Open Source Business Analysis

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Nat Torkington
Jan. 21, 2005 02:54 PM
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I first met James Governor from RedMonk at JavaOne. He was part of a panel on open-sourcing Java, an issue that never went anywhere. I spent the night before his panel, however, grilling him about the analyst business, his thoughts on open source, and much more. He proved very thoughtful, and his years of covering IBM through downs and ups gave him a great perspective on the industry. He was particularly interesting when talking about open source--where the strengths were, what were weak plays, and how it has changed the tech industry.

That's why I was pleased but not surprised to get mail from him today, pointing me to a series of blog entries describing RedMonk's thinking about, and first steps toward, changing the analyst industry by open sourcing it: 1, 2, and 3. In short, RedMonk plans to openly release their research reports under a Creative Commons license, profiting instead from consulting, licensing reports for commercial distribution (e.g,. if O'Reilly liked a report and wanted to distribute it on our site, we'd have to pay to license it), and their subscription business. Their subscriptions will still have customers because a subscription gets you much more than just the report text (time with analysts, notification of any conversations around your product, etc.).

Those are interesting moves. My two lenses for looking at open source are collaborative development and commoditizing your complements. There are definitely collaborative development benefits to be gained for RedMonk--not everyone will comment on their reports at a Slashdot reading age, and they may well get better reports as a result. But the part of this move that convinces me that they're onto something is the business tack.

This strategic use of open source happens all the time. IBM's reinventing itself as a services company (i.e., consulting). Before a client hires IBM to consult on technology, the client must first have that technology. So IBM invests happily in open source because free is the best way to make ubiquitous the technology on which IBM will consult. Before you buy a technology book, you must know you need to learn a lot about the subject. The O'Reilly Network makes available a steady stream of useful technical articles on a lot of common tools, and stands ready to sell you technical books once you decide that you need to know more. Before a company can hire an analyst, they must be convinced that the analyst knows something the company doesn't and that the analyst can help the company. Freely-distributable reports spread RedMonk's analysis memes, making readers realize "these guys know what they're talking about, and we need to learn more".

In one sense, they're being the first to remove value from what has been the staple of the industry. That generally presages a big shift in the industry, though it relies upon the perception of value as different from price. That is, if no other analyst company follows suit, will CEOs think "wow, I'm getting a bargain" or will they think "perhaps RedMonk reports are worth nothing". It'll be interesting to see how that plays out. Their competition already sees value in blogs, so it's not a stretch to see more open analyst reports.

Of course, the other way to look at RedMonk's move is as marketing. By CC-licensing their reports, they're effectively getting much more opportunity to be spoken about. The reports become fantastic marketing for their consulting (which is, in itself, a pressure to keep the quality of the reports high) and the conversations around the reports will get them business they never had before. Again the success will come back to whether the audience still sees the reports as valuable. If they are just seen as marketing, they'll probably be treated as such and ignored.

So how can RedMonk retain the sense of value in their reports, even though they're not charging for them? That, I guess, is where they're hoping the open source "conversation" will help them. By having the technology bigwigs and bigmouths that a lot of people look up to talking about a RedMonk report, it gains karma. That's the theory, anyway.

The move to blogging means we're hearing relatively unfiltered thoughts from powerful people, but there's a practical limit to the number of conversations and concepts a person can track. I see more companies and people trying to make themselves important by insuinating themselves into this conversation of the digirati. This can only work for so long, until the memeverse reaches saturation. Then, I figure, we'll see increasingly sleazy attempts to attract the online attention of the tech celebrities, much as they already do in real life. Capitalist whores gave us popup ads, mobile spam, and spam, and there's no reason to think that the search for the holy dollar won't give us impersonation, lies, mail bombing, paid conversations, and other manners of evil. Does anyone here think self-appointed alpha bloggers wouldn't take money to be a part of a thread? Thought not. It seems optimistic to hope that good conversations will float to the top--it hasn't happened in cable news or politics.

So it's an interesting move for RedMonk--it gets them free advertising, for a while, and may undercut their competition. The longer-term effectiveness remains to be seen, but in an economy where stronger than expected earnings cause your stock price to fall, it seems a gamble well worth taking.

--Nat

Nat Torkington is conference planner for the Open Source Convention, OSCON Europe, and other O'Reilly conferences. He was project manager for Perl 6, is on the board of The Perl Foundation, and is a frequent speaker on open source topics. He cowrote the bestselling Perl Cookbook.

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Showing messages 1 through 2 of 2.

• Not what it seems??
  2005-01-22 05:54:19  Steve Mallett [Reply | View]
  
  
  It seems more likely that they aren't selling reports like they used to, need to try something different to raise revenue, and have dressed it up in "changing the industry" talk.
  
  Bravo for trying something different regardless.
• Not what it seems??
  2005-01-22 10:26:54  sog [Reply | View]
  
  
  hahaha - you're half right ;) selling reports have actually never been a huge part of our total revenue - we derive the bulk of our income from consulting led subscriptions. so in that sense, it's certainly a low impact decision as far as the money goes.
  
  part of that is that we do not accept the often lucrative offers to produce commissioned research, believing that's a compromise of our integrity.
  
  but i do take exception to the angle that this is a pure marketing exercise. we're a business, so we're certainly not doing this out of the goodness of our hearts. instead, we see a lot of benefits from a distribution and interaction perspective and are more than willing to sacrifice some incidental revenue as a result.
  
  besides, we assume that the community is rather adept at policing itself. if this is simply a marketing move, people are absolutely smart enough to figure that out and the effort would be doomed.
  
  anyway, we're looking forward to seeing where it all goes.

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Showing messages 1 through 2 of 2.

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