(7) Case Studies in FOSS Business

Types of FOSS
business FOSS specialization
Flagship Package software
System integrator Server sales
NTT Comware, Nihon Embedded
Unisys, etc.
Embedded
Case studies in large-
development tools
scale development
using FOSS In-house business use
Distributor Education
Business strategy of
distributors
In-house FOSS

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 Types of FOSS Business
Category Description Leading Companies
Flagship Actively provide everything from contract IBM Japan, Fujitsu, NEC, Hitachi, HP
development of systems using own hardware and Japan, etc.
OSS, to software and hardware maintenance and
support
System integrator Contract development using OSS NTT Comware, NEC Soft, etc.
Distributor Packages sales of Linux with various types of OSS, Red Hat, Turbolinux, Miracle Linux,
commercial software, installation support, etc. etc.

In-house OSS Release own software as OSS; provide support Ten Art-ni, NaCl, ForeOneFirst, etc.
services and contract systems development
OSS specialization Specialization in specific OSS; provide support VA Linux Systems Japan, SRA, Zend
services and contract systems development Japan, etc.
Package software Sales of Linux-compatible versions of own package Oracle, NIWS, Horizon Digital
software; also provide contract systems Enterprise, F-Secure, etc.
development
Server sales Sales of Linux-equipped PCs and servers Dell, Toshiba, Sun Microsystems, etc.

Embedded Development and sales of OSS-embedded Sony, Matsushita (Panasonic),

information appliances, PDAs, mobile phones Toshiba, Sharp, etc.
Embedded Customization for OSS embedded use; provide MontaVista Software Japan, Lineo
development tools development tools and support services for fee Solutions, AXE, etc.
In-house business Use OSS for own business Amazon, Google, Rakuten, Livedoor,
use etc.
Education Provide exams and training courses for OSS LPI-Japan, Red Hat, Linux Training
qualification and certification Institute, etc.

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 Flagship Business
(Major Manufacturers)
Receive comprehensive orders for everything from hardware to
software
Business of major hardware vendors
IBM Japan, Fujitsu, NEC, Hitachi, HP Japan, etc.
Use FOSS to drive down costs for development of large-scale
systems
Provide comprehensive solutions
Possess numerous own development packages
IBM in particular strongly pushing FOSS
Provides FOSS resource site and FOSS information
Numerous in-house FOSS projects
Supports GNU/Linux through full range of platforms, from IBM PCs to
mainframes and wearable PCs
Released 500 IBM patents to FOSS community
Reason for market participation by major hardware vendors
System integration anticipated to generate annual profit of US$1.1
billion worldwide
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 System Integrators
Extension of existing business, only platform has changed
Drive down development costs using PC servers and FOSS
Also reduces vendor dependency
Enables small- and medium-sized vendors to compete as
principal contractors, but competition increasingly fierce
Biggest hurdle is securing FOSS engineers
FOSS deployment requires advanced technical skills
Requires skills to combine multiple FOSS, modify FOSS, keep
up with fast pace of change, etc.
Easier to retrain Unix engineers
Problem: Many engineers only know Windows development
Shortage of business applications
Development above LAMP level often requires ground-up
development
FOSS business applications gradually emerging

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 NTT Comware
Conducts development to improve GNU/Linux reliability
Cluster solution for non-stop GNU/Linux servers
Ultra Monkey load balancing software (FOSS)
Linux Virtual Server (LVS) load balancing software
Ldirectord for monitoring failures in real servers and removing failed servers
Heartbeat for monitoring operating status of each server
Member of OSDL
Contributes to development of Carrier Grade Linux (CGL) for
telecommunications carriers
GNU/Linux consulting, system building and operations
New markets for GNU/Linux deployment
Apartment entry management system using fingerprint
authentication and L-Box embedded GNU/Linux server
Prototype university business system for Waseda University
Developed using GNU/Linux, PostgreSQL, PHP
Available free of charge to universities across Japan

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 Nihon Unisys
Provides high reliability comparable to Unix
Alicia ø Advanced Linux Crash-dump Interactive Analyzer ø
Sponsored by Japan FOSS Forum’s Development Infrastructure Working
Group
Provides environment for kernel crash analysis
Improves reliability of enterprise GNU/Linux
Integrates crash and lcrash tools for analyzing Linux kernel crash dumps,
enabling faster dump editing
Migrated Unix-based database to GNU/Linux for leading travel
agency

Provide applications using FOSS

CFIVE learning management system for higher education institutions
Co-developed with University of Tokyo’s Information Technology Center
(ITC)
Learning management system (LMS) for e-learning; released as FOSS
Implemented using Java, Tomcat4, PostgreSQL, OpenLDAP
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 FOSS Deployment
for Large-Scale Systems
TSUTAYA online
Migrated to GNU/Linux from Sun Solaris OS, resulting
in one-quarter to one-fifth savings in deployment costs
Large-scale system designed for 10 million users

Lawson “Loppi” kiosk terminals

Kiosk terminals installed at convenience stores
Rare success among convenience store kiosk ventures
Uses GNU/Linux server to control kiosk terminal used
for ticket reservations, etc.
Back-end servers installed behind each store
Deployed in over 7,600 stores
System easy to manage due to remote operation
IBM Japan responsible for maintenance

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 Distributors
Sell packaged FOSS
Manage software to sell on ease of use
Provide automatic software updates
Develop proprietary installers or package managers
Localize (Japanese language versions)
Bundle with commercial software and commercial
resources (fonts, etc.)
Provide support services

Critical to decide on method of creating added

value to drive sales
Packing software onto CD-ROM translated into value
when networks were not as accessible
Walnut Creek’s distribution business
Roots of GNU/Linux distributions

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 Ebb and Flow of Distributors
DistroWatch.com
Portal site for GNU/Linux
distributions
Also lists select BSDs,
etc.
List of worldwide
distributions
Over 300 GNU/Linux
distributions listed

Provides various
information about
distributions
Reviews, new release
information

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 In-House FOSS Business
Develop own software and release as FOSS
Effectively used by enterprise consortia
Primarily business application software for specific
applications

Case studies
Network Applied Communication Laboratory (NaCl)
Developer of Japan Medical Association ORCA system;
deploying ORCA as FOSS receipt computer
Ten Art-ni
Garagardoa table reservation system for restaurant
industry
ForeOneFirst
Francine Web POS system

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 Network Applied Communication
Laboratory (NaCl)
Developer of software for ORCA standard
receipt computer from Japan Medical
Association (JMA)
Commissioned by JMA Japan Medical
Drives down cost of expensive receipt Association
order
computers, by deploying PC servers and FOSS
Network
JMA proprietary license, resembling GPL Center NaCl

Adoption rate development

Started as confidential project in 2000 ORCA
use,
Official launch (March 2002) improve
Deployed at 1,279 facilities (as of July 2005)
Certified Certified Certified
partner partner partner
ORCA business over 100 system deploy,
integrators authorized by JMA for ORCA maintenance
deployment and contract maintenance
Hos- Hos- Hos- Hos- Hos- Hos- Hos-
Some system integrators have released pital pital pital pital pital pital pital

modified software
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 Ten Art-ni Corporation
Corporate member of OSCAR Alliance
Voluntary non-profit association to promote enterprise
FOSS deployment
Garagardoa table reservation system for restaurant
industry
LAPP system (Linux, Apache, PostgreSQL, PHP)
Released as FOSS
Co-developed by Ten Art-ni and New Tokyo restaurant
chain
Cerveza order issuance and acceptance system for
restaurant industry
Co-developed by Ten Art-ni and New Tokyo
GNU/Linux, Apache, Java servlet, Oracle system
Used by several corporations

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 ForeOneFirst Co., Ltd.
Francine Web POS system
Sought to increase sales as proprietary
product, but product recognition was low ForeOne-
provide
Released by OSCAR Alliance (June 2003) First
FOSS
OSCAR proprietary license, resembling deploy,
operation,
GPL maintenance FOSS
Main functions: cash register, sales support
Cus- Cus- Cus-
history, product ordering, inventory Àø
tomer tomer Àø
tomer
management, store management,
employee attendance management NPO OSCAR Francine
Francine business Alliance use,
improve
Promote sales through association with member member
OSCAR Alliance brand Vendor Vendor
ForeOneFirst ultimately acts as core deploy,
operation,
provider of deployment, customization maintenance
and support services
Cus- Cus- Cus- Cus-
ForeOneFirst also provides support tomer tomer tomer tomer
services for other vendors in OSCAR
Alliance
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 FOSS Specialization
Conduct business focusing on specific FOSS
Key factors to success: Ability to hire top engineers
from community and collaborate with community
Requires engineers with advanced skills

Case studies
VA Linux Systems Japan (Linux kernel, NFS)
Zend Japan (PHP)
SRA (PostgreSQL)
SoftAgency (MySQL)
Sendmail

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 SRA, Inc. Japan
Advantages of independent software
development vendor
Not tied to specific product
Staffed by many Unix engineers

Conducts business focusing on PostgreSQL

Collaborates with FOSS community and major
developers in Japan and abroad
Provides expertise
Sells Windows native version
Provides tuning and other support services for
deployment and operations
Implements exams for database certification
Raises profile by publishing articles in magazines and
books

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 Zend Japan, Ltd.
Conducts business focused on PHP
Parent company Zend Technologies founded by main
developers of PHP
Capitalizes on technical expertise as original
developers of PHP
Offers PHP development environment
Provides expertise to improve PHP performance
Script compiler
Caching feature
Web systems development using PHP
Enterprise systems
SugarCRM on Zend: Customer management application
System pairing J2EE with PHP applications

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 Good-Day Inc.
Contract systems development with aggressive
support for FOSS
Also offers advanced technical services such as tuning
for GNU/Linux and PostgreSQL-based systems
Staffed by FOSS engineers to provide synergistic
benefits

Leading example as FOSS specialist vendor

Employs Sylpheed developer and provides financial
backing
Directly sponsors FOSS development for Japanese
environments
Works with OpenOffice.org
Sales and support of laptops loaded with FOSS desktop
software

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 Package Software Business
Proprietary package software made to support GNU/
Linux
Primarily implemented for server software to expand
platform support
Clear-cut business model for proven software
Product must be clearly differentiated
Without differentiation, users will choose FOSS
Barriers for new software
Requires strong degree of differentiation in terms of performance,
features, ease of use, development environment, etc.
Market established for network, server and storage
management
Opportunities in business knowledge field (accounting, legislation,
administration, etc.)
Not a strength of FOSS developers
Opportunity to improve interface for beginner users
Business opportunity to develop GUI for general users, that
works with
An Introduction to Free/Open-Source existing FOSS, etc.
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Software
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192
 Server Sales and Embedded Business
Server sales
Sales of own hardware pre-installed with GNU/Linux
Toshiba, Dell, Sun Microsystems
House-brand PCs
Outside of servers, other applications include factory
automation, specialized applications, etc.

Embedded business
Information appliances
Media servers, hard disk recorders, PDAs, mobile
phones, etc.
Consumer Electronics Linux Forum (CELF)
Established: July 2003
Association to study GNU/Linux standards for consumer
electronics from Matsushita (Panasonic), Sony, etc.
Industrial equipment
BRAINS: Web camera server system based on NetBSD
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 Embedded Development Tools
Business
Customization of FOSS for embedded systems; sales
of development tools and provision of support
services
Case studies
MontaVista Software Japan: MontaVista Linux
Lineo Solutions: uClinux
AXE: axLinux, Shikigami
Red Hat: Contract porting of GNU/Linux
FOSS embedded business offers excellent
opportunities for contract development
Since platform is not a differentiating factor, CE
manufacturers are pushing for common platform using
FOSS
Steady stream of business for contract development
dependent on hardware
Soum Corporation: Employs leading developers of NetBSD
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 Proprietary Business Use
Deliver own services at low cost by deploying
GNU/Linux for servers that demand high
reliability
amazon.com
Google.com
Rakuten
LiveDoor

FOSS also useful for rapid deployment of own

services and for modification
Take full advantage of modifiable source code
Employ many FOSS engineers

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 Amazon.com, Google
Amazon.com
Uses multiple HP GNU/Linux machines
Distributed Web server caching
Supports over 20 million product inquiries per hour

Google
Fault-tolerant system based on low cost IA servers
Proprietary automatic failure detection system based on
Red Hat Linux
Distributed system to account for high rate of hardware
failure and distribution of data across multiple hard disks
Google File System for filing data
Map/Reduce Framework for I/O scheduling
Global Work Queue for scheduling queries

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 Rakuten, LiveDoor
Rakuten
Deploys FOSS extensively for its virtual malls
WebLogic and Oracle licenses are costly
FOSS deployed based on balance of service and cost
Primarily uses PHP and MySQL, also PostgreSQL and Tomcat
Software lacks some functions of commercial software
Issues: Shortage of engineers and test suites, frequent version
upgrades

LiveDoor
Deploys FOSS extensively for its portal sites
FOSS suited for rapid deployment of services
Strategically involved in GNU/Linux distribution business
Purchased Turbolinux unit from SRA and turned into
subsidiary
Sells Linspire
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 Education Business
Peripheral business within software industry
Courses, materials
Adequate potential for business as number of users
and developers increases
“Dekiru” series of how-to books are expected to have
constant sales, regardless of software

Certification business
Numerous GNU/Linux certifications already exist
LPIC, RHCE, Turbo-CE, CNA, ComTIA Linux+
Other FOSS certifications have been introduced
¿ À¿ ø PostgreSQL
Rapid growth in number of certification courses offered
by technical schools, etc.

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 GNU/Linux and FOSS
Certification
Certifications for GNU/Linux engineers
All certifications aimed at network administrators

FOSS certifications
Main purpose: Train engineers to use company’s
software
Testing
Organization Certification Level Nutrality Cost
Method
LPIC Level 1 Entry 30,000 Yen
NPO LPI Japan Online exam. Nutral
LPIC Level 2 Middle 30,000 Yen
Turbo-CE Entry Vendor 31,500 Yen
Turbolinux Online exam.
Turbo-CE Pro Middle depended 21,000 Yen
RHCT Middle Practical Vendor 94,500 Yen
Red Hat
RHCE Expert exam. depended 47,250 Yen
CompTIA Linux+ Novice Online exam. Nutral 27,825 Yen
Zend PHP Vendor
Zend Japan Entry Online exam. 33,500 Yen
Certification depended
PostgreSQL CE
Entry 13,650 Yen
Silver Vendor
SRA Online exam.
PostgreSQL CE depended
Middle 18,900 Yen
Gold
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 Training Courses
Two main types of GNU/Linux/FOSS training courses
Network administrators
Courses basically designed to complement certification exams
such as LPI, etc.
Developers of Web system software
LAMP/LAPP systems development
Increasing number of courses for development of Java
application servers

IT schools and major IT vendors

Offer GNU/Linux/FOSS training with other courses
Mostly short courses ranging from few days to 1 or 2 weeks

Schools
Technical schools: 1-3 year GNU/Linux/FOSS engineer training
programs
Professional graduate schools: Development of advanced FOSS
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