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App Stores (if Apple permits the term) or Open Source?

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It’s been an interesting week for headlines. First and the most controversial is George Cooney, the head of Forrester Research, publicly stating that Apple revenues will overtake IBM and HP as it moves into being a $200 billion company. (IBM is at $99 billion and HP at $126 billion currently). What George didn’t comment on was the Apple business model that drives not only these revenues but a very high profitability model, but then that’s the point of this post. Apple doesn’t just sell the hardware, or even conventional software, the Apple App Store brings a whole new dimension to where, and how, we obtain ‘services’ and pay for them.

With that point in mind, Forrester also produced a report commenting on the confusion in the IaaS (Infrastructure as a Service) market. In the report summary posted on its website, Forrester drew attention to the difference between the 6% of CIOs using IaaS against 16% of business managers. I have not seen the full report but I hope the analyst house asked what both groups are using IaaS for. I suspect CIOs are more likely to be doing testing using external virtual machines and business managers are building, or consuming, actual business apps. Forrester Principle Analyst Frank Gillett points out the obvious risk of enterprise data being moved outside, and comments on the related security issues.

The second headline that I want to link with this followed RedHat publishing a 25% rise in Q4  revenue leading to headlines that it was expecting to become the first $1 billion Open Source company. Hidden in the text was the comment that this was due to strong growth in data centre and cloud market places. Maybe now the linkage and the headline become clearer? The other point in the title and another headline this last week, is that Apple is suing Amazon over its use of the term App Store claiming it as an Apple term. Given the number of companies that have announced that they will be launching App Stores, the lawyers are going to be busy.

It’s clear that we are shifting to an externally focussed and shared environment in which we all meet to do business, and that means using the internet for connectivity, the web for content and the cloud for processes delivered and orchestrated from ‘services’. All of which means a technology shift towards loose coupled orchestrated services, away from internal enterprise applications, and therefore a shift to Open Source licenses, as traditional licenses based on defined numbers of processors and users simply don’t work. So here is the explanation for a whole year of 20% plus per quarter growth by RedHat, and I suspect other Open Source players.

But how open do we want the things that our business colleagues use to be? It was fascinating to see Apple, who has previously collected abuse for its closed app shop business model, standing up forcefully at the recent RSA Conference to argue that their closed ecosystem is a safe approach, and indeed they are right. As Apple controls the developers and the resulting apps are tested for safe conformance a user should be able to load an Apple App from its App Store in complete safety. The real question is not about the closed environment; technically it’s actually about the commercial cost of the model with complaints that Apple currently wants too big a share of developers’ money for the benefit of participation in this closed market place.

HP is the latest company to announce its conversation to developing an App Store concept which I guess will be an extension of its current Download store into a much enlarged enterprise as well as consumer store. Presumably this, coupled with its shift to being a provider of smartphones, tablets and PCs, will change its business model towards one more like the Apple model, and maybe that could stop Apple overtaking in revenues as George Cooney predicts. The real question in all of this is where we source the software we want to use, will there be enough choice, how expensive will a closed community model be and is this a price worth paying for ‘safe’ end user computing?

Open Source software is one route, but app shops are another and newer model to consider. We also need to contemplate that we can already see four players offering end users a combination of different devices each with its own operating system for user / device integration which presumably will also tie them to some form of app shop. Who are the four? Apple with iOS, HP with WebOS, Google with Android, and Microsoft with Windows and there is no significance in this order!

About the author

Andy Mulholland
Andy Mulholland
Capgemini Global Chief Technology Officer until his retirement in 2012, Andy was a member of the Capgemini Group management board and advised on all aspects of technology-driven market changes, together with being a member of the Policy Board for the British Computer Society. Andy is the author of many white papers, and the co-author three books that have charted the current changes in technology and its use by business starting in 2006 with ‘Mashup Corporations’ detailing how enterprises could make use of Web 2.0 to develop new go to market propositions. This was followed in May 2008 by Mesh Collaboration focussing on the impact of Web 2.0 on the enterprise front office and its working techniques, then in 2010 “Enterprise Cloud Computing: A Strategy Guide for Business and Technology leaders” co-authored with well-known academic Peter Fingar and one of the leading authorities on business process, John Pyke. The book describes the wider business implications of Cloud Computing with the promise of on-demand business innovation. It looks at how businesses trade differently on the web using mash-ups but also the challenges in managing more frequent change through social tools, and what happens when cloud comes into play in fully fledged operations. Andy was voted one of the top 25 most influential CTOs in the world in 2009 by InfoWorld and is grateful to readers of Computing Weekly who voted the Capgemini CTOblog the best Blog for Business Managers and CIOs each year for the last three years.

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