Wednesday, April 11, 2007
Random Musings on Open Source
JP Ra commented on an original posting by Dan Farber named the True Nature of Open Source which I think missed some important considerations. The article says that economics don't favor pure open source which I think is 100% inaccurate.
Too much of the discussion around open source has been centered around software vendors and paid support models. The assumption is that enterprises won't go it alone in terms of using software without someone providing a holding hand. The funny thing is that many enterprises are doing just that. Ask yourself how many enterprises use Eclipse? Then ask yourself how many enterprises pay for support for Eclipse? Once an enterprise starts getting a taste of what it means to support themselves then the economic model changes significantly towards something more positive. The real question if folks can understand positive may not come from the perspective of a software vendor but it can benefit large enterprises in an economically sound way.
Another question not discussed in the blogosphere when it comes to open source related to economics is how enterprises spend money. For example, do you think that a Fortune 100 enterprise spends more money on operating systems or enterprise applications in the CRM space? Do you think that a Fortune 100 enterprise spends more money on J2EE application servers or industry vertical applications that run their business? The simple fact is that open source not only has focused on commodity stuff but it has focused on stuff that enterprises spend very little of their budget on.
Now ask yourself, if you agree that the vast majority of enterprise spend occurs in industry vertical specific applications, how much of that is truly competitive advantage vs the ability to buy an application off the shelf that should be commotizied? Every industry vertical has tons of applications that they spend tons of money on yet aren't competitive advantage. What if they were to stop outsourcing them to ratholes locations on the planet and instead were to open source them? What would the economic model look like then...
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