Who holds the key?

tauringhuang.

Aug 15th 2008
From Economist.com

The struggle to balance openness and control


“I AM RICH” is an iPhone application that made a brief debut on Apple’s software store this month. It cost $999.99 and did nothing more than put a glowing ruby on the iPhone’s screen. Seeing it as cynical rather than practical, Apple yanked it (after eight people bought it).

Apple has fought with developers and killed applications before. Indeed Apple’s boss, Steve Jobs, acknowledged that the iPhone has a “kill switch” that lets the company remotely remove software from people’s handsets. “Hopefully we never have to pull that lever, but we would be irresponsible not to have a lever like that to pull,” he told the Wall Street Journal.

Apple’s corporate culture is famously closed. By closely overseeing their hardware and software, the company believes it can better ensure that everything works properly. Opening their systems to independent developers entails a loss of control that they find hard to handle. Other companies can sympathise.


The bauble that burstTech firms today are caught in a bind, between being open (to attract a community of developers) and closed (to ensure high standards and maintain their traditional business models). As Apple’s experience shows, finding the right balance is anything but easy.

And the stakes are huge. In a recently published book, “The Future of the Internet—and How to Stop It” (Yale University Press, 2008), Jonathan Zittrain of Harvard Law School frets that technology companies will prefer to roll out “tethered appliances”, which do a small, proscribed set of things over which the companies and their chosen vendors will have exclusive control—like phones or GPS devices—instead of general-purpose devices like PCs.

Firms have good reasons to control how people use their products, from ensuring security to protecting copyrights. But aggressive oversight risks sacrificing the “generativity” of computer technology—that is, the continuous, unpredictable improvements from all quarters that drive innovation. Mr Zittrain fears that the rise of tethered appliances will inevitably chip away at the freedom of the internet and personal computing, which many take for granted.

This is an old problem. When computers were first released commercially in the 1960s, they came with the manufacturer’s software, and were even leased rather than sold outright. Because of their complexity, most customers were fine with that controlled arrangement.

The industry subsequently evolved into two distinct sectors: the computer itself (hardware) and the codes that make it work (software). By the mid 1980s, a gaggle of independent software companies thrived, each with its own proprietary technologies. Users had more choice.

Today the ground is shifting under the industry’s feet again, as open-source software challenges these proprietary technologies. Just as customers used to be locked into computer-makers’ software, so too were they later beholden to certain applications and upgrades from software vendors. Open-source has freed users by separating software from a specific vendor. And it has enabled companies to tap the broadest possible community of developers, which fuels innovation.

Even companies that eschew formal open-source licenses engage in open practices in order to attract outside developers and business partners. Companies as diverse as Google, Sun, IBM and even Microsoft ape open-source ways—and struggle with the question of how much to control.

Google, for example, is shepherding an open-source operating system for mobile phones called Android, and an open-source security tool called KeyCzar for handling cryptographic keys. Meanwhile, its main business of search is entirely closed: it reveals almost nothing about the underlying algorithm. It finds a useful middle-ground by opening the application-programming interfaces (APIs) to some online services, such as mapping, which lets third-party developers develop new uses. Since Google made its mapping APIs freely available in 2005, its traffic has soared.

Sun Microsystems, meanwhile, has a bet-the-company strategy towards openness. In 2005 it open-sourced its Solaris operating system for computer servers, and created an independent organisation to steward the project. In January, Sun bought an open-source database firm called MySQL. Managing it proved difficult: Sun unleashed a storm of criticism after it planned to make some features proprietary, or “closed source”.

Other stalwarts have faced similar challenges. IBM needed to create a non-profit foundation to oversee Eclipse, an open-development platform. Microsoft lets outside developers tinker with its mobile-phone software, and turned to standards bodies to make its file formats open.

Resisting the inclination to control is often a major factor in a company’s success. Wikipedia had only around two dozen entries after its first year, when it relied on experts to review submissions. Once it let anyone post anything, entries skyrocketed: within two weeks, it had 600 articles.

Apple has it harder than most, because its business is built on tying its hardware and software. And the iPhone is something entirely new: traditionally, a phone is an appliance, (it does a circumscribed set of things), but Apple’s product is becoming PC-like in its range of applications. It is thus a perfect test-case for Mr Zittrain's concerns.

The iPhone store has had more than 60m downloads in its first month and collected some $30m (Apple keeps 30% and hands the rest to the developer), and the company seems to be striking the right balance. The rest of the industry is watching with great interest whether Apple can maintain it.