Commentary: Tech Outfits Should Take Notes

By Robert D. Hof

Who would have thought that something called egoboo would help turn the software industry on its ear? Yet egoboo--a nerd term for the rush one gets from public recognition, especially for tasks done for free--is one of several unusual drivers behind open-source software, one of the most potent forces in technology today. Stock options? Bonuses? Nice, but egoboo is a powerful incentive that's free of charge. Until industry leaders, from Microsoft Corp. (MSFT ) to Sun Microsystems Inc. (SUNW ), find a way to harness it, they'll be struggling to keep step with the open-source movement.

It's no wonder traditional software and computer companies are perplexed. In the open-source method, independent programmers around the world contribute, often without pay, to creating and honing software such as the Linux operating system. Amazingly, this often creates better software than the standard industrial process. The open-source Web server software Apache, for instance, continues to dominate, with 62% market share vs. 27% for Microsoft's software.

Why does the open-source method work so well? For one thing, it taps into the true motivation of programmers in a way that corporations often don't. "Programmers are like artists," says open-source software consultant Bruce Perens. They like to showcase their best stuff for their peers. In open source, they can. But at most corporations, their best work is hidden behind locked and guarded doors.

The open-source way also acknowledges a reality most tech companies hate to admit: No one company, not even a giant such as Microsoft, has a monopoly on all the best programmers. By harnessing the scientific method of peer review, allowing contributions from anyone, anywhere, who can tap out better code, open source can trump secrecy. This shift, powered by shared information, recalls the scientific revolution of the Renaissance. Says Eric Raymond, author of The Cathedral and the Bazaar, a book on open source: "Alchemists turned into chemists when they stopped keeping secrets."

Triumphant Penguin
So what can software companies and hardware manufacturers that also sell software do to ensure that they won't get eclipsed by the open- source hordes? For one, they should step up their participation in the open-source community. This seems at first to fly in the face of business logic. But if software powers pried open a door to open source, they could leverage the best minds outside their company while engendering much-needed goodwill.

This process may well spur them to do something they should have been doing already: jettison projects that can be done more economically by someone else--basic operating system software, security, perhaps network management--and focus on where they can innovate.

Most of all, the industry needs to understand the fundamental appeal of open source: It's people power. Companies employing open-source software love that they can modify programs more easily to meet their needs or just fix problems. The sooner sellers of software give their customers power to improve it, the better off they'll be.

Hof heads the Silicon Valley bureau.

    Before it's here, it's on the Bloomberg Terminal.