Subject: Re: the value chain
From: "Tim O'Reilly" <>
Date: Thu, 09 Dec 1999 17:20:13 -0800

I agree very much with this thesis.  The OS is becoming a commodity. 
Frankly, applications are on their way to becoming a commodity.  What I
would suggest is that a lot of people don't know what "services" means. 
Those who do are going to do very well.

I've made this point in a number of my talks, where I've suggested that
Rick Adams was one of the first really big open source software
entrepreneurs.  He didn't try to put B News or SLIP into a box and sell
it, and he didn't really offer "support" either.  He understood what
"services" usenet and internet connectivity needed, and invented the
commercial ISP industry.

You could argue that NSI has built a monopoly service (being nibbled
away at by other registrars) on top of the free software base of the
DNS.  Not something that people here think of as an FSB (and it isn't,
because it doesn't acknowledge its debt nor give back to the community
that created its opportunity), but one that should be acknowledged.

I think that there are similar inventions waiting for us, new industries
that commercialize some aspect of what people have been doing in a
haphazard way for free. is one small attempt in that
direction, to create services that formalize the code sharing and remote
collaboration practices of open source communities so that corporations
can participate more easily in them.  

We're going to see lots more forehead-slapping "I didn't think of that
as a consequence of open source" kinds of service industries invented
over the next few years.

It will help if the open source community claims as its own some of the
people who figured out a new angle and as a result left the hard core of
how the community defines itself.  That will extend the range of
possibilities for those who remain involved in the original community.

What I'd really love is if more companies that figured out a spin on
open source that gives them a repeatable revenue stream would figure out
how to acknowledge an ongoing relationship with the source community,
rather than just taking the opportunity and moving on.

Jean Camp wrote:
> I have had this thought several times so it must be either a recurring
> nightmare or something of reason.
> Perhaps value is moving up the stack. From physical (the phone co, the
> telegraph wires) all the way up to services (which would be above
> applications).
> At the turn of the century and into the fifties the values were in the
> wires. One big monopoly charged for the wires. It was the natural choke
> point.
> Then value was in the big hardware. Altho this may be hard to argue because
> IBM was combining everything service, s/w, h/w into one big IBM price.
> Then the value in the eighties was in the little boxes.
> Then the value was in the the O/S on the little boxes.
> Now many argue that the value is in the Apps.
> The OS/FS companies argue (explicitly stated or implictly in business plan)
> that the value is in the service.  Which would be the next step natually
> after apps.
> This would, nicely enough, argue for the long term success of OS/FS.
> -Jean

Tim O'Reilly @ O'Reilly & Associates, Inc.
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