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Tim O'Reilly at Service Innovations
Wednesday, November 17, 2004
Tim O’Reilly was our dinner speaker for the Almaden function.

"A change in worldview that calls everything you know into question."

Open Source

||s IBM-PC & Open Source
How many use Linux every day? Google? PayPal.? Then you use Linux.

Source code is not distributed and it wouldn’t be useful to many developers if it were.

Licenses triggered by binary software distribution have no effect.

Most Open Source apps are wildly proprietary

The Law of Conservation of Attractive Profits, HBR Feb 2004-11-17
“When attractive profits disappear at one stage in the value chain because a product becomes modular and commoditized, the opportunity to ear attractive profits with proprietary products will usually emerge at an adjacent stage.”

The PC stack, lock-in by data, and the top is lock-in by network effect.

The Long Tail by Chris Anderson in Wired.

LAMP: Linux, Apache, MySQL, PHP or Perl or Python

Scripting languages weren’t getting any respect. Why the P matters so much. Babbage actually played the Mechanical Turk (the chess automaton) in 1820. (An inspiration). A man inside the machine. Finance.yahoo.com had a programmer between the ticker and the service. Often you find a lot of workers inside.

The Architecture of Participation. Linus Torvalds. Windows source code wouldn’t have helped. It’s built as a monolith.

User Relationship -or- Commodization

eBay --- the user is the service. Google – page rank, which is of course user-dependent. Amazon – no natural place, but further along. Amazon: middle copy: most popular. Central list is a combo of everything they know about this title.

Amazon: What they own is the relationship with their suppliers. Not duplicable by any of their competitors. Barnes & Noble: Their #1 book is something they publish. Nothing drawn from users.

Mapquest. Still a commodity. No tie to the users. NAVTEQ is the sole source of map content. An Intel-Insde kind of play. Tim figures it goes to the data level. “Control the data and you control the world.” Jeff Bezos, with ASIM, will end up with the namespace for physical products.

Paradigmatic advice a la Tim: Find ways to have increasing participation to increase your profits. How to architect systems to give you this sort of advantage?

Red Hat. They drew the circle around a component, not the integrated whole.

Rules of the New Paradigm
1. Leverage commodity economics of open source software suppliers
2. Understand why Perl, Python and PHP have been so important in web-based services
3. Create a system in which users help to build the value of the platform
4. Understand the power of data as the “Intel Inside”

“Perl is the duct tape of the Internet.”

Software as a service, including user-contributed data, requires an entirely new approach. Up and down the stack. What data are you going to own? What can you create that they cannot?

“I am an inventor. I become interested in long term trends because an invention has to make sense in the world in which it is finished, not the world in which it is started.” Ray Kurzweil


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