[via Dragos and economist.com]

Yes, Google will “support” an existing (and well-known) project by the Massachusetts Institute of Technology to produce a laptop for the poor, but so will many companies, and who wouldn’t? At one point, Mr Page mocked such inflated expectations by “announcing” Google Fastfood, a button in car dashboards that delivers instantaneous hamburgers.

Mr Page’s ambition started early. When he was 12, he read a biography of Nikola Tesla, a prolific inventor who never got credit for much, but is now a hero among geeks. Mr Page decided that he would be different: a great inventor and an acknowledged world-changer to boot. As the son of a computer-science professor, he channelled his energy into technology. By the time he was in college, Mr Page was building working inkjet printers out of Lego bricks—probably just to show that he could.

Playing God

If Google is a religion, what is its God? It would have to be The Algorithm. Faith in the possibility of an omniscient and omnipotent algorithm appears to be what Messrs Page and Brin have in common. It’s “in their DNA,” says Michael Moritz, a venture capitalist famous for investing early in both Yahoo! and Google. Whereas Yahoo! was started by two Stanford students who turned a hobby into a business, Google was started by two Stanford students who turned an intellectual obsession into a quest, says Mr Moritz. And what is that quest? Merely upstaging Microsoft would be almost banal. “We’re not trying to build a better operating system,” says Mr Schmidt (although that will not kill the rumour). Part of the plan is certainly “organising the world’s information”. But some people think they detect an even more grandiose design. Google is already working on a massive and global computing grid. Eventually, says Mr Saffo, “they’re trying to build the machine that will pass the Turing test”—in other words, an artificial intelligence that can pass as a human in written conversations. Wisely or not, Google wants to be a new sort of deus ex machina.

[via wikipedia]

Sometimes, nature can be beautiful and … geometric.

Snow flakes highly magnified by a low-temperature scanning electron microscope (SEM).

[via BetaNews]

The first draft of the General Public License version 3 will be released on January 16 at a conference organized to help develop the standard. The First International Conference on GPLv3 will take place at the Massachusetts Institute of Technology, the Free Software Foundation said Wednesday.

The current version of the GPL is 15 years old, and does not address many of the issues that play a role in modern computing. Richard Stallman, founder of the FSF, first announced that it would be working towards a new version of the GPL in November. […]

Some issues to be undertaken by the new version of the license include protection from companies who attempt to sue GPL developers over patent issues, GPL software use on DRM-capable devices, and modifications to policies surrounding how GPL software can be used on the Internet.

[via OnlineInvestor]

Oups, on January 6, 2006, the capitalization of Google ($137 bn) was higher than the one of IBM ($134 bn), Cisco ($115 bn), PepsiCo ($100 bn). Google is now at the rank 15 from the biggest capitalization…. Still far away from MS ($286 bn) and GE ($375 bn), the biggest one. Just crazy, in such a short time.

The Apache Software Foundation released the version 1.0 of its J2EE certified server project called Geronimo on January 5, 2006. If you don’t this very central open source project, have a look at the Wikipedia’s description:

The Geronimo project is an open source application server developed by the Apache Software Foundation and distributed under the Apache license.

Geronimo is currently compatible with the Java 2 Enterprise Edition (J2EE) 1.4 specification. When compared to other application servers such as JBoss, WebLogic and WebSphere, Geronimo’s most distinctive features are its:

• BSD-style license, which allows it to be modified for and embedded within commercial, closed source software (unlike the popular GPL and LGPL licenses)
• Modular GBean-based architecture, which allows users to remove unneeded services and build very lightweight configurations of the server
• Non-Profit ASF leadership, which provides legal protection, ensures stability across the loss of individual contributors and insulates the project from commercial conflicts of interest
• Diverse support community, in which companies compete freely and openly to provide services, with none enjoying any particular trademark advantage

Software consulting giant IBM has provided considerable support to the project through marketing, code contributions, and the funding of several project committers. In October 2005, IBM announced a free edition of its WebSphere application server suite based on Geronimo.

Other commercial supporters include AMD, Chariot Solutions, Simula Labs and Virtuas.

[via Matt Cutts]

Matt Cutts, if you don’t yet know him, is an employee of Google since January 2000 (Software Engineering). Matt is posting about a new data center Google is currently testing with some new algorithms. You can test it on http://66.249.93.104. This new data center is called Bigdaddy. This new stuff should be put in production in 1-2 months from now on. If you want to know if your Google position will change or not, have a look ;-)

Q: Do you expect this to become the default source of web results? How long will it take?
A: Yes, I do expect Bigdaddy to become the default source of web results. The length of the transition will depend on lots of different issues. Right now I’m guessing 1-2 months, but if I find out more specifics I’ll let you know.

Q: What’s new and different in Bigdaddy?
A: It has some new infrastructure, not just better algorithms or different data. Most of the changes are under the hood, enough so that an average user might not even notice any difference in this iteration.

Q: What else can you tell me about Bigdaddy?
A: In my opinion, this data center improves in several of the ways that you’d measure a search engine. But for now, the main feedback we’re looking for is just general quality and canonicalization.

[via U2log.com]

Paul McGuinness – U2’s manager – reflections on 2005 published in Billboard. Impressive!

This was such a great year for U2. A No. 1 album in 20 countries, 110 shows all sold out, 3.3 million tickets sold, 100% of the tickets we put on sale. Nine million-plus sold of the current record, 3 million catalog, 2 million DVDs. U2 have never been bigger or better. Next year after Mexico, South America, Australia, New Zealand and Japan, we will end the Vertigo tour in Honolulu.

Hey, wow, it is my Marc Goldberg‘s day :-) Marc actually published three must-read articles about all the economic shifts in the Software industry. Really worth a read for the three (although one of them is in French…). So, a very long post ;-)

First “via Marc“

Marc found out a very interesting article from Rick Sherlund, Goldman Sachs, about the new Software industry economic trends. Very interesting!

The macroeconomic influence on tech is greater than ever as tech has grown to become the single largest component of corporate capital spending – now almost 40% of the total.

IT spending was able to well outpace economic growth as it grew as a proportion of GDP from 1.5% in 1970 to almost 5% in 2000. Since settling in at less than 4% in recent years, tech is likely to resume growing as a percentage of the economy, but not nearly at the rate of decades past.

Not surprisingly then, the correlation of IT with the broader economy has jumped from less than 0.1 in the 1970s to over 0.9 in recent years as the industry has matured.

While tech continues to benefit from “mini-waves” of technology shifts (e.g.,
wireless), there are not the rapid, landscape-changing shifts that drove feverish growth in the 90s. In addition, many of today’s technology trends actually serve to reduce aggregate IT spending. […]

1. Of all tech trends, wireless’s impact will be broadest
2. China and India are altering both supply and demand formulae
3. The low-end unit epidemic is distorting revenue realities
4. With drivers escalating, security is at an earlier stage than the consensus view
5. Even at this stage, spending is still consolidating around fewer, larger vendors
6. Internet treasure chest now being unlocked
7. Open source opening Pandora’s box on pricing throughout the IT stack
8. The true digital home will be longer in coming than expected
9. SOAs shake up the software industry

Second “via Marc“

By the way, Marc has also published for some days a superbe analysis about the new Software industry economics and valuation. Just for French-speaking readers….

10 years of Internet, certainly 10 years of technology change and new businesses models, but more than that 10 years for a paradigm shift on how corporate assets are identified, valued, and monetized: 10 years during which the importance of intangible assets, their mode of valorization by the markets and their mode of appropriation by the entrepreneurs and owners of these companies became our true obsession….

Third “via Marc“

Last but not least…. The third one is based on a post from Bill Burnham on how the software industry has been shrinking in 2005 (providing low public market returns, but interesting M&A; exits for innovative software SME’s).

Despite this explosion of new software, the software industry itself is shrinking. In 2005, the aggregate market capitalization of the software sector shank by almost 10% despite the broader NASDAQ market being up 1.4%. Even if one adjusts that number to account for privatizations, M&A; and IPOs, the software market still shrank by 9%. This shrinkage is also apparent when looks at the raw number of public software companies. There were 236 public software companies at the start of 2005, but only 213 at the end of the year, a decline of 10%. Put another way, for every new software company that went public in 2005, almost 7 were acquired or went out of business. Not exactly an encouraging picture.

What then is responsible for the software sector’s precipitous market cap decline? Like most complex systems, there is no one single factor driving this trend, but a combination of factors including:

1. Software is moving from “growth” to “value”. value managers simply aren’t willing to pay 35X next year’s EPS for anything, which is leading to major multiple contractions in many of the top names in the industry.
2. Open Source and SaaS. The modern software market was built on the backs of large one-time perpetual license sales. Unfortunately two major trends are conspiring to make it increasingly difficult to grow revenues quickly: Open Source and SaaS. Open Source basically flips the revenue model: it gives away the source code up-front and tries to make money on the back-end by charging for support. SaaS (Software as a Service) allows companies to purchase software “on demand” over the web. As a result, SaaS requires little or no up front investment from a customer and is often purchased on a short term subscription plan. The lack of large up-front payments makes it very difficult to grow SaaS revenues quickly and reduces margins because the company actually provides a real service as opposed to just shipping a disk. Thus, as Open Source and SaaS gain prominence it’s becoming increasingly clear to investors that the good old days of 200% revenue growth/year at 95%+ gross margins are gone for good and stock multiples are responding by heading south.
3. No big platform transition.
4. Networking companies are encroaching on software company turf. If you pry open the hood of your average router, you won’t find a disk drive or a keyboard but you will find a ton of software sitting inside flash memory or embedded in chips. In fact, many network company executives will insist to anyone that listens that their company is more of a software company than it is a hardware company.
5. Being public ain’t so great. Being public in these post Sarbanes-Oxley days is not easy, especially if you were a software company that lavished options on its employees and played it a little loose with revenue recognition from time to time.

I can’t agree more… Specially concerning the point 4). For the point 5), I am convinced that there is no new platform, BUT new layers are appearing in the whole IT stack. I will come back to that in the coming days….

[via PlanetEarth]

The iceberg image is a digital composite that I designed to illustrate the concept of “what you see is not necessarily what you get”. As an underwater photographer I knew that my “vision” of what a big iceberg looks like was impossible to get in reality so I had to create it. The image exists in nature but due to water visibility is not possible to capture on film. There are 4 separate images involved; the sky, the background, the top iceberg (shot in Antarctica), and the underwater iceberg (shot above water in Alaska and flipped in the final composite). The image is available for licensing through CORBIS at www.corbis.com Ralph Clevenger

Beginning of November, I have published a first post about sugarCRM. As promised, some other inputs about this open source company.

Positioning of sugarCRM within the Open Source Stack (view from Optaros):

As far as I understood, sugarCRM has about the same (working) business model as mySQL, that means:

• a GPL license BUT they keep their roadmap totally under control, as the technical decisions. it is exactly a so-called “dual-license”, that means it exists a commercial and open source version of the product.
• the collaboration with the community is not very extensive, that means, the development is mainly based on internal resources.
• they are spreading their application on internet (website, blog) because of the availibility of an open source version (325’000 copies within 8 months!!!).
• they are using the LAMP (linux apache mySql PHP) stack, which ensures a) a very low cost structure (no license required) b) a complete portability of the solution c) a very attractive technical solutions for the geeks and SW-engineers ;-)
• the core team has a huge business know-how and they are specialized in CRM solutions for years.
• it is the first time that a start-up is entering the so-called open source business-solution-stack. till today, the succesful companies were more present in the so-called infrastructure-solution-stack (linux, apache, mySql, jBoss).
• their business case is based on “derivatives”: consulting, plugins (as the outlook ones), hosting (ASP solution), support, customization.
• they found a *lot* of investors who invested a *lot* of money. last round: 19 mio $.

Have a look at what they are saying on their website:

We believe the SugarCRM open source business model is far more efficient than the classic approach to building propriety CRM software. We do not believe in the notion of hiding access to code in order to lock-in customers.

Since the open source project is such an effective marketing mechanism, open source companies can keep their sales and marketing costs low. Revenues are invested back into product development. Our prices are substantially lower than what CRM vendors charge today the majority of your subscription costs goes back into product development, not into marketing and selling the solution. Download and install the freely distributed Sugar Open Source application. If it works for your company, we ask that you participate in the SugarCRM Community through forum discussions or code contributions. If you need the functionality in Sugar Professional or Sugar Enterprise, give us a call. We want you to become a customer once we have proven we have generated value for your company, not one minute sooner.

And, on sugarForge:

The reason there are so few CRM vendors is not because it’s costly to build great CRM applications, but because of the costs required to market and sell CRM applications. Take a look at the financials of any of the established CRM players, both hosted and on-premise. What you will see is that less than 15% of a CRM vendor’s revenue is applied to product development and easily 50-70% of revenue is allocated to sales and marketing expenditures. This has been the norm for traditional software companies, but is it the right model for today?

There is a perception today that if you host or rent your CRM application you will save money over time. The marketing engines of the leading hosting vendors have done an outstanding job selling folks on this premise. It is completely false.

Renting a proprietary hosted CRM application at $50-100 per user per month over a three year period far exceeds the cost of running an open source based CRM application. With a stock Linux server you can be up and running with SugarCRM in less than 15 minutes – installation is that easy and SugarCRM is far more flexible and extendable than anything you can rent from a hosted CRM provider.

Recently there have been a number of industry analysts quoted saying “the enterprise applications industry is dead“. We believe they are right. Modern open source based software companies are built on business models that are much more efficient and cost effective in building software, distributing software and acquiring customers. They spend far less on marketing and sales and far more on engineering and quality. Since the open source project is such an effective marketing mechanism, open source companies can keep their sales and marketing costs low.

Providing application source code is a good thing. Gone are the days of ‘custom demos’ by trained sales consultants or “Model T” application trials from hosting providers. At SugarCRM, our source code is available to all. Our bug lists are published, our feature roadmap laid out, our quality assurance testing shared with real customers – in real time. Download SugarCRM today. Install it, run it for free, build new components, interact with other Sugar enthusiasts and the Sugar team on the forums.