With the popularity of Facebook, bebo and MySpace, companies are trying to find ways to leverage social networking. However, it can be expensive to build out a strong platform.

Well, things are getting easier; that is, Ringside Networks has launched an open source server to build social networks (it's in the beta mode).

True, there are other systems on the market. However, in the case with Ringside, it allows for seamless integration with other sites, such as Facebook. In other words, it will help companies migrate users to their own platform.

What's more, Ringside allows companies to keep their own branding and the look-and-feel of their own websites.

Oh, and some of the co-founders of Ringside -- Bob Bickel, Rich Friedman and Mark Lugert -- were instrumental in the development of JBoss, which turned out to be one of the most successful open source projects in tech history.

To get some perspective on this, I talked to David DePaolo, who operates WorkCompCentral.com. He has known about Ringside for some time. His take: "It makes sense that someone would start this up as they have with other technologies, and just in time. As technology progresses, we find that it is not all about the technology and patents, it's the application of that technology to a specific market."

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Over the years, I've used a variety of blogging platforms. So far, my favorite is WordPress, which is the mastermind of Automattic.

Today there's some good news for WordPress users -- the company snagged $29.5 million in a round of financing. The investors include Polaris Venture Partners, True Ventures, Radar Partners and the New York Times (NYSE: NYT).

And yes, the founding developer of WordPress, Matthew Mullenweg, has a blog post about the funding and the company's history. Keep in mind that there have been more than 5.8 million downloads of the software, with over 3.8 million in 2007. With such a base, the company has been generating a good amount of revenues (and now has about 18 full-time employees).

Writes Matt: "Automattic is now positioned to execute on our vision of a better web not just in blogging, but expanding our investment in anti-spam, identity, wikis, forums, and more -- small, open-source pieces, loosely joined with the same approach and philosophy that has brought us this far."

If you want to see other interesting venture capital investments, visit DealProfiles.com.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.

Last year, there was quite a bit of consolidation in the software sector, such as from Oracle (NASDAQ: ORCL), Microsoft (NASDAQ: MSFT) and even SAP (NYSE: SAP).

And, yes the dealmaking is continuing into 2008. For example, this week, Sun Microsystems (NASDAQ: JAVA) announced it is shelling out $1 billion for MySQL, which develops an open source database.

Well, I had a chance to interview Raven Zachary, who is the Research Director of Open Source at the 451 Group:

Why the interest in open source? What is the business model -- in light of the "free" part?

The interest in open source has been driven by end-user demand. As more open source (from operating systems to web servers to middleware to data integration to databases and beyond) is used by end-user organizations, there is an opportunity for monetization around open source. Back in 2004, we saw the beginning of a new wave on open source venture funding that has continued, peaking in 2006, but still at $300m+ per year. As this new wave of commercial open source companies build out a customer base, they become attractive targets for larger IT vendors.

Technology insider blog, TechCrunch, ran a thought-provoking post yesterday about Google (NASDAQ: GOOG) entitled, The Google Set-Top Box. The article speculates that the search-engine giant may leverage its new open-source operating system, Android, to address TV advertising in a revolutionary way. Google is already testing a new ad platform for TV with Echostar (NASDAQ: DISH), being propped up with data provided by a recent deal with Nielsen. But this just addresses the way ads are bought and sold. According to TechCrunch, almighty Google's ambitions for television go way beyond just ad delivery.

In short, the article posits that Google's aspirations for the mobile phone can be applied to the set-top box, itself essentially a computer. Android's open-source application platform can be used to help promote and support new developments that would turn TV watching more like Internet browsing. "In many ways," says Google's head of TV development, Vincent Dureau, "we think that television is becoming like the Internet in that there is a multiplication of channels. This creates challenges for viewers, advertisers and creators."

So, what does this mean in practice?

Although it hasn't gained much attention in the media, a revolutionary computer is now on sale at your local Wal-Mart (NYSE: WMT). For just $199, you can buy the Everex gPC TC2502, a powerful PC with a hook: it is designed to run without using any Microsoft (NASDAQ: MSFT) products whatsoever. Instead of Windows and Word, you get Linux, OpenOffice and lots of Google Apps.

The computer itself is pretty impressive. Here's what you get for your $199: a 1.5GHz VIA C7 CPU, 512MB of memory, an 80GB disk, an Ethernet port, stereo speakers, and a DVD-ROM CD-RW drive. You also get an operating system called gOS and a full suite of software from OpenOffice.org. The operating system is specially designed to work with Google (NASDAQ: GOOG) applications like Gmail and Google Maps, and all software updates are free. The one thing you don't get is a monitor, but judging from the sidewalks of my neighborhood in Brooklyn, where working monitors routinely show up decorated with signs saying 'works perfectly!, please take,' that shouldn't be hard to remedy.

Expanding on a TechCrunch post last month, BusinessWeek has joined speculation that Google is planning an open-source debutante ball for its 67 million-user Orkut social networking site. Wait, what?

Yes indeed -- Google (NASDAQ: GOOG) runs its own Friendster/MySpace/Facebook. Orkut has been around since early 2004, though you'd have trouble finding any users among your own friends. However, the site does a mean, market-leading business in Asia and Latin America, particularly Brazil (Orkut's forums are nearly dominated by Portuguese). If you believe the chatter, Google will make Orkut's source code available to outside programmers, duplicating the third-party-widget blueprint largely fueling the ascension of privately-held Facebook.

Does this do anything to explain Google's recent run-up on the Nasdaq? GOOG crossed $600 yesterday, joining five other shares trading higher than $600 (which just equals six shares aching for splits) and climbed further today, trading in uncharted territory for the search giant.

Call me a party-pooper, or maybe just unimaginative, but GOOG's current climb seems uncalled for, particularly now when Facebook seems poised to change all the online rules, just as it apparently has changed Google's plans. I mean, Google is a dynamite search engine, but don't give it undue credit. Its history is one of acquisitions, tinkering and positioning, and lately it's playing a lot of catch-up, what with Orkut's speculated run at Facebook and all the hubbub about a Gphone platform.

Am I the only one baffled by Google's recent rise?

Sun Microsystems (NASDAQ: JAVA) has been on a wild ride in recent years. The company has been battered in the corporate space as cheaper hardware and operating system alternatives (like Linux) cropped up and stole profitable market share from the Silicon Valley stalwart. When company founder Scott McNealy handed the reins over to then-CEO Jonathan Schwartz, many investors did not know what to think. By now, they probably do.

Sun has delivered profitability for three straight quarters after making its once-proprietary Solaris operating system an open-source product, and it's mirrored a good deal of IBM's move to a revenue model built on services instead of software and hardware. With computer server hardware still rapidly moving into the commodity stage (if it's not there already), this move could not have come any sooner for Sun. Schwartz knew it, and acted in time.

Schwartz presented Sun's plans for cost initiatives and growth plans for the new fiscal year early this morning in New York City while many investors and Sun pundits watched and listened with a careful and scrutinizing eye (and ear). With Sun shares up over 6.5% in just the last week, what was the chatter from today's announcement? The meeting began at 8am EST today, and transcripts and audio downloads are available here.

It does look like the IPO market is staging a comeback. But there are still perils.

Just take a look at Sourcefire Inc. (NASDAQ: FIRE). The company went public in mid March at $15 and quickly moved to a high of $18.83.

Well, investors got a rude shock yesterday as the shares plunged 29% to $12.28.

Basically, the company violated a cardinal rule in IPOs: it will miss its first quarterly numbers as a public company. In fact, the company expects to post a loss of $2.2 million to $2.6 million for the fiscal fourth quarter.

Sourcefire is a cutting-edge security company that sells to big-time clients. What's more, the company has a very popular open source version of its technology. All in all, it's a good IPO candidate -- but apparently management is not doing a good job in dealing with Street expectations.

I had a chance to talk to Nick Selby, who is the senior analyst of enterprise security at the 451 Group. According to him:

"Sourcefire has profited mightily by deftly walking a marketing line that has got investors thinking it's both a security company and an open source company. We argue that this 'open source premium' has contributed to the company's successful IPO: investors think security equals growth and open source equals cost savings.

"Sourcefire has a lot going for it, but it does have to meet its targets. Although, in the past it has met privately stated goals and its unofficial ballpark numbers."

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

With Assignment Zero, NewAssignment.net and Wired Magazine are embarking on what they call "An Experiment in Pro-Am Journalism." According to the New York Times, "The idea is to apply to journalism the same open-source model of Web-enabled collaboration that produced the operating system Linux, the Web browser Mozilla and the online encyclopedia Wikipedia.

With the site, the lines will be blurred between journalist and audience, as people collaborate to write the news. Here's a list of the stories contributors are being invited to work on. This is an interesting social experiment, and I will certainly be watching the site. With readership and profitability at traditional newspapers in decline, it's clear that the future of how we get the news will be very different from the past.

For some interesting reading on the power of mass collaboration, check out these books: Wikinomics: How Mass Collaboration Changes Everything and The Wisdom of Crowds.

With Microsoft's (NASDAQ: MSFT) Vista launch, the world of operating systems is looking very different. A big problem: there is competition from open source approaches, especially Linux.

Basically, open source is a way to develop software that allows a global community of programmers to contribute to the code base. In fact, it often means inexpensive or even free software. Obviously, this is not acceptable to Microsoft.

However, one problem with open source has been fragmentation. But, it looks like there might be some progress. That is, two key groups -- Open Source Development Labs and the Free Standards Group -- have agreed to merge. Actually, the Open Source Development Lab has as one of its employees, Linus Torvalds, who is the mastermind of Linux.

For the most part, the combined entity will find ways to make life more difficult for Microsoft's operating systems.

Sun Microsystems, Inc. (NASDAQ:SUNW) has decided to make its software platform, Java, open source, not unlike the Linux OS that is marketed by Novell and Red Hat, Inc. (NASDAQ:RHAT). Microsoft Corp. (NASDAQ:MSFT) recently teamed with Novell, Inc. (NASDAQ:NOVL) to distribute Windows with the Suse version of Linux.

Sun's argument for making Java open source is that it will be more attractive to customers and programmers. But, being free does not always drive adoption. There is a reason that Microsoft still owns the operating system business worldwide while Linux is free. Without a development path lead by one company, the software can be hard to manage.

One thing for certain is that the market does not care. Sun's stock was up 1% on the news. The stock has been trading in a narrow range just above $5 for the last two months.

Yahoo! Inc. (NASDAQ:YHOO) greeted the fourth quarter this morning (the stock fell 23% during the third quarter), with a plan to give away the code underlying its e-mail application.

The plan is to have outside programmers build code around Yahoo! mail, which the company says has 257 million users.

Several companies provide code in this manner, including Google. The new software built from these big-company code bases are called "mash ups."

It is hard for investors to see what advantage there is to large software firms when they give away code. I think it probably has no value beyond the press release.

Free software has been a failure on almost every front. Linux, the free operating system, has made a very small dent in its primary target, the Microsoft OS. For years, forecasters have been saying free Linux would bring down the Microsoft empire. It has not happened. Sun's Java code base was also offered to outside developers. There are not many big Java projects around. And, there was the free audio compression software, Ogg Vorbis, which was to compete with MP3. That was hardly a huge success.

Yahoo!'s shares have dropped like a stone, and the fall in the last quarter is as sharp as almost any in recent memory by such a large cap stock.

Until Yahoo! releases the delayed version of its new search technology and stops coming in at the low end of its forecasts, things are not going to get any better for investors. And the free software code it is worth exactly what Yahoo! is charging for it.

Douglas A. McIntyre is a partner at 24/7 Wall St.

At his PC, about 15 years ago, one person sparked a revolution: Linus Torvalds. He developed a new operating system – Linux -- with a unique approach: open source software. That is, great programmers around the world would contribute to the code base.

Now, Linux is a staple of organizations around the world. And, it even has its own conference, LinuxWorld, which took place this week. Held in San Francisco, Ca., the event attracted more than 10,000 attendees.

Prominent Stanford Law School Professor, Lawrence Lessig, gave the keynote. The theme was powerful: sharing has meant much better software. Why not the same for other things, like music and videos?

Ok, this is not exactly something that resonates with companies like Apple, Microsoft, and thousands of others – except for some upstarts, like YouTube.

However, for enterprise software, "free" is certainly a scary word. For example, one of the companies at LinuxWorld, Ingres, is gunning for Oracle's database business. Dave Dargo, the company's Chief Technology Officer and a former senior officer at Oracle, said that the goal is not to kill mega companies like Microsoft, Oracle and so on. "To be wildly profitable," he said, "all we need is a small piece of the database market."

Another company at the show was Zimbra, which develops a collaboration product that goes beyond Microsoft's Exchange. "It's great to see Linux moving off of a traditional server model," said John Robb, VP of Product Management of Zimbra. "New developments around challenges such as virtualization and mobility are really showing off the power of the open source community."

Jitterbit's CTO, Ilan Sehayek, weighed in (his company develops open source integration software): "Red Hat's absence was interesting, but clearly the open source community's focus is expanding from systems and OS to business applications. The real value to businesses is in the applications, and all the major horizontal categories were represented including: SugarCRM and CentricCRM, Zimbra (collaboration and messaging), Pentaho (Business Intelligence) and Greenplum (Data Warehousing). I learned of a new company with HQ in Spain called Openbravo in the ERP category. The proprietary world of software went through a similar evolution, but with Web Services and lightweight open source integration tools this time around we should be closer to realizing the dream of best of bread applications."

One of his fellow employee's at Jitterbit, Daniel Oxenburgh, said: "Sharam, Ilan, and I spent the day roaming around the crowded exhibit hall at LinuxWorld. The floor has an interesting - and very telling - layout, I think. Most of the big guys (Motorola, HP, etc.) are trying to make a splash with huge flashy booths in the center of the hall, while smaller companies are set up around the perimeter of the show floor. Well, guess where all the foot traffic was? People grabbed their chotchskies from the middle of the room and headed to the busy edges."

Tom Taulli is the author of various books, such as the Complete M&A Handbook and operates InvestorOffering.com.

When the co-founders started-up Google, their main source of funding was their credit cards. Any way they could find to leverage resources was critical. One approach was to use open source software. Basically, this is software that is freely available – so long as all additions to the software is also made free.

In light of this, it makes sense that Google is launching a portal for open source, called Project Hosting.

The leading portal is SourceForge.net, which has built an extensive community over the years. Google said it is not competing against it.

I think, Google does have an interesting view of what "competition" really is. Google is leveraging its powerful search technology. In the programming world – in which projects have endless amounts of lines of code – strong search is a must-have.

According to a recent article in News.com by Ingrid Marson ("Microsoft: Open source 'not reliable or dependable"), Microsoft is not so hip on open source.

Basically, open source is a New Age way of developing software.  That is, instead of a big company developing it, a community of developers across the world contribute to the development of a software product. 

In an upcoming BBC documentary, a Microsoft vice president says that open source software is not ready for the prime time of  "reliability and dependability that comes from a commercial model."

Actually, open source providers are starting to get some serious traction.  Look at Zimbra, which develops a Web-based alternative to Microsoft Exchange. Only two  years old, the company already has several 100k seat enterprise deployments (such as H&R Block). What's more, the company is working on a 1 million telco deployment.

I had a chance to talk to the company's CTO, Scott Dietzen, who said: "You can argue that open source has taken a play right out of the Microsoft play-book by driving software costs down further than even Microsoft (who's success in part was due to their being a lower cost provider)."

Another top provider in open source is Jitterbit, which develops software for integration. I also talked to the company's CTO and co-founder, Ilan Seyahek who mentioned that companies like Dell, Google and Amazon.com are already big users of open source. "Market adoption is the only relevant fact to consider when forming an opinion on the reliability and dependability of open source products," said Seyahek.

BBC - The Code Breakers

News.com - Microsoft: Open source 'not reliable or dependable

Zimbra Interview

Jitterbit Interview