April 28, 2006

Xara retools for FOSS

Author: Bruce Byfield

The conventional wisdom is that software development companies have trouble converting to free and open source (FOSS) business models. But someone seems to have forgot to mention that to Charles Moir, the upbeat CEO of Xara.

Best-known for Xara Xtreme, the graphics editor that competes against such giants as Adobe Illustrator, Macromedia FreeHand, and Corel Draw, Xara announced in late 2005 its intention of porting its flagship product to GNU/Linux.

Last month, the company released the first code for Xara Xtreme on Linux (Xara LX). Since then, it has been adding to it almost daily. The port represents a major gamble for the company -- a change of direction both externally and internally in which Moir is literally betting the company on its ability to adapt to the standards of FOSS and the chance to develop new markets before his major competitors.

A strategic move

The motive for releasing Xara LX as FOSS, Moir freely admits, is strategic. Although Xara Xtreme is critically acclaimed, Moir says, in terms of sales, "We've always been ranked third or fourth behind the big guys." In order to compete, Xara has had to rely largely on reviews, word of mouth, and competitive pricing; Xara Xtreme, for example, is currently advertised on Xara's home page for $79, versus a list price of $499 for Adobe Illustrator and $399 for MacroMedia FreeHand. "We just don't have their marketing budget or their development budget," Moir explains.

Moir is aware of other products' past failures to enter the GNU/Linux market, such as those of Corel Linux and Corel Office. However, he believes that the market is more mature now. Moreover, with both Adobe -- now the owner of both Illustrator and FreeHand -- and Corel showing reluctance to enter the GNU/Linux market, he sees Xara XL as a chance for his company to get ahead of the competition at last. "It's pretty much a green field," he says, talking about the GNU/Linux market. "It's not a small market. If the figures are to be believed, there's at least as many Linux desktop users now as there are Mac desktop users. Many millions. So that is actually, from our point of view, quite a substantial market."

At the same time, Moir says he believes that it makes sense to hedge bets by ensuring that graphics programs are cross-platform. Although when Xara Xtreme was first developed a decade ago, releasing it on Windows made sense because Apple seemed a company in decline, Moir now says, "To be completely frank, we probably got the platform wrong." Not only is he determined to avoid repeating the mistake, but, with the rumors over the past few years that Adobe's commitment to OS X is starting to falter, being cross-platform may be another way to outflank Xara's competitors.

In addition, internally, development of Xara LX has already assisted with the OS X port. Eventually, he sees versions on all three platforms as sharing much of the same code.

Admittedly, probably few graphics professionals use GNU/Linux in their work. However, while acknowledging the problem, Moir also sees it as an opportunity to develop the market. He also says he believes that Xara LX should appeal not only to professionals, but also to those who occasionally need a graphics tool in their work, as well as home-users.

The business model

Like many, Moir and his advisors resisted at first the idea of releasing the company code. "It didn't seem to make any sense," he says. "How are you going to make money out of a product that's free?" Yet, after he studied previous attempts to enter the FOSS market, the basic conditions became clear. "It became fairly obvious," he says, "that to have any product have a chance to succeed in the Linux market, it had to be open source and ideally under the GNU General Public License."

So long as the software quality is high, then if these basic conditions can be met, Moir says Xara LX could become "a product included in almost every distribution and on the desktop of pretty much every Linux user" within six months of its official release. "If that happens," Moir says, "then we'll count that as a business success, whether we earn any direct revenue from it or not."

Once convinced of these basic conditions, Moir quickly realized that making the port would be a long-term project. "I don't think we expect to make money in the short, possibly even the medium term," he says. He suggests that one of the first returns for Xara will be the publicity and brand-awareness that results from having a FOSS product.

Another short-term advantage is that, if Xara can build a successful development community, it can develop the features it needs to compete with its much larger rivals. "We need 20 or 30 developers to really compete with the frontrunning products," he says. "We can't afford that ourselves directly. But it's reasonable to expect that sort of development rate if we can create a successful, community-driven project." Even Xara's Windows users might benefit from this community, as more of the code is shared between platforms.

In the long term, Moir still seems to be uncertain exactly how to make to profit from Xara LX. He talks about selling support and basic services, such as CDs and tutorials. Another possibility which Moir is leaning towards is a commercial edition that includes proprietary features. A number of features in Xara Xtreme, such as the bundled fonts and some of the effects plugins, are owned by third parties, so they cannot form part of Xara LX in any case.

Although Moir is considering replacing some of these proprietary features with FOSS equivalents -- for example, swapping the proprietary Pantone color management system for the FOSS little cms -- another alternative may be to supplement the free version with an enhanced proprietary version, just as OpenOffice.org is supplemented by StarOffice. Eventually, Moir speculates, all platforms might have a spectrum of Xara products ranging from the FOSS version to a series of enhanced proprietary ones.

However, such decisions are further down the road. For now, Xara's plans depend on a continuing revenue stream from the proprietary Windows version. "The rules of open source mean we can't insist that developers not create Mac or Windows versions," Moir says, "and so they might well happen. [But] if our Windows revenue goes down we'd probably have no choice but to stop this experiment."

Learning to walk the FOSS walk

In preparing for the transition, Moir and his employees were careful to try to understand the nature of the community. In particular, they have been in regular communication with developers at Inkscape, a FOSS graphics editor that is rapidly becoming a rival for Xara's own products. Urging collaboration between the two projects, Moir describes Inkscape as "an inspiration to us in many ways." It was partly from watching development at Inkscape, he says, that he realized the potential strength of the FOSS development models, and learned to appreciate the benefits of reciprocity as opposed to competition.

Since announcing its intentions in the fall of 2005, Xara has gradually changed internally from a proprietary to an open shop in its development methods. The smallest of these changes was having its programmers, whom Moir describes as largely "die-hard Windows developers," learn to use the GNU Compiler Collection (GCC).

More importantly, Xara's developers started the switch to community-based development. Moir says, "We've been a closed, proprietary source space, where we keep development stuff confidential." With the announcement of Xara LX, Moir insisted that the company's developers communicate with each other on a mailing list rather than privately in order to prepare themselves for the day when the code would be released. "You're got to start getting used to the idea that any email you write is now going to be public," he told his developers, "And just sort of get into it."

When the code was released, Xara also posted the last six months of internal archives to its Web site. Now, he says, Xara's developers are "actually quite used working that way" and ready to work in the FOSS community.

Judging the success

Moir is aware that Xara still has to prove itself to some parts of the FOSS community. When Xara first announced its intentions in the fall of 2005, many people were skeptical, dismissing the port as vaporware from a Windows-centric company. Now that the first code for Xara LX has been released, Moir displays an understandable pride in having proven the skeptics wrong. But how will he ultimately evaluate the gamble?

Moir suggests that Xara LX could become profitable if as few as one percent of users bought an enhanced, partly proprietary version. At the same time, Moir makes clear that the criteria for success will not be revenue alone. "We've probably spent more than $200,000 in porting [Xara LX] to Linux, and that's all part of the business gamble we're undertaking. That doesn't mean we have to get $200K of revenue back from the Linux market. If we can earn that back directly or indirectly, from Windows or Mac sales, or even something as mundane as selling manuals and CDs to those that want them, then we'll carry on."

More immediately, Moir says, he will know whether the gamble is succeeding by whether Xara LX can attract the community of developers it needs. "If, let's say, after another three to four months, we find few if any external developers helping us, we will have to classify this experiment as a failure. If the thing simply doesn't work out, if we find that we're still doing all the work, then I think the consequence of that [will be] that we'll just become a closed source company again."

By that criteria, Xara LX is already showing early signs of success. Moir speaks of often hourly commits to the source code, and it's true that the latest downloadable tar file is over 2MB larger than the files released last month -- an increase of more than 25% in a few weeks. "We've already got quite a few people expressing an interest," he says, and his excitement is obvious when he speaks of the work already done by outside contributors, such as enabling the text tool. "It's really interesting at the moment. The [developers] here love it because they're seeing it evolve really rapidly."

Whether Xara can translate its enlightened self-interest into revenue remains to be seen. Yet, if any company deserves success in the FOSS market, then surely Xara does -- if only for seeing an opportunity where others see obstacles, and for its strenuous efforts to reinvent itself.

Bruce Byfield is a course designer and instructor, and a computer journalist who writes regularly for NewsForge, Linux.com and IT Manager's Journal.

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