 | Issue: | Asia-Pacific I 2008 |
| Article no.: | 16 | |
| Topic: | Open source for telcos | |
| Author: | Tom Berquist | |
| Title: | CFO | |
| Organisation: | Ingres Corporation | |
| PDF size: | 216KB |
About author
Tom Berquist serves as CFO of Ingres Corporation, providing global financial leadership for the company. He also leads the functions of business development, finance, HR, IT, legal, and product management. Mr Berquist joined Ingres after ten years covering software companies as an equity research analyst. Most recently, he was a managing director at Citigroup, and covered large capitalization software companies including Microsoft, Oracle, BEA, Intuit, Symantec, CA, and BMC, among others. Previously, he was a managing director at Goldman Sachs with responsibility for its infrastructure and security software franchise. Mr Berquist started his Wall Street career at Piper Jaffrey. Mr Berquist holds a Bachelor’s degree in accounting and an MBA from the University of St. Thomas, St. Paul, Minnesota.
Article abstract
Open source software has quickly become a groundbreaking force in business and the telecommunications industry is one of its hottest growth areas. The adoption of mobile Linux platforms helps build innovative applications, reduce costs and enable a higher level of flexibility in telecommunications devices. IT industry professionals are beginning to leverage this force to their advantage. In order to reach the mobile consumer market and satisfy end-users, open source software and open standards are vital to any telecommunications company’s growth strategy.
Full Article
The global rollout of broadband networks that connect fixed and mobile devices to new content and web services has been nothing short of spectacular over the past decade. However, there is much more to be done. The US continues to lag behind much of the rest of the world in broadband communication speed and endpoint connections, yet leads the world in innovation on the software, content and service side. At least part of the reason for this is the large amount of capital spending that is required in order to upgrade infrastructure. In order for the telecommunications industry to do more with less, open source technologies need to be adopted to reduce cost and increase speed to market. Telecommunications is an industry ripe with opportunity for open-source solutions. Why open source for telcos? It may surprise some to find out that telco companies rank second, historically, on the list of industry spending on technology, behind financial services companies. With the recent woes in the financial sector, it is possible that telco companies could move into the top spending slot in 2008, particularly as broadband access for mobile devices continues to be a driver of capital spending. We believe telco spending on information technology (hardware, software, and development services) will approach US$100 billion in spending in the US, and more than double that worldwide, next year. If you include the software on mobile devices themselves, the spending is even larger. As a result, the industry is looking for ways to do more with less particularly as the prices for mobile broadband, mobile devices and wired broadband continue to fall. Furthermore, the demand from consumers – and increasingly from enterprises – for new applications and content delivered to users via mobile devices requires a different approach to software development. Telecommunications companies need to leverage a broad community of software developers both inside and outside their industry. This will allow them to deliver new community and social networking applications as well as a full spectrum of communication services such as email, messaging, personal calendar management, and location-based services. The broad adoption of open-source technologies is the best way for telecommunication companies to lower their software costs while simultaneously increasing their speed to market. This fact is not lost on the industry. However, most of the use of open source technologies today has been constrained to Linux operating systems on mobile devices or on communications equipment. This has resulted in a large number of purpose-built Linux operating systems (some count more than 20) being made available for mobile devices. An equally large number of special purpose Linux builds are also now available on communications hardware. Currently, very little adoption of open source has occurred beyond the operating system layer. We believe that is going to change over the next three years. First, awareness is building among technology decision-makers about the growing number of open source technologies available in other layers of the infrastructure software stack. Identity management, storage management, database management, application development, user interface design, and systems management technologies are just a few of the open-source software technologies currently available. The flexibility of open source enables developers to rapidly roll out prototypes and sample applications, which encourage customers to ask for refinements and additional functionality. Given the speed to market advantage of open source, these customers are unlikely to switch to a commercial vendor solution, as they perceive that the functionality will take years to get to market. Finally, the costs of open-source technologies are cheaper at all layers of the software stack. Databases, application development tools, content management applications, business intelligence applications, and even billing and CRM applications are available from open-source providers without up-front licence fees. Providers of these applications are paid for support and new features through annual subscription agreements, which are linked to actual deployment and utilization. Reality, not trend Open source is here. Whether or not your company has already adopted open source platforms and/or technologies, you should try to fully understand what it means for you and your customers, and fast. I generally summarize the business value to customers of using open source through a simple acronym – CRAFT. Community Contributions Reduced Costs Accelerated Adoption Flexibility of Usage Technical Support Network The open source community is very diverse, and the amount of code being developed and released at all layers of the software infrastructure stack is nothing short of amazing. There are tens of thousands of open source development projects going on around the globe and new ones starting everyday. Open-source products are generally cheaper than commercial products, quicker to adopt for new projects and easier to embed, deploy and virtualize. Next-generation technical support networks currently being developed by open source providers will continue to reduce the costs of managing, patching and securing open-source deployment platforms. Within the communications industry there are a number of open-source projects offering everything from VoIP to mobile communications platforms, voice mail/messaging, email, and many other areas. For example, Project Asterisk will enable you to replace your proprietary PBX, Project OpenMoko will enable you to replace your device operating system, and Project Open Source SIP will enable you to use an open -ource session initiation protocol for SIP-based communications applications. In fact, I was able to find more than 70 active open-source projects designed for use in the telecommunications industry. While many of them run on Linux operating systems, many are cross-platform and can run on Windows, UNIX, Solaris, and even Mac OS X operating systems. At the application level, however, the open source phenomenon is still in its early stages and the market is still very small and fragmented. There are many competing business models with little consensus as yet as to how best to commercialize open-source software development. On the content side, open source is not as central to the debate, although the way that content is licensed can look similar to open-source business models, as content is often sold and delivered via subscriptions rather than upfront licences or royalty fees. Over time, as more web-based content is repackaged and made available for mobile and VoIP platforms, it is possible that open-source models will emerge in this area. Good examples are mobile map platforms that share map information. Open source software has quickly become a disruptive force in many industries. With increasing adoption of the Linux platform as a way to build innovative apps, reduce costs and enable a higher level of flexibility in enterprise operations and products, telecommunications is no exception to this new force. Open-source software and open standards can be implemented by any size enterprise in order to increase speed-to-market, reduce costs and satisfy end-users thirst for innovative solutions at an affordable price. Many companies are improving their business performance by using a mixed model of both open and proprietary technologies for infrastructure, operations, business intelligence and product development. Adopting open source is now vital to any telco’s growth strategy.
