Red Hat Looks into the Future of Computing

 May 21, 2012, Open Source Business Conference, San Francisco–Jim Whitehurst from Red Hat talked about IT everywhere, and how this ubiquitous compute environment will change everything. Open source software will be a key component of the emerging information revolution.

To put the changes into context, we have to consider the parallels to the changes when the Industrial Revolution started in the mid-1700’s. The emerging information age is taking a technology and changing the value proposition of the various component parts. Information is becoming a key differentiator of value production, and the data center is becoming a driver for business change.

To illustrate, agriculture for over 10,000 years transferred value to the landowner. In early years, this ownership was related to occupancy, but over time changed to an ownership model. In the 1800’s, mechanization replaced labor, with the effect that the owners got more value with lower expenditures for labor. The addition of equipment raised the value of the land, by making the land more productive.

As we move into the information age, we are seeing that information has at least as much effect on values as any previous additions of equipment. The information for crop management, accelerated growth and pest management, and many other functions is not coming from the equipment makers but from the companies with information-Cargill, ADM, and Monsanto versus the equipment makers John Deere, Caterpillar, and Case.

Now the equipment is approaching commodity status and the information is the differentiating factor. In the same way, banks are moving into the information business in processing transactions and in generating information on identities, sources, and prices of other commodities.

Changes in the IT infrastructure are being driven by cloud technologies. Standards and commoditization enable modularization of computing and storage and becomes the foundation of all functions, the nuts and bolts of the industry. Again, going back in history, the invention of the auto-lathe enabled standard components that continued the drivers from the start of the industrial revolution 60 years earlier.

Now, computers are about 60 years old. The drivers are to reduce transactions costs by orders of magnitude. Blockbuster is an example of a company that was based entirely on transactions, and is now gone. The markets for transactions are more expensive than the costs for coordinating the functions. As information increases, the costs for transactions drops quickly, and becomes a new way to coordinate people and their work.

When you change the information from a scarce resource with long latencies into a commodity with high local control, the latencies go to zero. This change in data availability can help to reduce hierarchies and enable self-organizing systems.

Silicon Valley is an innovation generator. It has the infrastructure to address and encourage idea creation and implementation. The area can attack the limits of different models to coordinate behaviors. The area leverages openness to increase innovation without transactions costs.

For example, there are now 5-6 times the number of apps on a phone than on a PC. The old costs of software accounted for less than 20 percent of the selling price. The bulk of costs are in packaging, distribution, and marketing. The new apps on phones reduce the costs of distribution and the efforts to purchase. This model also applies to enterprise-level software. The elimination of a dedicated sales force and the freemium or free to try models change the cost structure for volume sales.

The new drivers for software sales are social, search, and e-commerce. Open source software enables self-emergent systems and the open source concept is going mainstream. Maturation, data centers, and the cloud are driving more companies to open source software. The growth in open source code runs most of the Web 2.0 business models.

In the recent past, changes in software were incremental and only slightly innovative. Now, the advent of big data and other new areas for development, like mobile are changing the role of open source, tools, and programs. The software model is now to start with lots of bright people and enable them to solve their own problems.

One example is Hadoop. The community works on issues, changing the roles of vendors and users. Enterprise IT no longer can just evaluate vendor solutions, but the likelihood that the open source community and their relationships can create the next solution. The cloud commoditization enable innovation, just as standard fasteners enabled developments in engines that resulted in cars, tractors, and planes.

Hadoop is a standard platform that demonstrates how to transform IT, and how to extract the value of change in information. All supply chains and al products will change, driven by the open source stack. Cool stuff happens when open source enables changes in the economy and society. There are large opportunities for growth and change.