They had a chance to use open source to make something really remarkable with their product, and all but squandered it.
I say this as a Movable Type user, which is why it pains me to say these things. I'd hate to think my loyalty was misplaced, because in the time I've used it I watched as one fellow user after another defected to competing products -- mainly Automattic and WordPress.
So what went wrong? For starters, it wasn't that Movable Type switched to an open source model. It was how they went about doing it.
Movable Type wasn't originally open source, but it was licensed liberally enough that it almost didn't matter. Many people could use it without paying for it, and for most people that was enough. But the licensing for version 3.0, released in 2004, placed far more emphasis on the user paying a licensing fee. It was still possible to get a free license, but on terms that didn't allow redistribution of the product.
Many of the "little" folks who had been using Movable Type up to that point started to get worried they would suddenly have to start paying licensing fees. It wasn't even the cost of the product that bugged them, but the principle of the thing: it felt like a bait-and-switch. Who's to say they wouldn't be given equally cavalier treatment in the future?
Faced with this, and with the rise of the unambiguously-licensed WordPress (GPLv2), a lot of Movable Type folks decamped and switched to that product, which began to thrive thanks to their input and usage. It wasn't until Movable Type version 3.3 released two years later that a free version for personal users was released.
By that point Six Apart seemed more interested in selling the product to business and enterprises than cultivating a groundswell of individual users. That is exactly the sort of thing open source thrives on, and which WordPress was harvesting to its advantage.
In late 2007 Six Apart created an explicitly open source version of Movable Type, based on version 4 of the product, and licensed under the GPL. The main differences between the commercial and open source editions were features designed specifically for enterprise users, like commercially-developed SEO add-ons.
It was a step in the right direction, and was welcomed by those who had been asking for such a thing, me included. But, again, it was too late to woo back the people who had already defected. For them, Movable Type was scorched earth.
And by that time, WordPress had already built a culture of open engagement with customers. There was a broad and growing palette of plugins, templates and other add-ons, created by people who had been in bed with the product for a good long time. (The gallery of templates for WordPress is something that's cited regularly as a reason why it's a superior product.)
Six Apart did go to some length to document their templating language and make it easier to convert WordPress templates to something Movable Type could use. But they waited too long to start doing those things on a scale that mattered, and by that time some really creative and inspiring template designs were coming out of the WordPress crowd.
WordPress also got something right early on that remains a point of trouble for Movable Type: make it easy for people to get on board with the software and stay on board. A WordPress installation can upgrade itself from a browser-based control panel with the push of a button. By contrast, Movable Type still has to be manually upgraded. It's too easy to get the process wrong, and so whenever a new point release came out I resigned myself to setting aside a day to upgrade and test.
That such manual work is still necessary is another sign of how most of what drove Movable Type's general direction seemed to focus on appealing to commercial customers, not the base of "in-the-trenches" users who were actually grappling with the product on a daily basis. Hence the add-ons for SEO and such, which most individual bloggers (me included) turned off the minute they installed the product.
When a company "does" open source, a lot of how they are perceived to approach it will shape things. Oracle's commitment to open source is perceived very differently from Red Hat's. Not just because of the size of one company vs. the other or their intended markets, but because Red Hat puts more of their money where their mouth is, while Oracle is inspiring more dissention than loyalty among open source folks.
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