Is Open Source Software a Race To Zero? 729
gozunda writes "My company is an open source software vendor/developer. We maintain a popular open source project and keep ourselves afloat by producing commercial products derived from or extending the value of the core project. Over time we've seen our business model eroding as other open source projects produce free versions of the same extensions and utilities that are our bread and butter. Something that was worth $5K last year is suddenly worth $0 because the free version is just as good as the paid. This same cycle is obviously having an impact on pure-play commercial software vendors. Is open source ultimately a race to zero? In ten years will there be any cost associated with commodity (non-custom) software? If not, will there still be a 'software industry' as it exists today, or will software simply be a by-product of the operation of other industries? Is that a good thing or a bad thing? As a professional developer, do I need to fear this or feed it?"
Evolve or Die (Score:4, Interesting)
You're doing it wrong (Score:1, Interesting)
I run a small custom software startup (4 developers) and it seems obvious to me that open source done the way your company is doing it is a recipe for throwing money away. Your model is completely backward. Keep the core product closed and open up the extensions. Let the community improve your core product for free, don't give away your core product for free.
Such is the case with all software (Score:3, Interesting)
Open source or commercial. WinZip's value to me is also effectively $0, since on Windows I have 7zip which does the job competently enough, and on Linux I have multiple tools to choose from.
It can get even worse, Vista's value for me for instance is negative -- I wouldn't use it even if given it for free, because I'm perfectly happy with Linux at home, and even installing it would be an inconvenience in exchange for no gain.
Even without free software such things happen: the value of a buggy whip is $0 for me, because I have no use for one.
How this works (Score:4, Interesting)
You just have to develope OSS applications, very carefully.
You have to make it prone to breaking, unintuitive and with a horrible user interface. That way, you can earn money forever by support contracts and paid-for maintainance/seminars/schooling.
The worst you could do would create a "just works" application, because that way you would steal your own future.
No! and I'll tell you why.. (Score:5, Interesting)
I work with a Government agency in Ireland, (I work for a university to avoid confusion). We developed a really innovative information system with them, a web-based system which allows flexible mapping, GIS work, sophisticated calculations, open ended queries, loads of pre-specified reports and more. It is entirely open source.
It would have been economically unfeasible, and, I think, technically impossible, with closed source software.
The developers were paid, and are still being paid, quite a large amount of money to build this for us, maintain it, and keep it moving forwards. My view is that give great value for money. All the stuff they develop for us is GPLed.
This seems like quite a viable model to me. What's not viable is the 'write a better video-processor' model which you describe. You need to work with your clients, support them in improving productivity, ease of use, cool new features, whatever it is they need for their business.
Good luck,
Anthony Staines
There is no market (Score:5, Interesting)
There is no market for selling a commodity with a zero cost of production. This is basic economics. If you want a good business model, sell something that doesn't have a zero cost of production. If you want to be in the market, then you have to do this by selling software that doesn't exist yet, since any software which does exist can be reproduced for zero cost.
The commodity off-the-shelf model for software only works because we have laws that let us pretend that software is a product.
Look at the market for commercial writing for an analogue. The vast majority of writers are employed writing for newspapers, magazines and web sites. Quite a lot are employed for in-house publications. A (comparatively) very small number write books. The software industry is exactly the same. Most developers are employed writing bespoke software. For these, open source lowers their costs, because they are not selling a product, they are selling a service: writing some software that solves a given problem for their customers. If they build their solutions on easily-modifiable, open source, commodity building blocks then they can charge less or profit more.
It sounds like this is what you are doing already, but you are seeing the number of people who need more than the commodity version shrinking. You now have two choices:
Option 1 is a good short-term solution, but again you will find that you eventually have a shrinking market. Option 2 is more effort, but a good long-term business model. Hopefully your existing customers already trust you to do a good job, and you can get them to recommend you to their suppliers and customers when they have other problems.
paid legacy is dead (Score:5, Interesting)
The whole notion of a software "industry" is a new and novel idea whose time is more or less come and gone.
Speaking as a long-time software developer, I find it hard to believe that software has been considered a "product." It is so amorphous and ever changing, it is hard to say that a "purchase" has any durable value what so ever.
Prior to the "write it once and get rich" mentality that ISVs dream of was the software as a service mentality which is seeing a resurgence.
Also note, most software written does not run on personal computers, in runs in microwaves, embedded devices, phones, routers, TVs, etc. Only a few companies really make money selling "software." Most P.C. based "software" companies make money selling a service around their software.
For instance, "QuickBooks" is a software product and has a lot of competition, but it is the service that keeps it afloat. TurboTax is the same way, they work all year to have the next years revision ready.
The "write once" software industry has only existed for a short time and for a very fortunate limited few. For people like myself, who have been developing software since the late 70s/early 80s, I don't see any major problem because I don't really see any real effect on the vast majority of the market.
Re:Value (Score:2, Interesting)
This only goes so far, then you need to start looking at other markets where there may be already entrenched players or other barriers to entry.
In this case they are just giving it away, traditionally businesses have regulations to prevent this soft of behaviour as in many cases it's deemed anti competitive and ultimately detrimental to the customer.
I think Open Source is well on course to polarizing the software markets now. Its tending more to favour corporate giants who offer the full one stop range of services and very small niche players that carry on under the radar of Open Source. Medium sized businessess are gradually being erroded as they are usually the ones most vulnerable to revenue loss as comparable Open Source offerings improve in quality.
Yes, it's over. (Score:1, Interesting)
I'm in the same boat.
The standard advice of charging for support is completely bogus!
Companies hire consultants to do support, these consultants support other products as well as yours, which makes them the single "go to" guy for many things (a nice feature for would-be clients, just call "the linux guy")
This takes a major dent out of anything you could make by charging for support.
Whats more, why develop software when you could just charge to support other peoples software?
Making your money by charging for support is not a viable option.
What you CAN do is charge for open source, even if you license it under the GPL.
This makes a lot of sense for vertical products because it removes some of the fears people might have of you going out of business.
Re:Yes, and there's nothing new with that (Score:5, Interesting)
Re:Value (Score:4, Interesting)
Re:No! and I'll tell you why.. (Score:1, Interesting)
In reply to this, I just wanted to point out copyright, much like patenting was meant to result in the goverment holding a copy of works 'in the public interest' in exchange for a time-limited monopoly on the produced work. One of the problems with modern copyright law, at least in the US is that you're no longer required to place a copy of the work in escrow with the government to ensure said work will be available after the copyright on it expires, which give the 100+ year reign most will have now is far far after the point where many items will be useful. But more importantly, as happened with Star Control 2 and Toy's For Bob, the original documented copies of the work may be permanently lost due to mishandling by their creator, who benefited financially from it, but now no longer has the ability to provide it to the public when it's no longer economically important to them (in their case the 3do version survived, and led to the 'Ur-Quan Masters' version which currently resides on sourceforge, but for untold other software titles produced in the early days of personal computing the master source has often been lost.
Just my 2 cents...
It Depends (Score:2, Interesting)
It's a classic manufacturing issue (Score:5, Interesting)
This is a classic manufacturing issue. The killer point is when an expensive item becomes cheap due to mass production. The makers of expensive items seldom survive that transition.
Historically, this has happened time and again. It happened to basic watches around 1890, when Ingersoll introduced the $1 pocket watch. The watch industry got hit again in the 1980s, when quartz crystal watches became both cheaper and more accurate than mechanical ones. (Neuchatel, Switzerland was hit hard by that.)
One strategy is to position a product as a luxury item. Rolex took that route in watches. Their CEO actually says "We are not in the watch business, we are in the luxury business. Apple positions themselves that way in computers and audio/video gadgets.
If that doesn't work, you're toast. There used to be a high-end graphics hardware business, with companies like Evans and Sutherland, Dynamic Pictures, Matrox, and SGI. They all got clobbered when gamer graphics cards got good enough to take over pro jobs. I visited Sony Pictures Imageworks around 1997, when all their animators had SGI workstations, with a few PCs being tried out. When I went back in 2001, everybody had a PC, with a few SGI machines still around to run legacy stuff. SGI went bankrupt in 2006.
Open source is just another form of commoditization. Most open source software isn't very original. There's usually some predecessor commercial product that did roughly the same thing. Open source is the same kind of competitive threat as white-box generic hardware.
Re:Value (Score:1, Interesting)
The quality issue is a good point, one that keeps getting confused with the price issue. My experience using both free and paid software is that, generally, free software gets better faster than paid software, if only because it can't compete on price.
Paid software often limits the rate of improvement in order to drive the upgrade cycle that keeps shareholders happy. I've seen some shamefully minor upgrades being touted by vendors as the Next Big Thing that you had to have.
Free software advances roughly at the rate the itch can be scratched, and by how many scratchers there are working on it, and how maddening the itch. This tends to fall apart a bit when the project gets too big (also something paid software is prone to.) Poverty, need and desire are good itches, time, money and desire good scratches.
It's all about value (Score:3, Interesting)
What is really happening with open source is that the value proposition has changed. With closed source the value is attributed to the software itself. Some open source businesses try to kludge themselves into this model as well. In reality what the open/free software movements have done is shown that the real value is in the time and effort of the developer. Once the market realizes that they are paying for service and expertise from the developer, the market will start to make sense.
Cheers!
CS
Re:Yes, and there's nothing new with that (Score:4, Interesting)
Actually, when Open Source is more widely used I expect the demand for computer experts to go up. Back in the days when computers just got to the sizes to be useful the programmers wrote all software from scratch - in assembly or fortran. Their Open Source foundation consisted of centuries of accumulated mathematical knowledge.
As proprietary codebases grew there was first increased demand for programmers to replicate competitors functionality, but than it shrunk as industry consolidation kicked in.
Now the growth is limited by what you can develop for existing proprietary product.
On the other hand, with more Open Source software there many more points to innovate. And very few packages can be used without some customization. So customers would need an expert anyway - and if they buy expert services they would also be inclined to pay a somewhat smaller fee for a commodity addon.
Re:Yes, and there's nothing new with that (Score:5, Interesting)
Eh. I don't really understand the question.
Having thought about it, the submitter is disappointed that they must continually develop new, better software products?
How is that a problem? Today, you're selling a simple app that people need. Tomorrow, someone will make a new one, but in the meantime you get to keep your developers busy (and paid) working on the next big thing.
Some day open source developers will replace that, and you'll have already been working on the next next big thing.
Sounds like a good scenario for a business... lead the market, make new products all the time, be known for being innovative and the model for everyone else's software.
The only downside is that you actually have to BE A SOFTWARE COMPANY, instead of the marketing and sales company that many closed source co's turn into... just before they die.
The mark of a good software development company is one that recognizes that writing one app is not the be-all, end-all of your existence. Some day you'll need something else.
Even MS doesn't get to stand still for too long. If they never improved Exchange, we wouldn't use it. If they never improved their OS's (Vista jokes aside), we wouldn't use them. They're not really selling Windows ME + Office 2000 + Windows NT 4.0 anymore. Each of those have been long eclipsed by other software. The only argument left in the marketplace is whether their CURRENT software is good enough to warrant buying it.
Literacy, the Internet, and 3d Printing (Score:2, Interesting)
Everyday tasks on the computer will eventually be in the same boat. "What?!? People used to pay for word processors?!? To listen to music?!? To watch movies?!?"
How many people reading here can easily program and reproduce the game "Pong"? I'm sure Atari guarded that knowledge back in 1972.
Literacy and the printing press was the first innovation making technology reproducible quicker. The internet is doing the same thing now. My guess is when cheap 3d printers [slashdot.org] can reproduce electronics instead of just plastic figures, we'll see the next jump.
Re:Yes, and there's nothing new with that (Score:5, Interesting)
And the other side of the coin is that IT is not a producing industry. IT merely allows other industries to produce their goods and services in a more efficient fashion. From this you can clearly see that the real source of money for IT is serving other industries as custom solutions.
Commodity market can go to 0 without a significant impact on global IT economy, because even now 9 out of 10 programmers work for non-IT companies. If your company is not selling software, then raise of free software is only to your benefit.
ALL software is a race to the bottom (Score:3, Interesting)
If you think it's tough to be an open source vendor, just imagine what it's like as a proprietary vendor who might have an even bigger investment at risk -- watching the open source market chipping away at it. I don't mean Microsoft or the other major players, as they have already had more ROI than they deserve. After all, it was overpriced "cash cow" products (originally Unix itself) that led to the open source concept in the first place.
The rise of Microsoft marked the halfway point in the race to the bottom. Back in 1980, IBM needed a cheapie OS that would not add $3000 of licensing fees to what was already a $3000 product. The market for $6000 PCs was less than 5% of the potential market for $3000 PCs. IBM was perfectly capable of adapting Unix for the mission, but not without bloating the cost. And besides, the original 8088 was not much of a CPU anyway. Any serious computing would be done via 3270 terminal emulation to a "real" computer elsewhere.
At thsi point, all software races downward approaching a price of zero. It's only a matter of time.
Competing with free is a losing proposition. So don't do it. Unfortunately, management has fallen in love with offshore outsourcing. As a result, the quality of commercial software has no way to avoid the open source juggernaut. It IS possible to out-invest the open source community and still make a buck. That involves real investment and real risk. As long as management stays focused on cost at the expense of innovation, quality and customer satisfaction, the open sourcers are in the driver's seat.
Consider the simple concept of tech support. Blog posting vs. a vendor's offshore call center. Which one responds first? With a workable solution? Resulting in a self-service workaround and a patch for all users? Why do we pay a PREMIUM for "supported" products that are supported by morons? We all know which vendors I am referring to.
I think Apple does a great job of exploiting open source on one hand, while avoiding price erosion in its own products that depend on it. We can't all do what Apple does, but they are onto something.
The IT industry has become an awful place to work. This created a large community of under-utilized, frustrated people who are very anxious to deliver software as it should be. For free, if necessary. Look closely at the key contributors of any major open source project and you will find people with spectacular credentials -- the type of folks you couldn't dream of hiring to work in your company. Competing with these people (at any price, especially zero) is a waste of time and money. The more we dumb down the commercial development business model, the more we feed the process.
Understanding the trend is the first step towards figuring out what to do about it. I think the trick is to plan ahead for the likelihood of commoditization, and maintain a pipeline of new products and ideas that runs ahead of it.
Although I do not have the answers, I am absolutely sure that swimming against the tide is a loser's game.
Re:Yes, and there's nothing fruity about that (Score:3, Interesting)
But it will filter down, people want their home computers to run the same as they have at work, so the more OSS takes off in large businesses the more it will filter down to home users.
Of course in an OSS world the corporate desktop software can be used as a base for the consumer desktop, and the rest of the cost can be rolled in with the price of hardware, this model seems to work for Apple.
Re:Yes, and there's nothing new with that (Score:4, Interesting)
The idea that software development will somehow become obsolete because there are open source programs freely available is a fallacy. It is like when 20 farm workers are replaced by a mechanized piece of farm machinery, they don't just starve and die. Those twenty farm workers end up operating, repairing, and building those pieces of farm machinery instead of breaking their backs in a field and every benefits from the productivity increase.
Software is similar. There's no less money being thrown into technology now than there ever was. The difference is that instead of throwing all their money on basics like OS and Office suite, now they spend your money on more complex things, custom internal software, employees capable of managing and aggregating FOSS, and highly complex systems that have not been tackled by the community. This is great for programmers in general as there will be less drudgery, more respect, and more rewarding work than have existed in the past.
Re:Yes, and there's nothing new with that (Score:3, Interesting)
If market price = 0 (if that even is a meaningful statement), that means people are not willing to pay anything for the software, and so paid demand = 0. The only way this can happen is if no one wants the software or somehow they are getting it free. Getting it free is what we've seen in the sale of bytes generally, like with pirated games and mp3s.
Any ECON 101 course will teach that there are both demand and supply curves. In this case, we have established that market price = 0, although it isn't because the demand = 0. He was happily selling the extensions for > 0 before, so there were people willing to pay for it. Rather, it's that people are willing to supply for $0. So it's the supply curve in the supply and demand curves that causes equilibrium to be $0.
Re:Yes, and there's nothing new with that (Score:5, Interesting)
Except your scenario has never happened in real life. At least never happened without the collusion of government. The scenario exists in some bad economic texts, but it's a myth. Without the force of government to competitors at bay, big businesses will always have small businesses keeping them awake at night. The history of 19th century "robber barons" is the history of lobbying government to stop the competition. In fact, the term "robber baron" was coined by a monopolist (Collins) complaining to congress about a competitor (Vanderbilt) encroaching on his government granted privilege.
The more successful a business, the more people want to enter that industry to grab a piece of that pie. People used to enter the oil business just so they could get bought out by Rockefeller. And he only had 60% or so of the market. We may not have seen Windows clones come out in the late nineties during the heyday of the Microsoft monopoly, but we did see an explosion of software development all competing with various bits and pieces of Windows.
Businesses come and go. It's the nature of economic reality. The Fortune 500 of 1958 had a very different roster than the Fortune 500 of today. And I can think of only one major U.S. company in 1908 that still exists intact today (IBM).
Re:Yes, and there's nothing new with that (Score:5, Interesting)
"done some valuable work at some point, and then sit around and collect money for the rest of your life."
This always bugs me. It's not like there is a major world problem that people who create something that sells lots then sit on their ass and do no more work. In fact, I'd say the opposite is true. J K Rowling could have quit writing after book 1, but didn't. Most big name pop bands could retire after their first hit album. Spielberg and Lucas could have retired after their first big movies (American graffiti and Jaws).
When people make a lot of money from royalties, they very often will plough that money into doing it again, only bigger and better next time. Lucas spent every penny of his American Graffiti money to make Star Wars. Then he took all the SW money and used it to try and self-fund Empire, and cut out the movie studio.
People often say that those who work for royalties "sit around and collect money when doing nothing"
Those same people are the ones taking a daily wage for all those years when those royalty guys worked their asses off for zero salary, to try and get to that point.
If working for royalties is such a meal ticket, why doesn't everyone quit their job and start their own business?
I don't begrudge anyone earning royalties of any sort. if you can live off your royalties, you created one hell of an awesome product and likely made a lot of people very happy.
Re:Yes, and there's nothing new with that (Score:5, Interesting)
OSS aside, shareware, adware, bundling, and "free for personal use" push the software market to $0 or very close thereto. Think of the Windows anti-virus market -- there were a number of entrants who gave away a version of their product even before any open-source AV was available: anti-vir, AVG. Same for desktop firewalls: zonealarm, kerio/tiny/sunbelt. Same for virtualization: vmware server is a free download. Same for web browsers: IE and Netscape went free even before mozilla went open source. Same for Windows media player software: remember Real vs. Windows Media player? Same for disk compression software: remember the Stacker/Doublespace controversy back in the early 90s? Same for backup software: Microsoft has bundled a basic backup app in Windows for a while.
So even in a "pure" commercial software world, you sometimes have to compete with free.
The same effect can even happen in the COTS hardware market. If you released a 1GB hard drive in the early 1990s, you were sitting pretty. If you sat back and didn't innovate, though, your product's value would quickly erode over the next few years as competitors released larger and larger drivers. Today, your product's value would be effectively $0, with vendors giving out free 1GB USB keys at tradeshows. Similar for video cards: a video card that could command $100 10 years ago is nearly worthless now, with much faster devices available, and equivalent functionality integrated into cheap motherboards.
Progress is a bitch. Evolve or die.
Re:Yes, and there's nothing new with that (Score:3, Interesting)
On the other hand, with more Open Source software there many more points to innovate. And very few packages can be used without some customization. So customers would need an expert anyway - and if they buy expert services they would also be inclined to pay a somewhat smaller fee for a commodity addon.
While that seems to make sense, reading messages posted to mailing lists and web sites, it appears that people who are trying to use FOSS aren't even programmers at all, and make it painfully obvious that they have no idea what the are doing.
Then we have the companies that produce software using FOSS, and don't contribute back, which I think is much more common that believed.
What may happen, is that FOSS may increase the demand for short-term contract programming. Need someone to integrate three packages with a thin integration layer? HIre someone for 20 hours and done. No one on staff. I've seen a lot of interest by people in India asking basic questions about software, and have dealt with some companies who outsourced their development to India, where they used FOSS to complete the task.
Re:Yes, and there's nothing new with that (Score:2, Interesting)
The laws of suppy and demand guarnatee that in a competitive market profits will always be reduced to zero as price is eroded to the level of cost of production. One party will develop a product and sell at some margin above cost, a second company will come in and sell for a bit less winning over the entire market and still sell at a slight margin above cost (though a smaller margin than the first company). The first company then responds and drops its prices and so on. Ultimately the price balances out at the cost of production. In OSS the cost of production is $0 because labor is volunteered labor, and there are no material costs, so ultimately the value of software is reduced to zero.
The way this is avoided in other industries is through innovation and patent rights. Actually there's considerable evidence that patent rights are responsible for developing our society into what it is today. The industrial revolution is attributed by some scholars to the establishment of modern style patent rights in Great Britain towards the end of the 16th century, and these same rights are what create an incentive for development in most industries today. So short of pattenting your software, yes, all you can do is inovate to stay ahead, and like everyone else here seems to be saying, that's nothing new.
Re:Yes, and there's nothing new with that (Score:5, Interesting)
To me that's more of a benefit than a problem
A lot of OSS software out there isn't that good (much of it is just tolerable), so if your Closed Source stuff is worse than free/Free stuff, maybe the world would be better off if you were doing something else instead.
Audacity has its problems. OpenOffice still sucked the last time I checked (haven't checked the latest though).
And it's been the year of "Desktop Linux" for how many years
In contrast look at how long Mac OSX took to overtake "Desktop Linux" in market share.
If Desktop Linux discourages "yet another crappy closed source O/S" from being made, it's worth it even if the Desktop Linux market share remains abysmal. If you want to make a new closed source O/S, you better know what you are doing. If you don't, please do something else.
I doubt we really need a new closed source OS that's worse than Desktop Linux.
Nor do we need a new closed source audio tool that's worse than Audacity.
Do we want to have to keep paying big bucks for something that's only a bit better than OSS software? I doubt it.
Add two words: sustainable, and marginal (Score:3, Interesting)
You're right, but people picked you apart as your first line was too broad. Try this instead:
There is no sustainable market for selling a commodity with a zero marginal cost of production.
When the marginal (ie. incremental) cost per unit is zero, this directly implies that no proprietary resources or secret sauce were required in its production, which in turn implies that effectively anyone can produce the commodity. Thus, while there is always a market initially for something new, there can be no sustainable market for an item with a zero marginal cost since it will eventually spread into public production. The answer for producers isn't to panic, but just to keep designing new items.
The same will apply to physical goods one day when they can be assembled with atomic precision from the elements around us.
Re:There is no market (Score:2, Interesting)
Re:Yes, and there's nothing new with that (Score:3, Interesting)
In the pre-win95 era there were a number of "windows clones" (in that they had similar functionality to Windows, rather than necessarilly running the same software) which were arguably better - GeoWorks and OS/2 spring to mind (given the choice between GeoWorks and Windows 3, I think I'd choose GeoWorks every time).
Geoworks Ensemble had its chance. It was far faster on a 286 than Windows 3.0 was on a 386 and had WYSIWYG screen and printer fonts before TrueType. Unfortunately, they didn't get an SDK out as promised, and when Windows 3.1 came out, it was all over.
Zero is a big place... (Score:2, Interesting)
An infinite singularity in fact!
It's the value you create making the technology work for someone. It's called "consulting" or "packaging" a "product" for sale. A "gizmo" economy where the "computer" is bundled with the "software" in custom configurations.
It's starting to happen now. Look at Apple. Almost everything they sell is a hardware product with software to enhance it! They could have taken over when Microsoft humped the bump with Vista by selling a software only version of MacOSX for generic X86-64 boxes. Instead they keep making custom hardware. Heck they are even making their own chips now! Yum, chips...
Hey, it could get worse than zero by having to pay people to use your software!!!
You get what you pay for (Score:2, Interesting)
Patents (Score:1, Interesting)
This is the whole point of patents. Patent the core functionality of your next extension and you'll have protection for x years.
wrong business model (Score:2, Interesting)
Re:Your business model is wrong... (Score:3, Interesting)
The problem with the "sell support" model, is that it gives the wrong incentive. You make the most money if your software is not too good.
I once worked at a company that wrote software that was sold at retail in stores, and included free support. Management was constantly urging us to raise quality, as every time we had to actually give support, we lost many times the profit we made on the sale to that customer. Our incentive as programmers was to produce the best code we could.
As a software user, I'd rather use software from people whose incentive is to write the best code they can, rather than people whose incentive is to write code just good enough to make paying for support less painful than switching to a competing product.
Re:No, the base software is open. (Score:3, Interesting)
This will only work if the development team can add enough compelling features to the closed-source version to prevent users from just passing it by on their way to the free version. (If it was trivial, more companies would try the open-then-closed-source maneuver.) And if they could start doing that tomorrow, they'd probably be doing a lot better at their current plan, producing closed-source add ons that enhance the FOSS platform.
The fact that they can't make the current business plan work suggests to me that either the free version meets the needs of most users, or that they're just not very good at enhancing the base version in ways that gets people to open their wallets. Neither bodes very well for them.
Offering a commercial alternative to a free software product isn't an easy or safe plan -- commercial XWindows servers have existed for years, but how many people do you know running them? -- if the free package is good enough.
Ultimately, the key is producing features that users are willing to pay for, and selling them for a price they want to pay. If you can do that, you can survive whether your business model revolves around an open-source or closed-source core; if you can't, neither will help in the long run.
Re:Yes, and there's nothing new with that (Score:1, Interesting)
Incorrect, Microsoft doesn't provide free software. The price of a stagnant Windows version is always falling due to depreciation. To compensate for this effect, Microsoft adds new features to increase the price. The cost of the bundled software is added to the price of Windows. Since Windows sells so many million copies, the price bump may be a few cents or a few dollars.
New Windows price = depreciated price of old Windows version + price of new features.
What pisses off independent developers is that Microsoft steals their ideas, and makes 100 times more money than them by charging 10 to 100 times lower, because they have such a huge customer base.
Re:No, the base software is open. (Score:3, Interesting)
HOWEVER, they also can't force the source of any previously GPL'd version of the software to be pulled from a third party's site either.
If the close-sourcing is done well, it is likely that binaries are the made primary means of disseminating the software, already.
And the closed-sourcing will actually accompany a major new release that leaves the OSS version in the dust, i.e. major redesign, major bugfixes, major new features, that would be an extroardinary effort to duplicate.
If few people had actually obtained the source, and the author of the source also dismantles any provided communication methods for OSS developers (like forums/mailingl ists/etc), it is unlikely the source will actually re-emerge on a third party website.
And if it does, it will be as a brand new project that enterprises will have never heard of, meaning it will unlikely to be used.
(The new OSS project cannot use the name of the original project in any of their communications, literature, or anywhere on their website, to even so much as advertise they are a fork, due to trademark protections.)
Re:Yes, and there's nothing new with that (Score:3, Interesting)
Not that it is the genesis, but the pressure that bundling put on smaller software vendors left no market, a virtual vacuum that was not filled until F/OSS developers who are working for something other than direct competition with MS decided to share their code under GPL et al. I was around for shareware, crippleware, trialware, freeware and the rest. Shareware was good. The license changes really made a difference. The GPL etc. gave more value in the early days. There was a strong battle between Novell and MS when MS decided to not jump on the networking thing. More mergers, more bundling and bad licensing deals, and on it went. The little developers were left cold. Anything that was created outside of Redmond was bought up or squeezed out. By the time that MSDN came along, the battle lines were drawn and entry to the game became rather steep. MS then cleaned up the messes by making it more difficult... whether that was forced on them to control the quality.. meh. The point is that MS helped to create the vacuum that F/OSS blossomed in by taking all the developers who could into their cathedral. Those left on the streets of the market outside waited for scraps, tried to find something to sell that was not given out to those buying in the Cathedral. Eventually they began to cobble their own systems together, and since nobody wanted to play nice or fair, they kept working on them till they were actually better than good, they were competitive.
Right now there are lots of people who shop at the cathedral like Pavlovian experiments in technology, and others are learning that the wares in the bizarre are not nearly as bad as those in the Cathedral want them to believe.
There are many successful Windows programs that survived quite a while:
Winzip, Winamp, SysInternals... can you tell where this is leading?
Adobe resisted with grace. Digital Research fought hard. WordPerfect... not so much. Ever wonder what might have happened if we were all using open standards?
Now we head back to equilibrium. It's no longer just Windows and Mac. Yes there was Xenix and such, but now with F/OSS the cost of entry to the game is much much lower. More competition is good. Look at all the small groups of people that for want of a better phrase, basically said 'fuck microsoft' and did their own thing. StarOffice, OOo, Samba, OpenLDAP etc. People that don't want to buy from the cathedral anymore. It took oppressive behavior coming out of the cathedral to foster it, even if it is not it's progenitor.
Re:No, the base software is open. (Score:3, Interesting)
And no, it's not a bad thing. But it does mean a changing business model.
I would add that it's a change in the direction of textbook laissez-faire capitalism, meaning towards practical realization of the academic abstractions behind theories of free markets as efficient distributors of wealth. The OP has observed that the Open Source model requires suppliers to continue producing, not to write a program once -- then, as the eloquent first post put it, sit on the duff collecting royalties for nothing.
Adam Smith's idealized competition is pretty well summarized as an open source independent contractor.
Free market works only when there is scarcity (Score:2, Interesting)
We can already see this in the case of Operating Systems because everybody uses an OS AND because there is no scarcity of OS related ideas either (OS algorithms are easily available). And therefore, sooner or later, somebody will find utility in doing it for free and bear the oppurtunity costs.
Some companies try to emulate scarcity by introducing DRM, but any such attempt will inevitably face competition from non- DRM substitutes which will inevitably lead us back to the problem of no scarcity. Some other companies try to write bad/incomplete software so that they keep improving and customizing it. But such companies will face competition from better/more complete software.
There are however someways to get around this problem: