The Open-source Way to Success: Microsoft, Intel, and IBM
Open-source software is a strange phenomenon for a software company to deal with. At first glance, it might seem like an existential threat for the developers of closed-source, proprietary software. On the surface, it might feel like somebody set up shop and started selling counterfeit leather goods across the street from your upscale store where you sell the finest Italian leather.
However, thinking about it, open-source software doesn't have to be the mortal enemy for conventional software companies. Well-managed companies find a way to harness open-source to turbocharge growth in certain areas. Here are three remarkable examples:
Microsoft wasn't friendly to the open-source concept until a decade or so ago. Bill Gates saw intellectual property as the only way software companies could make money. His company was adamant in defending it. For a time, Microsoft CEO Steve Ballmer seemed to be on a one-man crusade against open-source, calling Linux "a cancer" at one point.
However, that did not last forever. The age of the cloud arrived, and Satya Nadella replaced Ballmer as the CEO. Microsoft had already started participating in open-source projects before, and under Nadella, the open-source became the go-to strategy for Microsoft.
This change had nothing to do with altruism, though. The fact that Microsoft wanted to compete with AWS meant the company would have to rely on an open-source infrastructure. Because as Cloudera CEO Mike Olson says, "No dominant platform-level software infrastructure has emerged in the last ten years in closed-source, proprietary form." Today, enterprises depend on open-source systems like Kubernetes and Kafka, and no closed-source system comes close.
The defining moment in Microsoft's new game plan came when it acquired GitHub in 2018 for $7.5 billion in stock. This was a strategic move for the company as it had become the top contributor to GitHub in terms of the number of contributors, and so much of its business depended on it. It just couldn't afford some other company snatching it up.
Software companies investing in open-source projects come as no surprise. However, it is a bit different when a hardware company, Intel, does that. The microprocessor manufacturer has been supporting open-source projects for more than two decades and hosts a vibrant community at 01.org. In the past, it grabbed the headlines by open-sourcing its ACAT (Assistive Context-Aware Toolkit) software which the late theoretical physicist Stephen Hawking used to communicate with others.
After a brief respite, Intel is making a comeback to the open-source realm. Intel's interest in open-source is powered by the rising importance of artificial intelligence (AI). The company wants to offer a product range that will perform well with applications controlled by AI. In accordance with that goal, it recently hired tech leaders from companies like Apple and Netflix.
Another goal for Intel is to remain competitive in the age of the Internet of Things and Industry 4.0. That was the motive behind its recent acquisition of Linutronix, a Germany-based software company. Linutronix is the creator of the Linux-based PREEMPT_RT patch that facilitates communication between drivers, sensors, and robots. Intel hopes to capitalize on Linutronix's expertise on Linux kernel at a time when real-time, low-latency communication between different types of hardware becomes of paramount importance.
IBM was one of the first corporate giants to recognize the potential of open-source software and embrace it. It supported projects like Linux, Apache, and Eclipse. As early as 2005, IBM opened 500 patents to the open-source community, a position diametrically opposed to Microsoft's staunch defense of intellectual property at the time.
IBM has nurtured a long-term interest in Linux. It has been consistent in its support for Linux, shelling out $1 billion in technical assistance and other resources in 2001. This investment continued in the 2010s, and the 2020 annual report underlined IBM's commitment to spending $1 billion over the next three years to support Linux.
IBM capped its long-standing support for open-source software with a power move: In 2019, the company acquired Red Hat, an open-source software company that delivers its customer enterprise-grade Linux-based software, for $34 billion. Recognizing that it lags behind Amazon and Microsoft in cloud computing, IBM aimed to leverage open-source software to offer its customers the highest-performing cloud infrastructure.
IBM is looking toward a future where it aspires to dominate the cloud, artificial intelligence, and machine learning fields. It relies on the versatility and robustness of open-source to turn this vision into reality.
We probably wouldn't have the cloud infrastructure and AI as we know them today in a world dominated solely by proprietary, closed-source software. Thousands of elite developers working on open-source projects, solving bugs, and inspiring each other fast-tracked our way to a future that wouldn't be possible without open-source. It is no longer a matter of whether a company should use open-source but rather how best to leverage it for the greatest competitive advantage.