How an open source software pioneer made his millions: Best of the Web

Michael Tiemann, the co-founder of Cygnus Solutions and now vice president of open source affairs at Red Hat, was one of the world’s first open source software entrepreneurs.

Over at, Tiemann talks to Bryan Behrenshausen about how he built a successful business using the open source software model:

So trade he did. In 1989, Tiemann established Cygnus Solutions, the world’s first open source software company. Each of the company’s three co-founders put up $2,000 to get the business moving (the amount should have been $5,000 apiece, but Tiemann couldn’t afford it). But what Plato once said held true: “The beginning in every task is the chief thing.” A decade later, Cygnus merged with Red Hat in a deal worth $687 million.

Suddenly, Tiemann’s cautious detractors seemed more like early objectors to Copernicus’ heliocentrism: they’d just plain misunderstood the mechanics of their universe.

Satya Nadella at six months

Earlier this year, Satya Nadella took over as the chief executive of Microsoft from outgoing boss Steve Ballmer.

It might seem like it was just yesterday, but Nadella has now held the position for six months. In that time, the company has had some significant product releases, such as Windows Phone 8.1 and Office for iPad. Meanwhile, Nadella has also been instrumental in setting a “mobile first, cloud first” direction for the company.

So how is he travelling? Woody Leonhard from InfoWorld investigates:

Satya Nadella took over as Microsoft’s CEO six months ago, on Feb. 4, 2014. While that six months seemed to have gone a lot quicker than the gestation period prior to Nadella’s coronation, it’s plenty long enough for us to get a bead on the kind of supremacy it will be in Redmond.

When Nadella took over, Microsoft was mired in the aftermath of a lengthy and ultimately unpopular reign by longtime CEO — and Microsoft majority shareholder — Steve Ballmer. Given the constraint of that checkered past, some might argue that Nadella hasn’t had enough time to make his imprint on every aspect of Microsoft. Yet there have been many changes already under Nadella’s watch, and patterns are certainly emerging as to the kind of company Microsoft will be in the years ahead.

Why Xiaomi is making its rivals nervous

The emerging Chinese consumer electronics giant Xiaomi (pronounced she-yow-mee) has gained a lot of interest from the tech press of late – and with good reason.

According to recent Strategy Analytics figures, the rapidly growing company has already overtaken Samsung as China’s largest smartphone vendor. More conservative figures, published by SmartCompany, place it at number two, behind Samsung but ahead of Apple.

Over at CNet, Aloysius Low looks at the reasons why Xiaomi –backed by the growing economic might of China – is set to become a major player in the global tech industry.

One of the key factors listed by Low, against the backdrop of a booming low-end smartphone market, is affordability:

The Redmi Note, for example, retails at around $154 (£95 or AU$170), depending on the country, which is way below what you’d expect to pay for a smartphone of its calibre. All prices are off-contract.

The company’s flagship products are also priced as midrange phones, but have features that compete directly with the high-end devices. Then there’s the MiTV2, a UHD TV sold in China that costs just $640 (£380 or AU$690), a far cry from what Samsung and LG typically sell theirs for.

Why Red Flag failed

Of course, Xiaomi is far from the first tech company to emerge from China. And if a warning sign is needed on how it all can go wrong, look no further than the tale of a company called Red Flag.

Born in the early 2000s to a lot of fanfare and ballyhoo, Stephen Chen from the South China Morning Post explains how its software was supposed to replace Windows and Mac OS X in the desktop computer market: 

Established by the powerful and prestigious Chinese Academy of Sciences (CAS) in 2000, the company produced the Red Flag Linux operating system. The Beijing company never achieved more than 10 million yuan (HK$12.6 million) in annual revenues. So the government subsidised it, hoping that the system would take off and free the nation from relying on the United States-made Microsoft.

That ambition died on June 27 when the company declared bankruptcy. It is believed that once the government significantly cut the subsidies, Red Flag’s finances crumbled. Before closing, the company’s 50 employees staged several protests, saying they had not been paid for several months.

Chen explains one of the points where it all went wrong for the company:

Chinese consumers prefer mainstream foreign systems – Microsoft Windows for desktop computers and Google Android on mobile devices – because they are reliable, easy to use and supported by an enormous number of third-party applications. They are also able to ward off most viral attacks because they are routinely scrutinised by information security companies worldwide.

Wang Lei, a university student in Shanghai, said he supported the development of home-grown operating systems – but would not switch over to one until they were as good as their overseas competitors. “Saying no to foreign operating systems is as silly as saying no to foreign cars,” he said. “That’s not patriotism; it’s xenophobia.”

Why the Diaspora didn’t get moving

Another failed tech company that failed despite high hopes was a social media site called Diaspora. It was designed to be a more open, privacy concerned version of popular social media sites such as Facebook and Twitter.

Given public concern about government surveillance and data collection, heightened in the wake of the NSA revelations in the US, it should have been a massive success.

Over at Motherboard, Alec Liu looks at where it all went wrong.

In February of 2010, at the height of Facebook’s run-in with the public’s trust, a law professor named Eben Moglen delivered a public lecture at NYU titled “Freedom in the Cloud.” “The human race has susceptibility to harm, but Mr. Zuckerberg has attained an unenviable record: he has done more harm to the human race than anybody else his age,” Moglen declared, and outlined the dubious contract the connected world was entering into with Facebook. “Namely, ‘I will give you free web hosting and some PHP doodads and you get spying for free all the time.’ And it works. That’s the sad part, it works.”


Notify of
Inline Feedbacks
View all comments
SmartCompany Plus

Sign in

To connect a sign in method the email must match the one on your SmartCompany Plus account.
Or use your email
Forgot your password?

Want some assistance?

Contact us on: or call the hotline: +61 (03) 8623 9900.