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New open source business models based on Xen

Editor: This is a post by Simon Crosby, Xen Project leader. In the first sentences he refers to a previous blog posting on this site.

I wanted to re-phrase some key points from my blog posting of this (which I have withdrawn) because I failed to tease out and succinctly articulate the core argument, and in doing so unintentionally aroused the ire of some in the community.  Thanks to those who offered feedback — you were right, and I stand corrected.  Let me try to get it right.

Novell’s announcement of its Windows driver pack for the Xen hypervisor implementation in SLES is interesting because it both challenges the existing business models of the Linux distros while offering them previously inaccessible opportunities through the delivery of mixed-source offerings.

When Linux was just Linux, and not capable of virtualizing other operating systems, the concept of the Linux OSV Supporting the OS and all open source components in the app stack that they deliver as part of the distro, was straightforward.  The business model of the major distros is based on their ability to Support (that is, take a phone call from their customer, and deliver fixes where necessary) any of the technology they deliver in their product (whether or not they originally developed it). An open source product philosophy enables them to develop, debug and develop expertise in the entire stack that they deliver. 

But with virtualization as an integral component of the distro (whether Xen, KVM or one of the other open source virtualization technologies), Linux is only one (arguably the key) component of the stack, and when a different OSV’s product is virtualized on Linux (Windows, perhaps, or another open source OS),  two new opportunities emerge: First, a Linux OSV can extend its value proposition to its customers by offering to Support other open source OSes virtualized; and second, by adding to their offerings the requisite closed source add-ons such as the Novell Windows Driver Pack for closed source OSes, the distros can artfully deliver high value mixed-source offerings that “price to value”, and protect themselves from the kind of discounting attack that Oracle used on Red Hat.

Both Novell and Sun have announced their intention to support their customers’ use of other open source operating systems virtualized on their implementation of the Xen hypervisor.  Thus, one might expect Novell to see new business opportunities to support competitive Linux distros on SLES, and in so doing give customers a migration path to SLES as an OS while leveraging SLES and the hypervisor to virtualize existing competitive Linux installations in use by the customer.

The fact that Linux, BSD and OpenSolaris source code is available to the virtualization vendor, and the fact that the key vendors and communities behind those OSes work within the context of the Xen project to develop a common open source “standard” hypervisor, means that from a virtualization  perspective at least, all are compatible with the same hypervisor ABI, hopefully reducing any support complexity.  Thus far, only Red Hat has maintained a steady focus on only RHEL, and possibly future Windows support.

The possible adoption by the Linux OSVs toward the delivery of mixed-source offerings is extremely important.   Upcoming releases of Netware and OES to run on SLES/Xen gives Novell an important opportunity to price to value, specifically because the mixed-source nature of the combined product contains IP, and the market is good at determining the value of such things.  Contrast this with the traditional open source business model, in which there is no IP, but the vendor markets a high value brand (such as RHEL or SLES) and associated service offering.

This is vulnerable to attack by lower labor cost and/or competitive offerings – a problem that the mixed-source offering does not seem to me to have.

It is a specific goal of the Xen Project to develop an open source “engine” that can be delivered to market by multiple players, in
multiple products.   Virtualization of closed source OSes forces (in the case of Windows) the delivery of closed source value-added components that are not part of the core hypervisor itself.   The value-added components that vendors must add to the “engine” in order to deliver a complete “car” to their customers allows them to differentiate their products, and gives customers choice.   By contrast, had it been the Xen project’s goal to deliver a complete open source “car” there would be no value proposition for the different vendors seeking to add virtualization to their products, and it would put Xen in conflict with the Linux OSVs — some of the most important contributors to the project.
The nutshell: I think that Xen has pioneered a new model of open source business – one which uses open source as a reference standard implementation of a component of the offering, but which stops short of a whole product.  This encourages multiple vendors to contribute, because adopting that model allows them to add value to the final product and be compensated for it.

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