Microsoft exec: Open-source model endangers software economy

InfoWorld - A Microsoft Corp. official yesterday questioned how the software industry could survive if users are getting software for free through open-source.
For-profit software companies will struggle for a business model against free software, said Microsoft Distinguished Engineer Jim Gray. He served on a panel last night on software trends, XML, Web services and grids at the Software Development Conference and Expo West 2004 show in Santa Clara, Calif.
"The thing I'm puzzled by is how there will be a software industry if there's open-source," Gray said, disagreeing with a fellow panelist over the effects of open-source technology.
Speaking in response to an audience question about the effect of open-source on standards development, panelist Daniela Florescu, a senior software engineer at BEA Systems Inc., said implementations of standards such as XML schema are being taken out of open-source movements such as Apache.
But Gray said the open-source community hasn't been responsible for standards development. "I don't think any of those specifications were written by any of the open-source community," he said. Gray even cited Microsoft rival Sun Microsystems Inc. as a company that has developed standards while stressing that he was "puzzled" by Florescu's answer.
"All those companies [developing standards] are selling software," said Gray. "The key thing is [with] people who are selling their software, the software has to somehow be better than the free software, and [if] it's not better, I'm puzzled as to what the business model is because they can't sell it."
An audience member asked if software companies could instead compete on the basis of their service models. "No, they don't, because I think the people in China could do better [with a service model] than the people in America," Gray said.
A panelist from Oracle Corp. acknowledged that the database company couldn't compete with an open-source vendor such as MySQL AB on price.
"One place where we could not compete very effectively is [on] price," said Jim Melton, standards architect at Oracle. However, he said the company would compete very well with open-source products by emphasizing functions such as scalability, high performance and huge databases.
"I also think the open-source databases will pursue [features] in the same manner," Melton said, but he noted that Oracle has a "10-year head start" in development.
The Oracle database as well as Microsoft SQL Server and IBM DB2 will continue to compete effectively, Melton said.
A product release last Friday by MySQL confirmed that open-source companies do intend to compete on features. MySQL announced an open-source, clustered database productwith high-availability support, called MySQL Cluster. The database is intended for larger applications than what has been the company's forte.