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Open Source
How Is Open Source Like The Large Hadron Collider?
The article revolves around the following premises, which I have quoted from him and scaled down a bit for space: 1. "There is a realistic ceiling on the revenue that can be earned by any open source company, and that ceiling is much lower than any proprietary software company." 2. "The trouble with freeware is that there is no margin on free, and while open source solutions are not free, the race to asymptotically approach free is on." 3. "Open source solutions are forcing down pricing. ... As zero is approached, however, less and less money will be available to be made, proprietary software giants will [have] long since gone belly-up and leading open source companies, such as Red Hat, will not be able to compete." Notice anything missing from this picture? There's no mention at all of one of the major revenue-generating systems used by companies that deal in open source: support and services. There's almost certainly less money to be made there than there is in charging for the software and the support -- but for a company that knows this from the outset, this isn't a problem, since odds are they're already running trim enough to deal with that. But there's a much bigger omission under that: the race to zero theory only works if every piece of free software drives its proprietary equivalents out of the marketplace, and if those free equivalents cannot be monetized in any way through the sale of support, expertise, etc. This isn't happening, and frankly I doubt it could. Microsoft is still selling licenses for Windows despite Linux, and Adobe still sells licenses for Photoshop despite GIMP and Paint.NET and all the rest of them. SugarCRM likewise hasn't driven folks like Salesforce.com out of business; if anything, it's given them all the more incentive to be innovative and competitive, to give people something worth paying good money for. And, likewise, the competition between open source firms that provide similar products (e.g., the CMS space) is lively and strong. Most of the folks who have been driven off the playing field are people making easily-commoditized products. It's silly to pay $50 for a DVD burning application or something equally by-rote when there are tons of perfectly functional free equivalents -- but paying $200 or $4,000 for something which cannot be had for free, either in a decent edition or in any form, makes plenty of sense. I don't want any of this to be construed as an argument against criticizing open source when used as part of a business strategy. There's plenty of room for good, cogent criticism of open source, and there ought to be. But I've been hearing exactly this kind of chicken-licken-the-sky-is-falling alarmism often enough to become certain it doesn't count as such. InformationWeek Analytics has published an independent analysis what IT and corporate professionals are looking for in business optimization. Download the report here (registration required). Follow me and the rest of InformationWeek on Twitter. « SGI, Once Mighty Graphics Giant, Gobbled Up For Pittance | Main | Who Are Washington's Top Twitterers? » |
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