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The OSS post

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I guess where I should start this post in OSS is by going back. This time 20 years ago, we were in a time of economic irrational exuberance so large as to be like a fairy tale in comparison to Brexit and the coronavirus.

Irrational exuberance

Everyone believed that the future was going to be rebuilding the catalogue shopping business online. Consumers would have a raft of choice.

Japanese newsprint

Advertisers were going to swap print and TV advertising for banner ads. Something that looked like small advertisements on the pages of newspapers at the time. Because of this, online display advertising was over-priced and everyone was happy.

In order to do these businesses, you needed a lot of servers and a lot of software. If you had the money you bought really good software and servers from Silicon Valley. Companies like Sun Microsystems, Silicon Graphics or Digital Equipment Corporation. These all ran variants of the Unix operating system.

If you were less fortunate you might be running on an Intel server running Windows NT, anything by IBM or repurposing a Mac from the design studio. The Mac made a surprisingly robust server solution mainly because the computer was so ‘dumb’. There wasn’t a lot that hackers could do to it at the time.

True hackers

People who were hackers in the truest sense realised that you didn’t have to pay for software to run on servers. If you knew where to go and had the right technical chops, you could have robust server software. You could end up paying good money to Microsoft and still need to use three times the amount of servers for a given load because Windows didn’t handle multiple threads as well. It couldn’t do as much ‘work’ as free software. You would get even more benefit if you were skilled enough to see how you could tweak it to meet your needs. Online communities also meant that you would find fellow travellers interested in similar tweaks and would collaborate with you.

A classic example of this would be Hotmail. Hotmail was founded on NetBSD servers and it took years for Microsoft to migrate away from it due to performance and scaling issues with Microsoft’s own software.

Yahoo! which used and contributed to various OSS projects including:

  • Debian Linux and later moved to an adapted version of Red Hat Linux
  • FreeBSD
  • PHP

A peer of Yahoo!’s founders David Filo and Jerry Yang, decided to make hacking together servers and web services easier for businesses and technologists. The founder was called Larry Augustin and the company he founded was VA Linux. VA Linux built workstations and servers for websites. VA Linux is now most famous for the largest opening day price increase on the NASDAQ; but they made seem really great computers.

For smaller businesses, a small start-up called Cobalt Networks came up with a relatively friendly server that could sit in the corner of an office called the Qube. This was popular in a number design offices as a file server and also ran numerous websites. As well as the cute form-factor, it made OSS more approachable for a lot of businesses and changed expectations about IT complexity.

Cobalt Qube 2
Cobalt Qube

I was working on a mix of telecoms, enterprise and consumer technology clients. One of my clients . By the time I was working with VA Linux in April 2000, open source software (OSS) was a hot ticket. And both Cobalt Networks and VA Linux were at the forefront.

At this time OSS, in particular the Linux operating system was endorsed by IBM with a $1 billion investment in the community. This helped adoption by other large business technology companies including Oracle, SAP and Sun Microsystems.

IBM and Linux

Suddenly it was OSS everywhere. My client Palm was trying to move its photo-smartphone operating system to Linux underpinnings.

Where was Microsoft in all this?

Its hard to explain to someone under 30 how dominant Microsoft was a business at the time. They were steadily working towards a goal outlined by Bill Gates and Paul Allen in the mid-1970s

A computer on every desk, and in every home, running Microsoft software.

Paul Allen and Bill Gates, 1974 – 1975

Bill Gates wasn’t a cuddly billionaire who wanted to give the world toilets, but a dodgy looking technocrat who made Mark Zuckerberg seem human.

Microsoft had won the PC industry and was looking to extend itself into every aspect of business and home life. Microsoft injected investment into Apple at a time when the company was days away from bankruptcy. This made sense for a number of reasons:

  • The Apple Microsoft Office business was worth more than the investment into Apple
  • The deal allowed Microsoft to settle a number of patent disputes
  • It was a cheap distribution deal for the Microsoft Internet Explorer browser

The disappearance of Apple would have had serious issues in terms of antitrust regulation in the US into Microsoft’s core Windows business.

They’ve done a great job. They’re a company that’s done a great job. If you go back to 1997, when Steve came back, when they were almost bankrupt, we made an investment in Apple as part of settling a lawsuit. We, Microsoft made an investment. In a way, you could say it might have been the craziest thing we ever did. But, you know, they’ve taken the foundation of great innovation, some cash, and they’ve turned it into the most valuable company in the world.

Former Microsoft executive Steve Ballmer on the Apple investment

Back then Bill Gates was the Mark Zuckerberg or the Sergei Brin of his day and even he almost missed the importance of the world wide web and the internet. Gates was paranoid about the next thing coming along and sweeping all his success away.

The internet represented one such threat.

Gates is as fearful as he is feared, and these days he worries most about the Internet, Usenetand the World Wide Web, which threaten his software monopoly by shifting the nexus of control from stand-alone computers to the network that connects them. The Internet, by design, has no central operating system that Microsoft or anybody else can patent and license. And its libertarian culture is devoted to open—that is to say, nonproprietary—standards, none of which were set by Microsoft. Gates moved quickly this year to embrace the Net, although it sometimes seemed he was trying to wrap Microsoft’s long arms around it.

Headliners: Bill Gates. – Time magazine. December 25, 1995

OSS represented a second such threat. Microsoft’s sales of enterprise software for businesses and other organisations was a high margin business. OSS was a threat to that business. Back in 2001, I started working with colleagues at an agency who were asked to deposition OSS products and the the underlying legal agreement (the GPL).

I was asked by my colleagues to write a briefing document of what OSS actually meant. It didn’t g0 down that well as it outlined the challenge of assailing an idea and a committed community. That didn’t stop our client Microsoft trying, mostly at the C-suite and policy level.

The problem was that it didn’t offer a better alternative. And so we come forward 20 years: Microsoft: We Were on ‘The Wrong Side of History’ With Open Source – ExtremeTech which captures the highlights of Microsoft president Brad Smith talking at MIT a week ago.

More information

Yahoo: The Linux Company | ZDNet

A Brief History of Search Advertising | Searchengineland

MS Hotmail servers begin switch from FreeBSD to Win2k | The Register and Microsoft Hotmail still runs on U**x | The Register – this give you an idea of how critical and high-performing NetBSD is as an operating system.

Barbarians led by Bill Gates by Jennifer Edstrom

Report Flays Open-Source Licenses | Wired

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ICYMI | 万一你错过了| 당신이 그것을 놓친 경우에 대비해서

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Pentagon wants open-source 5G plan in campaign against Huawei – ok in theory only

It Seemed Like a Popular Chat App. It’s Secretly a Spy Tool. – The New York Times – Emirati’s do with Totok what the Chinese have been doing for years with WeChat TOMS/Skype etc. Totok is apparently popular in Qatar as it allows VoIP without a VPN – so expat workers use it to connect with their families at home.

Totok messenger

Made in America – On US staffed hacking team in UAE. Interesting investigation by Reuters

The decade of the drop: why do we still stand in line? | How To Spend It – experience. It’s diametrically opposite to one stop shopping

Apple Captures 66% of the Smartphone Industry’s Profits in Q3 leaving all of their Competitors Combined in the Dust – Patently Appleit is becoming a challenge for Chinese smartphone brands to increase their smartphone ASPs and margins due to a combination of longer consumer holding periods and Apple lowering pricing on some key SKUs, which has limited the headroom that Chinese vendors had used to increase their ASPs – in the long term Huawei having to be vertically integrated all the way up the stack could be to their benefit

Nike’s Jordan brand just had its first billion-dollar quarter — Quartz – interesting that it has taken over 30 years to get to a billion dollar quarter, yet Jordan is at least ten years past its cultural peak

In Focus: Pet Shop Boys 6th December 2019 | Listen on NTS – amazing delve into their career

Reality TV stars auditioned to ‘promote’ poison diet drink on Instagram – BBC News – Oh my gosh, this is as good as watching re-runs of Brass Eye

Pig Irons at the ‘Plex | Margins – essay on consulting firms well worth reading

Gildo Zegna: tailoring masculinity for changing tastes | Financial Timesluxury goods industry is feeling the heat of technological disruption, social upheaval and identity politics. Furthermore, within the high end fashion industry few items of clothing are facing more pressure from falling consumer demand than the one that made the Zegna family rich: the traditional men’s suit. “The big challenge we face is a rethinking of masculinity,” he says. – I think streetwear is interesting because of the reassurance it provides on masculinity. The basics of streetwear go back to the mid-century sports basics. The hooded top, jeans, t-shirts, plaid shirts, Letterman jacket, track jacket etc

Facebook awaits EU opinion in privacy case | Financial Times – interesting how wide the impact of this case could be in terms of things like credit card transaction data etc. (paywall)

Aito.ai – Introducing a new database category – the predictive database – hmmm

A Surveillance Net Blankets China’s Cities, Giving Police Vast Powers – The New York TimesChinese authorities are knitting together old and state-of-the-art technologies — phone scanners, facial-recognition cameras, face and fingerprint databases and many others — into sweeping tools for authoritarian control, according to police and private databases examined by The New York Times. Once combined and fully operational, the tools can help police grab the identities of people as they walk down the street, find out who they are meeting with and identify who does and doesn’t belong to the Communist Party. The United States and other countries use some of the same techniques to track terrorists or drug lords. Chinese cities want to use them to track everybody.

Is LVMH’s Digital Transformation Working? | Luxury Society“Over the last few years our market has become highly fragmented,” it added. “Customer journeys and purchasing habits have become more complex. Now, in addition to magazines and other traditional media, our customers – especially young people – use a range of digital options to stay informed, communicate with friends and shop. Brand awareness and customer engagement are built on these many different touchpoints.”

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Is it western companies, or China in a financial crisis? Part 2

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Apple and Jaguar Land Rover blamed the Chinese economy for their recent financial results. The truth is probably more complex. What factors are affecting affecting these businesses that aren’t directly related to the Chinese economy?

China is a unique mobile environment and in some ways it mirrors the hopes (and fears) for the internet in the late 1990s. Oracle and Sun Microsystems spent a lot of time during the dot com boom developing technologies that would allow applications to run on the web. Enterprise software sudden had a user experience that could be accessed via a web browser. Java allowed applications to be downloaded and run as needed. Netscape had a vision of the internet replicating the operating system as a layer that would run applications. Microsoft also realised this which was why they developed Internet Explorer, integrated it into Windows and killed off Netscape. The Judge Jackson trial happened and that was the start of the modern tech sector allowing Google and Apple to rise.

Move forwards two decades and most computing is now done on mobile devices. In China, WeChat have managed to achieve what Netscape envisioned. Their app as a gateway to as many services as a consumer would need including a plethora of mini applications. It doesn’t suffer the problems that native web apps have had in terms of sluggish user experiences. In addition, WeChat has invested in a range of high-performing start-ups to built a keiretsu of businesses from cab services, e-commerce, property companies and even robotics. In the meanwhile Tencent who own WeChat have a range of consumer and business services as well.

What this means for Apple is that many of its advantages in other markets are negated in China. The OS or even performance of a smartphone doesn’t matter that much, so long as it can run WeChat and a couple of other apps. The look and feel of the app is pretty much the same regardless of the phone OS. Continuity: where the iPhone and a Mac hand-off seamlessly to each other doesn’t matter that much if many consumers use their smartphone for all their personal computing needs.

This has been the case for a few years now in China – but Apple haven’t found a way around it.

As for phone industrial design – Apple lifted the game in manufacturing capability by introducing new machines and new ideas. To make the iPhone 5, Apple helped its suppliers buy thousands of CNC machines. This grew the manufacturers capability to supply and the amount of pre-owned machines that eventually came on the marketplace. It meant that other manufacturers have managed to make much better phone designs much faster.

That meant Chinese consumers can buy phones that are indistinguishable from an iPhone if you ignore the logo and function the same because of China’s app eco-system. Again this has been the same for a few years and has accelerated due to the nature of the dominant smartphone form factor. The second iteration of the iPhone X form factor is what really changed things. The phones were different to what has come before, but they weren’t demonstrably better. They were also more expensive.

In the mean time Huawei and others have continued to make progress, particularly in product design and camera technology – the two areas where Apple led year-on-year. Huawei devices can be expensive for what they are, but they gave domestic manufacturers ‘brand permission’ in the eyes of many Chinese consumers to be as good as the foreigners.

This wasn’t helped by Samsung’s missteps in the Chinese market that started with the global recall of the Samsung Galaxy Note7 battery recall. Samsung hasn’t managed to make that gap back up and seems to make marketing missteps regularly such as its recent tie-in with the ‘fake’ Supreme brand holder China. If you’re a Chinese consumer the additional value or status that you used to see in foreign handset brands is now diminished. This seems to be a wider theme as domestic brands are also making similar gains in market share compared to foreign FMCG brands. Although there are also exceptions like baby formula.

Domestic brands have done a good job marketing themselves. BBK in particular are very interesting. Whilst Huawei makes lots of noise and bluster at how big they are, BBK creeps up. It has a number of brands in China and abroad OnePlus, Oppo, Vivo and RealMe going after particular segments. The brands are focused but run separately like companies in their own right. Apple’s marketing riffs on its global marketing (though it did a great Chinese New Year themed ad last year). This reinforces the perceived common view that foreign businesses are full of hubris and don’t sufficiently localise for China. Apple’s recent pricing strategy in a market where this is so little to show in value provided looks like the epitome of hubris.

180120 - China smartphone market

Finally, there has been a massive amount of consolidation of brands in the China smartphone market over the past four years. That provides for scale in terms of logistics, supply chain, design, component sourcing and marketing.

If we move to the automotive sector and look at Jaguar Land Rover – their problems in China look self inflicted. China’s car market has declined for the first time in 20 years. But it seems to have mostly affected brands like Hyundai rather than prestige brands like Mercedes Benz or BMW. The reasons why aren’t immediately apparent. Yes diesel cars are less popular, but BMW, Audi and Mercedes make diesel cars.

Jaguar Land Rover aren’t the only foreign brand suffering: Toyota has had problems in China since the last round of strong anti-Japanese sentiment exploded in 2012.

More information

Why Does WeChat Block Competitors, While Facebook Doesn’t? | Walk The Chat

Apple’s China Problem | Stratechery

Samsung recalls Galaxy Note 7 worldwide due to exploding battery fears | The Verge

Samsung angers hypebeasts by partnering with fake Supreme brand in China | The Verge

Fake News: Samsung China’s Deal With Supreme “Knock-off” Spurs Drama | Jing Daily

Chinese car sales fall for first time in more than 20 years | World news | The Guardian