Stepping up to give software makers a push to open source their products,
The Center of Open Source & Government
Tuesday unveiled the Open Source Threshold Escrow Program, or O-STEP.
Affiliated with the The Cyber
Security Policy & Research Institute and The George Washington University, The Center
of Open Source & Government intends the program to provide software makers
with competitive incentives that will help them transition to the Open
The essential idea is that traditional proprietary software companies will
escrow their source code with the Center until a sales threshold — set by
the company — is reached. Once the sales threshold is hit, the code escrow
breaks and the code is released to the open source community.
So what’s in it for the software companies? According to Tony Stanco,
founding director of the Center and associate director of Open Source &
eGovernment with the Cyber Security Policy and Research Institute (and a
former senior staff attorney with the U.S. Securities and Exchange
Commission’s Corporate Finance, Internet and Software Group), the answer is
simple: their software will become enormously attractive to government
buyers and Global 1000 companies that have a healthy fear of vendor
“O-STEP will re-invigorate the software industry and result in more
competition by re-balancing the rights between users and producers in a way
more appropriate with the incentives framework of the U.S. Constitution,”
Stanco said. “The current intellectual property regime creates vendor
lock-ins for critical infrastructure software.”
The standards-based model has been the accepted way of doing business in
the hardware world for years, where companies like Intel stay on top of the
silicon heap through providing an attractive value per dollar rather than
locking customers into proprietary systems.
In the past several years, that idea has been percolating in the software
world, drawing companies like IBM
to adopt Linux as a platform for their hardware products
so they can sell customers on the idea that the customer will be able to
buy the right tools for the job even if it doesn’t come from them.
Theoretically, customers can buy HP servers running Linux, IBM’s WebSphere
environment and tools, and use BEA Systems
servers and it will all just work. With a common playing field, the idea is
the companies can compete for customers based on value-added features and
Such a model is especially attractive to many companies because switching
to a new vendor doesn’t mean replacing existing infrastructure or investing
in system integration.
O-STEP seeks something of a medium between proprietary and open source
models, allowing companies to keep their code proprietary until the sales
threshold is hit.
The Center of Open Source & Government offered Corel as an example, noting
the company could put the source code for its WordPerfect suite into
O-Step. According to a Yahoo Corel Profile from Feb. 21, 2003, Corel is
valued at $73.4 million, though it has $77.7 million in cash and cash
equivalents. Corel could decide to set the WordPerfect O-STEP Threshold at
Once the code is part of the program, the Center said governments and
Global 1000 companies would have an incentive to replace Microsoft Word
with WordPerfect for two reasons. One, combined they spend more than $100
million on Word by a large factor, and two, once the threshold is reached,
the code will become an Open Source standard which prevents the possibility
of vendor lock-in.
For Corel, the promise is that the product will be revived and made
standard. It can take the $100 million earned while the product is still in
escrow and still proprietary, to innovate for the next version. The company
could choose whether to escrow the improvements at a new sales threshold or
keep the improvements secret. The Center stressed that the decision would
belong to Corel alone.
Once the code becomes standard, Corel will still have a competitive
advantage over new entrants, but will have to continue innovating or risk
losing that advantage over time.
The Center of Open Source & Government plans to present O-STEP at its Open Standards/Open
Source for National and Local eGovernment Programs in the U.S. and EU
conference in Washington, D.C., March 17 to 19.