bkuhn on Canonical

October 17th, 2010 | by | bongo, fedora, freesoftware

Oct
17

If you haven’t read it already, Bradley Kuhn’s take on where Canonical are aiming is deeply interesting. There is bound to be push-back against the article, because it does connect a few distant dots, but I found it particularly interesting because it’s apropos of a recent discussion on Surrey LUG’s mailing list – which has no public archive so therefore I cannot link, but the gist of the thread was a discussion on the various approaches Canonical takes to getting income.

I personally disagree that it seems like Canonical are attempting some kind of open core strategy: I think it’s arguable that they’re seeking to leave that avenue open, but for them to sell proprietary software products at any point in the next few years would destroy pretty much their entire brand image. In particular, Shuttleworth has made extremely strong statements in the past about never charging money for software – and it seems pointless to be proprietary if you’re giving the software away (well, for the most part).

However, there are a couple of things I find pretty depressing that Kuhn brings up, particularly the admission that Canonical is still not profitable and would take “some more time” to achieve that. By 2007, some three years into the Ubuntu project, it had already cost some $25 million, and of course we’re another three years on since then – given the growth of Canonical, a total spend of $50 million to this point would seem particularly conservative.

What I never understood to begin with, and still fail to understand, is why Shuttleworth has ham-strung the project from the start by promising there would never be a pay-for version a la Red Hat. My thinking in this regard is pretty simple: when you’re paying for all this development, you have to recoup those costs somehow. When you’re providing support or doing all these other activities, you leverage that development, but you incur further costs which then also need to be recouped.

Pretty much everyone else who commercially develops free software has some method of recoup in position. Red Hat, as an example, sell security updates, support, and the OS itself. Nokia invest in software to sell their phones; similarly the likes of Intel, Oracle, and all sorts of other businesses invest in the software to enable hardware sales. Google invest in the likes on Android because it gives them a huge amount of control over the mobile market. And of course, there are plenty of small players too, all of whom have some kind of strategy to ensure their development activity is not some loss-making exercise in the grander scheme of things.

If Canonical’s commercial model confuses me, though, there is one thing which is abundantly clear: for that company to fail would be incredibly damaging. It would be difficult to imagine a more worse-case scenario than seeing Canonical at ten years old, still burning millions of dollars each year and still not making a profit.

Of course, Canonical likely has that luxury; previous break-even targets have been set and then moved for whatever reason, and the vision still seems to be about growing hard, branching out and becoming some “cohesive whole” (which is avoiding the issue). So it’s not likely that they’re going to fold in the next five years. But in away, that’s almost worse: much like a Government-funded entity, there is this insulation from commercial reality which ensures that “the vision” will be followed. The must be an opportunity cost there, room for a new Ximian or a new Mandrake, and fresher more innovative visions that are currently squeezed out of the market.

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9 Responses to “bkuhn on Canonical”

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  1. Jo-Erlend Schinstad says:

    I agree with you on several points. I too, see no evidence of Canonical becoming, or wishing to become, an “open core” company. Launchpad has been distributed and opened, for instance. Ubuntu One is a proprietary service, yes. But as long as the clients are open source and available on different operating systems, talking about it as an example of their “open core” strategy, is ridiculous. I would say this reminds me of how Firefox uses Google as a default search engine in order to make money. I might personally prefer it to be a bit more provider-agnostic, but that might become reality in the future. I think it would be beneficial to everyone, including Canonical. I am a bit sceptical at this point in time, though. I have difficulties seeing this as a potential money machine, but I wish them the very best of luck. Because I share your view that a failing Canonical would be disastrous. Not as disastrous as the Mandrake mess, but a big one none the less.

    I think they have a real chance in the consumer market, with products like ARM-based tablets and netbooks, like those new ones from FreeScale (http://www.youtube.com/watch?v=iEovlXFKm84)

    I don’t think they have to be an “open core” company in order to be successful, monetary wise, and I think they know that.

  2. Juanjo says:

    They’re already selling a product based on privative code (partly at least) with Ubuntu One. So Canonical have no problems with using Ubuntu brand in a privative based service (being myself Ubuntu user for +5 years, I didn’t like it when they announced it).

    I agree with you, I don’t see Canonical as an open core based company either. I sound like they want to own the copyright of some projects as a way to get value, but I may be wrong :)

  3. Peter says:

    Haven’t Ubuntu introduced a paid software store for the 10.10 release. That would indicate the direction of an open core (somewhat similar to MeeGo though). But in terms of income I’m sure they get paid to support things like the Ubuntu on Dell and they are certainly going that route with the ARM support, not that its a bad thing.

  4. Alex says:

    In terms of the paid software store, I don’t really know, but I got the impression it was other people’s proprietary apps they were selling. Perhaps they get a cut of sales, but I can’t imagine that’s going to pull in a huge amount of money.

    In terms of Ubuntu on Dell and stuff: I think that’s exactly what they ought to be doing, and I’m sure they get paid a reasonable amount of doing that. They get paid by others, like litl, as well. I hope they make a tonne of money out of it; I just suspect that they don’t. I also don’t know how big a market that is: it relies on people wanting to ship Ubuntu, which just isn’t a strong brand right now. Android is probably going to eat their lunch there.

  5. Michael says:

    AFAIK, landscape is a paid software of Canonical, and it is not free ( http://www.canonical.com/enterprise-services/landscape ). So basically, the promise of not charging for software is already broken, even if I do not think that’s a problem, as they need to be profitable to survive. Maybe he just told that Ubuntu will always be free, but the Ubuntu-One issue ( https://bugs.launchpad.net/ubuntuone-servers/+bug/375345 ) didn’t seems to affect the branding much.

  6. Alex says:

    That’s true, the “always no cost” thing always applied to the Ubuntu OS itself – and of course Canonical is free to define what that means, so they can stick stuff around it like Ubuntu One and Landscape.

    I’m against proprietary software in general; but I have to say, in many ways it seems a bit of a moot point in the case of Canonical. For the longest time, Launchpad was seen as a important application and people demanded that Canonical free it. However, in reality, once they did that nothing much happened: I don’t see anyone else using Launchpad, and my impression is that the community of developers around it is small. It honestly wouldn’t matter much if Launchpad was still non-free.

    It’s actually really surprising how unsuccessful their free software development work is. For a community-oriented company, which they genuinely are, practically everything they’ve touched has turned or is turning to lead. Even in the areas where they’re being innovative, like Unity, they’re competing with the likes of Meego and Android, which are entirely incompatible platforms. They don’t even have a decent touch-input story yet – they’re desperately scrabbling to create one – which means they have no tablet story either. Does anyone there really think they can pull rabbits out of hats in that area? It baffles me.

    Canonical is the underdog in a lot of areas, trying to break through against some big players. The longer it takes them to make a break-through, the less seriously people will take them, and instead of putting all their wood behind a single arrow they just keep on opening up new fronts on which to battle. I think it’s a shame.

  7. Alex, as I admit in the blog post, I don’t have proof Canonical is going to Open Core; I can just see no logical reason they’d spend a year marketing the idea to the community without planning for it. My argument is opinion, and I’d rather be wrong and it turns out they don’t do it, actually.

    Meanwhile, I too agree that it’s weird they haven’t pursued the RHEL strategy. Red Hat actually walked the line at trying to make a business model that walked up to the line of GPL compliance but didn’t cross it with RHEL. The model has some problematic stuff around the edges (anything that gets that close to GPL violation would), but it’s still more software-freedom-friendly than proprietary relicensing models.
    Despite what I said in my blog, I’d love for Canonical, Ltd. to succeed as a profitable software-freedom-respecting company. But, if it’s going to experiment lots with proprietarization, I don’t necessarily see why the software freedom community should care that much if it survives. The good hackers that work there are surely talented enough to find other jobs and/or start their own Free Software consulting businesses, no?

  8. Alex says:

    Thanks for taking the time to respond, Bradley. I think we’re more or less on the same page in terms of what Canonical are doing; I think we probably disagree more on the motivation. I think it’s more the case that they’re leaving that option open through lack of decisiveness. I think there’s generally little reason to make a decision like that unless your hand is forced (either by needing a proprietary revenue stream, or by needing to promise that you’ll never set one up – either way), so it’s probably more the case to my mind that they just don’t feel a the pressure either way right now.

    It’s a shame that I couldn’t link to the SurreyLug e-mail since I explained this better there, but my feeling is that by promising to always give away Ubuntu at no cost they’ve basically hamstrung the project by saying that they’re basically going to be working on something for free. It’s ok (economically speaking) to do that if the “free thing” unlocks some other revenue – like hardware sales, support sales, or [e.g. in the case of open core] if it’s a loss-leader – but in the case of Ubuntu, it’s a very indirect means by which they’re doing it. It’s essentially a dead weight around the neck of the business, and I just don’t understand why this “always no cost to all” principle is so important.

    In terms of what good hackers could do instead: I think there is room for more FS-respecting consultancies, but it’s a limited market and Canonical play the game on a higher field than that. If you look at the hackers who’ve been successful in that model, they’ve tended to have pretty narrow focussed businesses (i.e., they’ve been extremely expert at what they do) and that has overcome potential objections to size/support that consultancy can offer. With the best will in the world, it would take more than a small business of good hackers to be able to support multi-thousand desktop deployments, and I wish Canonical was making big wins in that department. My fear is that they’ve more or less given up on that, and are following all these other not-quite-desktop avenues to try to fill in some gaps.

    What is probably key is the application side of things. No-one ever sold a desktop on the merits of the desktop alone; not even Apple. So when it comes to those large desktop deployments, it’s critical that the argument can be made on an end-user feature basis that it stacks up. The security/anti-virus situation is one obvious feature that can be sold. However, the downside is that the free desktop just doesn’t have the apps or the management infrastructure. To an extent, Canonical are probably attempting to address part of that through Landscape, but it’s really not an offering that makes sense yet.

    I find it difficult to envisage how they will be truly, properly, successful until they pull in a single direction and communicate that clear message about what Canonical are actually about; because right now no-one knows. Are they open core or free software? Are they a music sales and file-sharing business, or are they enterprise-level server management bods? Right now it’s Canonical Jack of All Trades.

  9. Jo-Erlend Schinstad says:

    You keep talking about Canonical and whether or not they are successful and what it takes for them to become successful. However, a measure of success depends on what your goals are. To you, it seems, it is obvious that Canonical develops and uses free software in order to make money. If that was the case, then it would be very strange to give the software away gratis. But if they’re making money in order to create software, then that’s something else. Then, the success cannot be measured by how much money it makes, but only by how useful their products are to their users.

    I also do not agree that they’re dependent on a rapid success. Quite the contrary, in fact. In our everyday lives, it’s easy to forget that USA and Europe are relatively small markets. They are the dominant markets right now, but that’s rapidly changing. There are a few billion potential users out there, who doesn’t yet have a preferred operating system, or at least isn’t loyal. Personal computers have been around for ~30 years or so. That’s nothing. And computers that can do the things that makes them so attractive and addictive, have been around for just a few years. Which brands were the big guns in the early radio- or TV-set industry? Which are the dominant ones today? I think Ubuntu have all the time it needs, and it is the success of Ubuntu that must be used when considering the success of Canonical. Obviously, they need to achieve a balanced economy, but I don’t know how big an income they need in order to get there. If they’re able to stop loosing money, then that’s an amazing success. It would be nice if they could also write their financial results in black and bold, but I don’t think that’s a criteria.

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