Investors have to make a decision whether to consider Google a marketing/advertising agency or a media company. But as an open source software (OSS) user you probably care more that they are technologists at heart. And among the biggest users of OSS to boot. Look no further than CEO Eric Schmidt discussing the LAMP stack with financial analysts back on March 5 and 6 and this week when Alan Eustace and Jeff Huber, engineering VPs at Google, spoke to an “adoring crowd” at a Goldman Sachs investor conference. Just letting two engineering VPs loose on Wall St. is signal enough but they made it clear, saying: “We are a technology company” and “Google is a software company that should be measured against its peers in delivering user experience,” when asked some question about return on investment metrics.

Therefore it is no surprise that next week, on May 31, 2007, Google offices in ten countries will host Google Developer Day, a global virtual event featuring workshops, keynotes and breakout discussions on Google's APIs and developer tools. Focusing on the theme "Building Blocks for Better Web Applications," Google Developer Day will explore innovative uses of Google developer products to create and enhance applications, and integrate with Google services.

Google Developer Day will take place at Google offices and offsite locations in Mountain View, Sao Paulo, Madrid, London, Paris, Hamburg, Moscow, Beijing, Tokyo and Sydney. The proceedings will begin in Sydney on May 31, 9 a.m. AEST and end 27 hours later in Mountain View on May 31, 7 p.m. PDT. Confirmed presenters include Guido Van Rossum, Google software engineer and creator of the Python programming language (Beijing); Chris DiBona, Google open source programs manager (London); Mark Stahl, Google data APIs tech lead (Madrid); Bruce Johnson and Joel Webber, co-creators of the Google Web Toolkit (Mountain View); Bret Taylor, group product manager for Google developer products (Mountain View); Lars Rasmussen, Google Maps senior engineer (Sydney); and Greg Stein, Google engineering manager and chairman of the Apache Software Foundation (Tokyo).

To reach developers everywhere, Google will offer live streaming webcasts from its Mountain View office and provide a YouTube channel with videos of Google Developer Day sessions at other sites. For registration and additional information, see the Google Developer Day website: http://www.google.com/events/developerday

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Most people “love” lists. The psychology of lists has been proven somewhere (no URL provided). On the other hand, analysts love surveys. So I spent a little time digging into the factoids and finer points of portions of a user survey released this week by open source enterprise service bus (ESB) supplier MuleSource. I know from my years at Datapro and IDC that IT users like IT research too. (Perhaps they are normal and like lists as well). For IT staffers, the idea is to see what other IT guys are doing. Unless they are out and out contrarians, like analysts, there is benefit in knowing which technologies peers are betting on.

Take a look at Mulesource’s data yourself. The company gives you its opinion on what the results mean, and I give you mine below. In this world of open source, research and analysis are becoming open source as well. You might also want to look at my opinion on Linux Leveling Off, posted at Research 2.0. It’s based on IDC quarterly data released to the public this week.

A couple of cautions: Only 34% of the respondents were from the U.S., making the mix a little suspect as compared to overall software usage (the U.S. accounts for about 45% of spending, according to publicly released IDC data). Mulesource didn’t publish the survey instrument so I don’t understand some of the tables provided out of context. I also didn’t see any indication of a statistical significance percentage but I suspect it is “wide.” Most important, this is a survey of Mule users so what they say they are doing with Mule cannot in any way be inferred to Sonic, Fiorano, Logicblaze, or other ESB users. But unless Mule ESB users are Vulcans or something, the non-Mule factoids below probably have some universality to them.

According to the release, of Mule ESB users:
• Almost 30% already have their ESB in production; I find this percentage high for any relatively new technology (the ESB in general, not just MuleSource’s) based on my research into the adoption of client/server, ERP, ecommerce, CRM, and so forth over the years.
• About half are “community” oriented, in that they give back custom add-ins to the market; this statistic is probably what is driving the other numbers indicating higher than expected (by me) early adoption. That would be an interesting change in behavior caused by the OSS movement if my theory is correct.
• A major Mule usage is custom integration with legacy apps according to Mulesource’s analysis but I find it hard to reach that conclusion without the survey instrument and without the statistical significance information; clearly is it an important use along with building (presumably new) self-service apps and portals
• Mule users are overwhelmingly JAVA guys, claiming a large adoption of service oriented architecture (SOA) principles
Not coincidentally the group reports big Spring application development framework usage, another possible statistical anomaly.

What I find most useful in such supplier-sponsored and technology-restricted research findings are the factoids separate from the restriction (that is, Mule usage in this case). As I implied above, unless there is some weird correlation between Mule usage and otherwise aberrant behavior, these findings should be more representative of the IT universe as a whole:
• BEA WebLogic, IBM WebSphere and Red Hat JBoss were statistically tied (whatever the precision of the sample) as preferred application servers; Oracle AS trailed badly. I suspect this finding is based on the company not getting a representative mix of database users in their surveying methodology; if they did not have about 66% of their sample running Oracle RDBMS, they did not have a good sample of the IT universe
• 50% are using integration techniques (web services specifically) to connect to customers and suppliers, not just to connect within their own enterprise
• A large percentage of respondents are using MQ Series as transport (although JDBC was leading transport/protocol); in a related question, as many respondents said they were using MSMQ as using TIBCO for actual queuing; Oracle AQ scored well too.
• Following conventional wisdom, there was a high use of Active MQ and JBoss messaging for queuing. But defying conventional wisdom, 60% of these presumably avid OSS fans are working with Windows

Mulesource claims to be the “the leading provider of open source infrastructure and integration software.”
Be careful however. The company uses the now debased JBoss-driven metric of downloads to characterize its market acceptance. I call it the “free AOL CD in the mail” metric. Once JBoss numbers became “public” after its acquisition by Red Hat, it was clear that a vast majority of the millions of JBoss downloads had not been translated into maintenance contracts. In my opinion, such contracts signify market acceptance better than downloads. On the other hand, I could also argue—and have—that the lack of conversions to subscription maintenance simply indicates that the related OSS product really works well.

In related news this week, the 6-month-old Mulesource secured an additional round of financing from venture capitalist Lightspeed. Mulesource will use the investment to double its headcount from 25 to 50, primarily in the area of sales and support.

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Wrapping up Red Hat week, I caught up with Tim Yeaton, Senior Vice President of Worldwide Marketing & General Manager, Products Division at Red Hat, as he was catching a plane to New England from San Diego. Finding ex-DEC, DG, and Wang folks among the hot new companies from the south and SV is not unusual but finding ones who still live in good old “Live Free or Die” New Hampshire is. Tim must want to vote early in the upcoming presidential race but given his job, it will probably be by absentee ballot.

Yeaton is responsible for all Red Hat marketing functions worldwide including Partner, Product and Programs Marketing and Communications. Yeaton was most recently President and CEO of Avaki Corporation (acquired by Sybase), and worked before that at Macromedia and DEC/Compaq.

I tried to cover the Red Hat Summit week waterfront with Tim in a short timeframe but if you have any questions for Tim, send them along to me and I’ll follow-up. I was interested in:

• Speculation that broke Friday May 11 that Red Hat was interested in acquiring open source software (OSS) application companies. Zimbra and Alfresco were mentioned specifically by Credit Suisse (as quoted by Larry Dignan on SeekingAlpha). This would have been bad news for users all around and OSS devotees in particular but I didn’t hear any thing along those lines at Wednesday's Red Hat Financial Analysts conference (Tim's slides are still available at the Red Hat web site) and I heard just the opposite at Red Hat's most recent quarterly-results conference call. Red Hat Exchange (RHX) is key to providing users both choice and quality in the applications stack just as users have choice in the operating system and middleware layers. Yeaton confirmed that RHX is not about acquisition but partnering. In my opinion, Red Hat acquisition of application suppliers from its RHX "catalog" (or using the RHX program as a due-diligence method for M&A as investors were discussing) would instantly set up conflict that would retard the entire OSS market's development (and thereby limit user choice). As an ex-DEC guy, Yeaton appreciated my analogy that RHX is potentially as important to the OSS movement (and the overall IT market) as the DEC ISV catalog was in the 1970s (and that the Oracle CAI program was in the 1980s, and the Microsoft ecosystem were in the 1990s).

Of course, he was careful to imply that “you never say never.”

• The Red Hat Global Desktop strategy that was announced last week but not discussed among financial analysts. Does Red Hat really care about a Windows desktop replacement strategy or is the Unix-server migration strategy where all the Red Hat marbles get placed? I don't believe many users are considering a desktop change in the near future but understanding Red Hat's strategy might give you some food for thought five years down the road. “Yes, Red Hat wants to have a knowledge worker platform but the thick client desktop has had its day except possibly in some emerging geographic markets” where Red Hat desktop Linux is well positioned. Hence the “global desktop” nomenclature which I did not get until his explanation.

Strategically, Red Hat wants to support thin clients that are network-aware (see Red Hat’s announcement with Exadel). Owning the server (UNIX migration now; mainframe and Windows migration later) is the key to that strategic direction. I believe even Microsoft believes that the days of the thick client desktop are numbered so it would not hurt for users to start thinking that way, especially for the 80% of their employees not currently "touching the network" and the 10% touching it with much more (expensive) horesepower than needed. An X-terminal anybody?

• Red Hat Virtualization plans. Yeaton explained how the virtualization strategy and pricing are set to drive Red Hat platform pervasiveness (taking a page out of the Microsoft playbook). The RHEL platform comes with virtualization built in, in contrast to EMC/VMware and most system supplier’s approach to the technology. In my opinion, users have to be pretty sure what they are getting--vs. what they already have--as they make virtualization decisions over the next few years, lest they pay for something that they've already paid for.

In addition, Red Hat and Intel will use the same virtualization technology base that runs with RHEL servers to build the Intel Appliance OS, a next generation client.

• Red Hat Interaction with Apache.org Users, especially those responsible for integration software, should be happy tha the days of Apache-JBoss talking past each other are probably over. That’s just not the Red Hat style (and I would think Apache would tell me the same thing). Yeaton says Red Hat wants to leverage the entire OSS community the way it always has (and that includes working with Apache).

On the other hand, naturally, as Red Hat begins to “OSS” Metamatrix, it will happen through JBoss.org.

Interesting talk. Interesting guy. Red Hat is leading this parade and are working hard to keep it that way.

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So what kind of open source software (OSS)/IT investment research analyst am I that I didn’t blog on May 14 about the Microsoft/OSS “patent happening?” Instead I played golf May 14. It was the first great day of spring here in New England: low 70s Fahrenheit, the grass has grown enough to be cut for the first time; the trees are now leaved so my ball can’t go so far into the woods.

So I am coming late to this blogfest. It’s just as well. This is old news to you if you have been reading my blog these last three months.

Here are five reasons why this is not new news.

As noted here multiple times, when FSF says “free” they don’t mean software “at no cost,” they mean “as in free speech.” The FSF earnestly hopes that the Microsoft patent assertions will lead to defining legal cases that will confirm its position. But there are no cases filed anywhere yet. And the FSF itself never seems to want to file one itself (no Thurgood Marshalls there).

Second, as for “free” as in “at no cost,” even the FSF says software is not free “as in free beer.” It doesn’t matter if users rented a mainframe bundle in 1970s, leased a preloaded mini in 80s, acquired CD’s under a perpetual right to use license with annual subscription maintenance in the 90s, or went Software as a Service (SaaS) this decade. It ain’t free.

Third, community was important when the OSS movement began with IBM COMMON, Share and Digital Equipment’s Decus in the 1960s and there’s some of that community flavor today in many of the special interest groups revolving around OSS. But in general, the IT top 12 has taken over OSS development as I described here.

Fourth, with the happenstance exception of Linux (admittedly a big exception), the FSF’s GNU General Public License (GPL) is not a big licensing factor in OSS. There are dozens of other licensing structures without the FSF’s patent limitations. And the major users of OSS—like the major creators of OSS, the leading IT companies—will gravitate to them because these users have nothing against patent limitations. That’s the way they run their enterprises. Ditto for academic institutions that want to set up future revenue flows based on intellectual property.

Fifth and most important, the mainstream media glosses over a lot of key product subtleties. To keep it simple but not glossed over, remember:
• Linux is not OSS. OSS is thousands of pieces of software other than operating software.
• Much if not most of these thousands of pieces of software runs on Windows as well as and even instead of Linux.
• Basically, Linux is UNIX. In a sense, Linux is almost 40-year-old technology.
• Linux is not an FSF product.
• The FSF’s GNU is not OSS but mostly thousands of typical “low-level” (no pejorative intended) utility software that every operating system like Linux needs to do anything useful. We’re talking down in the stack here. For example, here are the 10 most recently (as of 5/15/2007) updated entries in the directory:
o Jest, a software project estimator.
o Konch, a versatile KDE system tray proxy for scripts.
o Shell Directory Manager, a small tool for managing often-visited directories using a shell
o USBAuth, a passwordless authentication method for USB storage devices.
o CLISP , an ANSI Common Lisp compiler, debugger, and interpreter
o CLN, a C++ class library for numbers
o FFCall, which builds foreign function call interfaces in embedded interpreters
o Gettext, tools to produce multi-lingual messages
o GNU libsigsegv, a library for handling page faults
o gnulib, the GNU portability library
• Most of the GNU stuff that surrounds Linux probably dates back to utility activity that supported UNIX (from which Linux sprung) or even earlier operating software since the GNU project was started long before Linux (when the FSF was in the process of writing its own operating system called Hurd). If you’ve ever read through a Share, COMMON, Decus or similar catalog, you’ll find the similarities striking (once you substitute tape drive for USB storage, Algol for C++, and make other such time-conscious conversions)
• Most of OSS is neither Linux nor GNU and grew out of 1990s-era requirements to get things working together over the Internet, a development that GNU/Linux did not anticipate

So there is a lot of ancient history in this tempest in a teapot. Microsoft is taking it slow on this issue. The IT blogging world best chew for a while on the Microsoft claim that OSS as a group violates over 200 of Microsoft patents.

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While attending conferences virtually, as I did for this week's Red Hat Summit, let's me be in two places at once, it still doesn't easily support being in three places at once. Where I wasn't--even virtually--this week was at the Sun JavaOne Conference, which is increasingly becoming an open source software (OSS) community meetingplace. In fact, Sun's CEO claims JavaOne is now "the world's largest open source developer conference."

Since I wasn't there, I highly recommed Gavin Clark's coverage of the event, which you can find at Take Two. Also see Tony Baer's impressions of JavaOne here at ebizQ.

Sun's major OSS announcement was that it had delivered on its promise from last year's conference to make Java open source. It is signifcant that Java's Platform Standard Edition, Enterprise Edition and Micro Edition are being distributed under the GNU General Public License version two (GPLv2). No commitment was mentioned vis a vis GPL v3 but it seems likely that they will embrace it. Otherwise, I think they would have stuck with their own previous open-source license, used for Open Solaris, and the sort-of open Java Community Process. Another hint: Richard Stallman of the Free Software Foundation thanked Sun in the press release.

Sun also announced that OpenJDK-based implementations can use the Java SE 6 Technical Compatibility Kit (JCK) to establish compatibility with the Java SE 6 specification.

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Paul Cormier and Tim Yeaton (see for OSS Talking with… interview early next week) led off the Red Hat financial analyst conference conducted as part of the Red Hat Summit in San Diego this week. The slides are available on the Red Hat web site under the Investors heading.

Paul Cormier began by talking about Red Hat customer involvement in influencing product roadmap development. Of course listening to users is as old as IBM Share and COMMON but the fact that users take the lead in the open source software (OSS) development process, over internal development departments, is what’s new. He outlined how the Red Hat Open Source Architecture is so linked to the community. Even “outside” OSS efforts such as GNU, Apache, Xen virtualization, and so forth lead into the corporate Red Hat deliverables such as Red Hat Enterprise Linux (RHEL) 5.

Now, according to Cormier, with JBoss and RHEL 5, the architecture, which was just a roadmap, has been replaced with a platform, “a (substantive) new era in operating environments.” The three offerings in the platform include the RHEL “advanced” platform, the JBoss framework, and the two put together. As is typical, with JBoss—where the technology is less mature—the explanation is a little more complicated (in terms of trying to rationalize the classic JBoss app server with Hibernate, Metamatrix and other piece parts).

Tim Yeaton took over to talk about the market, emphasizing virtualization. Naturally this market opportunity analysis is of more interest to the IT investment community rather than to users. But looking at the data can be useful to you in terms of understanding your needs in juxtaposition with your peers’ needs.

Tim began by outlining the server market in terms of new acquisitions (68% Windows, 22% Linux and 10% Unix, according to IDC). Are you seeing this in your enterprise?

Tim also used IDC data to illustrate that the perceived leading value of virtualization, production consolidation (50% of the action today), gets replaced by 2010 by mission- and business-critical high-availability applications as the leading use of virtualization functionality.

Red Hat mixed Aberdeen, IDC and Gartner data; out of past loyalties, I only cite IDC. An IDC slide shows the Linux/OSS ecosystem growing from $15 billion in 2006 to over $40 billion in 2010.

-- If Red Hat feels it only can compete for a portion of that bar, I’m not sure which parts they are targeting.
-- But with programs like the Red Hat Exchange, I don’t see why Red Hat can compete for the whole stack except for hardware.

After Tim and Paul, Alex Pinchev, the VP of sales, talked about many aspects of how users are supported, especially talking about how Red Hat plans to build back its channel flow as a percentage of total (it dropped because of the acquisition of the mostly direct JBoss, not because channel flow dropped absolutely).

At the end, Charlie Peters, the CFO, repeated the presentation given yesterday and summarized here.

CEO Matthew Szulik did an epilog on recent results that highlighted the RHX program (apparently more news to come on Thursday May 10) and the worldwide strength of Red Hat.

The only thing I was surprised by was the dog that didn't bark. Red Hat also put out a press release today on desktop Linux but there was no mention of that sujbect for the financial community by the marketing, engineering, sales, financial or executive speakers. I suspect that the Red Hat Linux on Desktop message is strictly for the true-believer community and that the real Red Hat strategy continues to be to replace Unix on servers.

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The Red Hat Summit user group meeting kicked off today in San Diego with two announcements involving the big guns of the proprietary world: IBM and Intel.

FYI, I am doing this "virtual" with a financial analysts webcast meeting serving as my version of the conference keynote and separate interviews over the phone replacing humping my laptop around the city. Believe me, as someone who dates information-technology (IT) conference attendance to the days of the Joints (in the 60s and 70s, in the ITworld, the word "joint" did not just mean something to be smoked), I've earned the right to do trade shows sitting down.

The announcements:

1. Intel and Red Hat said they were going to develop an Appliance OS for Intel vPro processors. The idea is to simplify systems management and improve security in "open choice" (Linux and Windows) shops, so I can hardly criticize the effort. However, as I said last week on seekingalpha.com, I still don't get virtualization on the desktop. General release is scheduled for 2008.

2. IBM and Red hat said they would work the other end of the open choice spectrum: Linux working with classic operating systems in parallel on legacy systems. Ironically, the partners claim the reason for virtualization on the mainframe is the same as Intel and Red Hat claim for virtualization on the desktop: "Two key factors driving the growth of Linux partitions on the mainframe are the performance and security benefits of consolidating distributed applications."

As I look at these announcements, I am thinking about why Red Hat has become an important company to watch in my IT investment research practice. The answer is that they are perceived to be at the leading edge of the open source software (OSS) movement and therefore are like the canary in the coal mine in terms of telling us if things are working or not for the OSS business model. In reality, both IBM and HP probably recognize more OSS revenue than Red Hat but that revenue flow is buried so far down in software and services divisions that neither upticks nor downtrends become obvious until much too late to do investors any good.

On the other hand, when Red Hat is doing well (as it has with Red Hat Enterprise Linux flowing out of Fedora) it says something specific for the OSS business model. And when Red Hat hiccups as it apparently has with JBoss, it tells us either that users want their middleware integrated (Red Hat has obliged) or that the commoditization of middleware caused by Apache has already changed the rules before they could be written down.

The next stage is to see what Red Hat can do for the OSS applications world. That is the real inflexion point and the Red Hat Exchange has adopted an interesting means of moving the ball down the field.

Stay tuned for a live blog of the financial analysts meeting beginning at 2:30 EDT to see what Red Hat proposes in these three key areas: the operating system, the middleware and the actual logic that does something.

Posted by dennisb in OSS Business Issue | Permalink | Comments (0) | TrackBacks (0)

(You can listen to a replay yourself via the Red Hat web site)

A Baird analyst kicked it off by saying they were basing investment advice to their clients on the fact that OSS is a disruptive technology trend, with a "low barrier to entry but high barriers to success." Baird contends that RHEL is only a five year old product (but of course UNIX is almost 40 years old, which is the fair comparison).

The Red Hat speaker was Charlie Peters, its Exec VP and CFO. He made six topline points of interest to both investors and users and then expanded on them during a 20-minute presentation and Q&A session. Basically, he said Red Hat is the subscription-model-based global OSS provider with multiple revenue streams and product lines. Treating each of those points indvidually, he said (includes some of my analysis, especially pointing out both investor benefits and user benefits):

1. Open means "you can see it" (forgive him, he's the CFO not a technical guy). His point was that
- development model and community is open
- that makes development better, faster and cheaper (there is actually no research that backs up the first two points of this claim--made by all the OSS providers--but there is no doubt that it is cheaper because they get the OSS community to do the work)

Openness let's the company mitigate risk and grow revenue from users in different ways (Linux to JBoss users and vice versa). And openness let's user take advantage of a "certified" software ecosystem (3000 apps and other pieces of software are supposedly "certified"). If true (I cannot confirm that number), users do not have to constantly "try it, you'll like it" as is true of most OSS. Peters said Red Hat looks at Oracle and other Red Hat "clone" competitors closely as part of prudent business practice but feels it has an advantage because of Red Hat's customer count and the aforementioned certification procedures.

2. The Subscription model is of course good news for investors (almost half the FY2008 revenue is already "in" in accounting terms because of deferred revenue) but also has benefits to users.
- Users can choose 1, 2 or rarely 5 year contracts (and of course pay monthly)
- Red Hat allows users to sign coterminus subscriptions as customers add users (keeping things manageable)

Red Hat is seeing a 98% renewal rate (renewing at 100-120% of deal size) and is adding 10,000 customers a quarter as smaller companies sign on even though Red Hat's original success was in Fortune 500 companies.

3. Global sales and support is important to both investors and users
-- Good coverage around the world.
-- Bookings are 61% the Americas, 25$% EMEA, 14% APAC
-- 52% channel and 48% direct (Red Hat's goal is to get channel up around 60%, again making the products more available to users)

4. Red Hat is not just Linux; there is a large addressable market for UNIX and proprietary middleware migrations
-- Now: Virualization plus middleware on top of classic Linux
-- Coming: Red Hat Exchange (Red Hat will be "selling" and users will be able to get other suppliers' OSS through one point of contact)

Peters noted that under 10% of users are into virtualization at this point but it is there, embedded in the OS, and Red Hat is poised for virtualization to take off (see my thoughts on how virtualization will emerge at seekingalpha.com)

5. Red Hat just completed a major new product cycle
-- RHEL 5
-- New JBoss

6. Red Hat has two revenue streams
-- Services (15%) as well as subscriptions (85%)
-- Services include training and implemenation, which Red Hat will begin to emphasize (partnering with Exadel)
Market is not price sensitive but Red Hat has seen a mix of discounts as they broadened sales reach to smaller companies. The two revenue streams mean users can get their services needs filled with Red Hat as well as all of their OSS needs.

(For finance types, Red Hat has large tax-loss carryforwards and good cashflows because it doesn't worry about a hockey stick the way software companies have since the dawn of the ISV era around 1980.)

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Barring Oracle acquiring Microsoft or some similar cosmic event in the industry I will be devoting this week to information out of the Red Hat user conference and related events.
-- I will live blog meetings with investors at 12:50 pm EDT today Tuesday and 2:30 pm EDT on Wednesday
-- I will interview Tim Yeaton Thursday morning and post the results some time after the meeting
In addition to Red Hat's position in the open source software (OSS) movement as the sponsors of the Fedora Linux distribution and various JBoss middleware code sets (most importantly, the application server of the same name), the company is taking on a leading role in building an OSS application catalog (through the Red Hat Exchange). The lack of applications is the biggest impediment to Linux adoption and Red Hat knows it.

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Elizabeth Book and Ely Rosenstock of ebizQ.net called yesterday to alert me to the controversy that made May 1 of this year “Digg/DRM Day” instead of the traditional celebration of the first day of summer. Or the traditional day to celebrate socialism and past labor reforms. Or the day to do whatever just to get outside on what is statistically likely to be one of the first warm days in the temperate part of the northern hemisphere. [That was not true here on Cape Cod but all of you who come here in July and August fail to realize that the same thing (the ocean all around us) that makes it 10 degrees cooler here in those months also make it 10 degrees cooler and rainy here in the spring.]

Any ways, if you didn’t hear about the controversy, in short, the industry-standard hexadecimal encryption code that Blue-ray and HD-DVD makers use to protect their content from copying had started appearing on the web about five months ago. This hadn’t caused much notice because unless you are real hacker there’s not much you can do with the code. Hackers could copy the HD-DVD and watch the copy on their HD TV instead of watching the original. Or they could stand on 3rd Avenue in Manhattan in a long coat and sell pirate copies of movies to the .00000001% of the world population that has HD TVs. Or presumably they could send what must be fairly large files out over the Internet to others who have paid $3000-$5000 for a television set.

Sarcasm and HD TV envy aside, the encrypted high-definition movies can also be played on PCs and laptops (and that play-back device in the back of my daughter’s minivan that she uses to keep my grand kids quiet). But why? Does the definition matter when you’re three feet from a 17-inch screen?

The answer of course is that it is the principle of the thing. The administrator of the code, the Orwellian sounding “Advanced Access Content System Licensing Administrator (AACSLA)” had informed a few sites to cease and desist from reproducing the code based on a legality called "trafficing in circumvention devices" (the same reason you're not supposed to be able to buy one of those things cops, car thieves, and the AAA use to open locked cars). So on Tuesday, Digg said it would honor the cease and desist request for the same seemingly reasonable legal reasons other sites had (that is, because the copyright or patent owner—the aforementioned AACSLA—asked them to). In protest, Digg devotees almost overwhelmed the popular social networking news site by posting and “digging” (popularizing the posts to the front page if, like me, the term has to be explained to you) the hexadecimal code. The “Digg” attack almost shut down the site. Later the same day, the owners of Digg relented. They dramatically stated that the AACSLA could put them out of business if need be.

If you have been asking yourselves what the heck this has to do with open source software (OSS), there it is. The protestors say they won against Digg in the name of “free speech, not free beer,” the classic mantra of the Free Software Foundation. The new version of the General Public License (GPL) is also against Digital Rights Management. As I read it, the FSF is basically saying directly that if you develop some code, copyright it and publish it into the OSS community under the GPL, some one else can’t take it and add it to their software and encrypt it (or at least can’t charge for the encryption code). That's OK. It's their license and it's their choice.

But indirectly, an FSF ghost organization called Defective by Design rails against Digital Rights Management and intellectual property rights as represented by the hexadecimal code. The FSF is saying don't encrypt anything, apparently because it precludes "fair use" (your making a copy of a couple of pages of a book at the library) but actually because the FSF is against choice.But according to the Electronic Frontier Foundation (another DRM basher), that’s not what the AACSLA was doing. It was demanding cease and desist on the car thief device rule.

I am conflicted (I never thought I would say that). I am giving away my intellectual property by posting this essay; that is my choice. And I have no problem with the FSF choosing to help software developers give their intellectual property away as long as it respects others intellectual property rights to encrypt things. The AACSLA was not giving away its movie content under any “open source” like arrangement and they shouldn't be forced to.

Any ways, according to the great masked AACSLA behind the screen it looks like there is a fairly easy fix for the content providers and manufacturers. The hackers will soon get to try again.

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