?  History, of course, will
answer this for us.  My prediction is that the answer will depend not so
much on the finest distinction of the definition of "free" nor the
subtlest interpretation of the GPL, but rather on the fundamental
question of where the value is, and who is best able to capture it
before they are run out by a more competitive company or model.

M