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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.