Open Source Software
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Open Source Software

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Open Source Software Open Source Software Presentation Transcript

  • Reconciling “Free” with “Profit”
    • What Business models will take advantage of Open Source?
    • Use Value (value as an intermediate good)
    • Sale Value (value as a final good)
    The Overwhelming source software value is use value. Not sale value
    • Device Drivers
    • Software bundled with hardware
    • Business specific applications
    Look at the newspaper hiring pages. Classify jobs that create use value versus sale value
    • Vendor has gone burst …is there a market for the company’s product ?
    • Vendor has discontinued support …is there a market for the company’s product?
    Price a customer pays is the expected future value of vendor service
    • Software need not be a factory business
    • But a services model based on exchange of continuous value
    • If you are working in a ISV struggling with support calls and low customer satisfaction scores ask yourself:
    Is the “20% of license” sufficient investment to supporting increasing usage of the product? Will not my customers be willing to pay more if I could prove that it works for them?
    • Reduce Testing efforts
    • Reduce Bug Fixing efforts
    • Augment Feature Development efforts
    All Bugs are shallow for a thousand eyeballs
    • Use Open source software to maintain/gain advantage in proprietary software
    • Use Open source software to drive gains in your hardware business (for drivers etc.)
    • Use Open Source to sell services (eg Red Hat, Zope)
    • Use Open Source to sell the content (share trading, education)
    • Id software’s Doom game:
      • In 1993 really unique in its graphics on low end processors
      • Competitors appeared
      • Markets matured in features, platforms and user base
      • In 1997 Doom released full source
      • Third party developers added value to the game
    This non “software” example crystallizes the issues….
    • Will I really benefit from network effects?
      • Are the key methods common engineering knowledge?
      • Can correctness be verified without independent reviews?
    • How critical it really is?
      • For the business of my customers?
      • Is reliability/stability/scalability critical?
    As customers mature the open source does become an option
    • “ The Cathedral & The Bazaar” by Eric S Raymond