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Subsections

The Power of Free Software

The enormous power of free software and Open-Source Software (OSS) has been well demonstrated by the tremendous success of such OSS systems as Linux, Imap, Sendmail, and various others. At this point it seems clear that creating a rich and powerful software system, then providing it as patent-free, free software, in open-source form, and at no cost to the user, is an extremely effective mechanism for encouraging its adoption and usage.

Our strategy for making LEAP widespread is based on the power of the Open-Source Software model. By making the base implementation available as free software, we are enabling anyone to expand or enhance it, or make it available on any open platform. This model reduces the end cost to the ultimate user, and frees the user from the restrictions of traditional commercial software.

For further discussion and information about the Open-Source Software model, see article [15]. Also, a particularly revealing analysis of OSS is provided by Microsoft's infamous Halloween documents, [17], [16]. These leaked documents provide embarrassingly revealing insights into Microsoft's viewpoint and attitude towards the threat posed by OSS.

On the face of it, the OSS model would appear to have little commercial application - giving away free software may be an unbeatable way of promoting its usage, but it would not appear to be a useful business strategy. However, four basic business models have been proposed based on OSS:

  1. Provide Secondary Services. The vendor/developer of the OSS system makes money by means of service contracts, customer integration, etc.
  2. Loss Leader for Market Entry. The vendor/developer of the OSS system uses the advantages of the OSS process (especially that of credibility) as a competitive advantage against established commercial vendors.
  3. Commoditizing Downstream Suppliers. The vendor/developer of the OSS system is also the producer of a product or service further in the value supply chain, and closer to the consumer.
  4. Standards Preemption. Because the OSS process can be argued to be a winner-take-all process, it may be to the advantage of the vendor/developer to seed the OSS market with its own codebase, so as to preempt a competitive codebase from taking hold.

These four models represent the current status of business thinking, regarding the possible business uses of the OSS model. All four of these business models are valid, and each represents a practical, workable business strategy.

Irrelevance of the Supply Chain Model

According to conventional supply chain analysis, a successful business model must satisfy the financial and other needs of all potential gatekeepers throughout the supply chain. The OSS model, however, renders the conventional supply chain model irrelevant.

If the protocol-based Mobile Messaging industry were to be looked at from the traditional supply chain point of view, the picture would look something like Figure 1. This figure shows the supply chain relationships among all the major players in the Mobile Messaging industry. According to the conventional wisdom, in order for a business model to work, it is necessary (though not sufficient) for all the companies in the chain to make profits and satisfy their non-financial needs. In the protocols-based model, the LEAP protocols, shown at the bottom of the figure, are the basic enabling technology for the entire industry. The Consumers, shown at the top of the figure, are the ultimate end-users of the industry products and services. In general, products and services flow from the bottom of the figure towards the top, while revenues flow from the top down towards the bottom.

Figure 1: Traditional Supply Chain Model
Traditional Supply Chain Model

Some of the key Mobile Messaging industry constituencies are the Modem Manufacturers (e.g. Novatel), the PDA Manufacturers (e.g. Palm), and the Network Service Providers (e.g. AT&T). Integrators such as OmniSky, who are bundling fully integrated solutions and focusing on direct Layer 7 relationships with the consumer, are best positioned to exploit the increasing returns opportunities of the Virtual Communities phenomenon [1].

Much of the success of WAP can be attributed to the WAP Forum's masterful manipulation of the traditional supply chain model, and to their winning the support of all the relevant gate-keepers. The creation of the WAP Forum, and their accomodation of all the significant network operators, is the classical business execution of what is needed to make the supply chain work in one's favor.

The OSS model, however, is completely different. The OSS model bypasses the traditional gatekeeper roles altogether, thereby rendering them irrelevant. Those gatekeepers who do not recognize that the End-to-End Internet model will make their gatekeeper role obsolete will sooner or later find themselves out in the cold. All four of the OSS models described in the previous section will fullfil their respective purposes. In addition to the OSS model, the Internet End-to-End model, which eliminates the WAP-like gateway model, is also in favor of LEAP.

In the telecommunications industry, the accomodation of gate-keepers and supply chain models have been traditional requirements of a successful strategy. However, we do not consider that tradition relevant in the context of LEAP. Instead, we consider that our main challenge will be to fully understand and direct the power of the Internet End-to-End and OSS models.

Bypassing the Telecommunications Gatekeepers

The strength and effectiveness of the Mobile Messaging industry requires cooperation and understanding among several players, including mobile device manufacturers, wireless network operators, ISPs, and software providers.

Two of the key players are the telephone companies and the wireless network operators. We will refer to these two players collectively as the Telecommunications Industry. For largely historical reasons, the Telecommunications Industry tends to have a different culture and set of attitudes than the broader Data Communications Industry.

Most of today's closed wireless data networks are monopolies, or have their roots as monopolies. Also, the operation of these wireless networks is similar to the operation of phone companies. The type of fitness resulting from competition which the Data Communications and ISP market enjoys has been absent from today's wireless data networks. Many key technical decisions in the wireless data networks are likely to continue being made by unfit wireless data operators.

This represents a potential obstacle to the efficient development of Mobile Messaging, and to some extent can be expected to retard its development.

However, the power of the Internet end-to-end model and OSS will ultimately overwhelm all resistance. The trend towards open networks is clear, inevitable, and unstoppable; and any gatekeepers who resist this trend will eventually be eliminated.


next up previous contents
Next: How LEAP Will Become Up: Strategy for Making LEAP Previous: Introduction   Contents