In the software-as-a-service world, source code becomes irrelevant. We don’t want to know how to make a telephone, just a dial tone. With IT, we want app tone.

For a long time, source code was viewed as a software company’s crown jewels, protected by dongles and complex encryption schemes to prevent copying and theft. In the software-as-a-service world, however, source code becomes irrelevant. If someone offered us the schematics to a telephone, we wouldn’t care. We don’t want to know how to make a phone. We want a dial tone. When it comes to IT, we want app tone.

A recent April Fool’s joke claimed the Vista source code was leaked. But really, would we care? Gartner says Windows is collapsing under the weight of 20 years’ worth of legacy code. Forrester says that only 6.3 percent of enterprise users it surveyed at the end of 2007 had switched to Vista. It’s not just Microsoft. IT administrators will tell you that the cost of running any application far exceeds its license fees.

Even the open-source movement is feeling the change: Recent modifications to the third revision of the GNU Public License recognize that it’s the service, not the source code, that has value — and that any user of the service has the rights to its source code. IP-protection firm Palamida’s GPLv3 blog says that “in a SaaS arrangement…the opportunity to receive such source code must be prominently offered to all users who interact with the program remotely over a computer network.” (italics ours)

But I increasingly don’t care. If 37 Signals gave me the Basecamp source code for free, I’d still use their service. If Freshbooks burned me a copy of their app, I’d still subscribe to them. Even if Salesforce.com handed me their software, I’d use their hosted portal.

In the license world, it’s all about the ability to make copies of the software. By contrast, in the world of app tone, it’s about the ability to run instances of the code. It’s about operating an application reliably, and the ecosystem the SaaS provider can build around it through APIs, partners and extensions such as the Salesforce for Google Apps integration.

Microsoft clearly wants Yahoo for its traffic. The future of consumer applications is free, and having traffic to monetize those applications in other ways is essential if Microsoft is to make the jump from software to service.

But the ability to deliver “app tone” is an equally compelling reason for Microsoft to go after Yahoo. Instead of selling software burdened with 20 years of backwards compatibility, they need to start running applications. Yahoo is not only staffed with people experienced at this, but it has a large-scale computing cluster to run it on, and an installed base that already thinks of it as a service. It’s something that Redmond desperately needs, and something Yahoo’s willing to ally with its biggest competitor to defend.

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  1. Pretty sure MS has yahoo beat in large scale computing. They’ve been innovating in the space (dryad , etc) , while yahoo has been mainly a consumer of OSS implementations(hadoop) that were based off of Google’s innovations in the years prior.

  2. As an individual, I completely agree with this. I make extensive use of Google’s various applications as well as a few others. Long ago, I started forwarding all of the mail from my private domain, which functions like a brand name, to an “invisible” gmail account. I don’t have the time or the inclination to run any of this stuff on my own server.

    But I think that you need to distinguish between applications that are heavily user-oriented such as spreadsheets, text, CRM, calendars, email and those applications that operate a business but whose value is largely in the processing algorithms and data and require highly specialized skills to operate. A banking system, for example, that manages large scale transactions is not a good candidate for SaaS computing.

    Maybe this is obvious, but as an employee of a software company that makes this kind of database-intensive, minimal-user system, I keep wondering whether the license-and-install model will eventually move to SaaS. While we see some small customers moving in the hosted direction, very few are comfortable or willing to operate their company on someone else’s server farm.

  3. making time » From selling IP to selling a service Wednesday, April 16, 2008

    [...] This article on GigaOM got me thinking about how little we hear about software piracy these days.  SaaS essentially expires all issues of piracy: vendors are no longer selling pieces of IP on a shiny disc, but sell the proper execution of their software.  On top of that, users don’t even have physical possession of the IP.  I’d venture to guess that software piracy looses all relevance within 3 years. [...]

  4. links for 2008-04-17 « The Adventures of Geekgirl Wednesday, April 16, 2008

    [...] I Don’t Want Source Code; I Want App Tone [...]

  5. Ian Shortreed Thursday, April 17, 2008

    You gotta love sutra-like postings like this because they are so succinct.

  6. care for open source is also care for data portability – in the end the key issue is your freedom. if all you care about is app-tone, in the end you will end up in the same situation as with closed-source software – you will be beholden to a single vendor. but wait, its worse, in the app-tone world, they have your data too. at least in the “windows” model you could conceivably reverse engineer a file format and read the your own files from your own disk. how will this work in the app-tone world? it won’t. you will be completely beholden to your vendor and its url.

  7. I don’t want to spam the comments section but I think I have explained very well with the following four posts (albeit a bit disjointed in the presentation) about the importance of open source in the SaaS world, in spite of arguments made by people like you, Tim O’ Reily, etc.





  8. Boycott Novell » Links 18/04/2008: New Linux Kernel, New RedHawk Linux, Yahoo Gets Close to Google Thursday, April 17, 2008

    [...] I Don’t Want Source Code; I Want App Tone [...]

  9. Alistair Croll Thursday, April 17, 2008

    Interesting comments. I think there’s a lot of value in being able to review the source code — primarily for security and compliance — and transparency is a good thing. But I agree with @whoopie that data portability, which is a good predictor of just how much one SaaS or PaaS (platform-as-a-service) vendor can hold you ransom, is a big issue.

    Maybe we’ll see an “open data” equivalent of open source that commits to making data, metadata, and relations openly retrievable to its owner in a structured, standardized manner. And maybe an open source license can enforce that kind of behavior in apptone operators.

  10. It’s not about the software, it’s about the service Friday, April 18, 2008

    [...] Croll just wrote a post over at GigaOM talking about the increasing irrelevance of source code: For a long time, source code was viewed as a software company’s crown jewels, protected by [...]

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