Beta
×

Welcome to the Slashdot Beta site -- learn more here. Use the link in the footer or click here to return to the Classic version of Slashdot.

Thank you!

Before you choose to head back to the Classic look of the site, we'd appreciate it if you share your thoughts on the Beta; your feedback is what drives our ongoing development.

Beta is different and we value you taking the time to try it out. Please take a look at the changes we've made in Beta and  learn more about it. Thanks for reading, and for making the site better!

Open Source Economics and Why IBM Is Winning

kdawson posted more than 7 years ago | from the committed dept.

GNU is Not Unix 146

driehle writes "In an article published in IEEE Computer magazine I recently looked at the economics of open source. I argue that large system integrators will do best and that open source startups will keep struggling. For developers, open source creates independence and new career paths as committers, while non-committers will fall on hard times. The race is on!"

cancel ×

146 comments

Sorry! There are no comments related to the filter you selected.

blatant plug (-1, Troll)

rucs_hack (784150) | more than 7 years ago | (#18716729)

what? The readership there wasn't good enough, you had to come here for some more pats on the back for your insight?

Here, have an ego cookie...

Re:blatant plug (0, Offtopic)

rucs_hack (784150) | more than 7 years ago | (#18716801)

Cool, the perfect first post. Blessedly free of insight, whilst at the same time vaguely insulting. That and moderated to troll within ten seconds.

I've never managed that before, another slashdot first for me.

Re:blatant plug (2, Funny)

Anonymous Coward | more than 7 years ago | (#18716891)

You replied to your own post like that!?

Here, have an ego cookie...

Re:blatant plug (0, Redundant)

rucs_hack (784150) | more than 7 years ago | (#18716983)

heh

Re:blatant plug (1)

miro f (944325) | more than 7 years ago | (#18718145)

how will your third post et modded down?

I vote for "redundant"

Re:blatant plug (1)

rucs_hack (784150) | more than 7 years ago | (#18719479)

well, you were right. I'd have gone for redundant as well, but only because there's no tag 'dorkish'

what can I say, it's been a year and I've never deviated from excellent karma. Time for a change.

It's really hard work though, I've been at it all day, and not a change in sight.

Re:blatant plug (1)

PitaBred (632671) | more than 7 years ago | (#18720845)

Dude. If you have nothing better to do than fuck with your karma on Slashdot, move out of your mom's basement and find a real job.

Re:blatant plug (1)

rucs_hack (784150) | more than 7 years ago | (#18722785)

You sir, are very correct.
I cannot deny that it's sad that I do this. However I am indeed stuck without a job for the next year while I write up, and I'm bored.

I view friday and saturday as 'have fun on slashdot' nights. because I can't afford much else. What's irritating is that I keep making comments that get modded up because, dammit, slashdot has such interesting debates.

Saw this earlier this month in Computer magazine (5, Interesting)

5, Troll (919133) | more than 7 years ago | (#18716733)

I came across Dirk Riehle's excellent article: "The Economic Motivation of Open Source Software: Stakeholder Perspectives" while reading the April issue of Computer on the train this morning. Thankfully, he's also put it online.

While there's certainly some truth in the example of how loyalties are shifting - and individuals might stay loyal to a project (or set of projects) across employers, just as IT professionals have always carried skillsets, language preferences, etc. across employers - I don't think this necessarily means more movement in this direction, for a few reasons:

1. Developers get involved in multiple projects. Core open source folks might start as contributors and become committers on a single project, but that is more a reflection of their interest in being involved than it is of their interest in that specific project - if the employment environment (quick Optaros plug here?) is explicitly supportive of that engagement across projects developers might discover new loyalty.

2. If the employer can uncover enough opportunities for developers to get paid to use their favorite project - for example, keep a developer busy working on Drupal based applications - they might accept the variety of new projects as compensation for the single employer. The joys of systems integration and consulting work is that if you change client projects frequently enough that it can be like changing jobs without all the paperwork.

3. How much of the whole "employees becoming 'free agents'" thing is really voluntary to begin with, at least on the IT side? Maybe a better way to look at this is to say that Open Source increases the level of portability of the knowledge an IT worker gains over time with any single employer, or decreases the barriers to leveraging that existing knowledge in a new firm.

Regardless it's a very good read for business stakeholders who struggle to understand why anyone wants to open source an in-house project or contribute to an existing open source project.

Re:Saw this earlier this month in Computer magazin (0)

Anonymous Coward | more than 7 years ago | (#18716971)

Please mod me only (+) Underrated or (-) Troll
Hmmm...interesting. Are you trying to prove a point? If you really were only ever moderated 'Underrated' or 'Troll', you will eventually have negative karma and will be banned.

Re:Saw this earlier this month in Computer magazin (2, Insightful)

cibyr (898667) | more than 7 years ago | (#18717195)

Look at his name...

Re:Saw this earlier this month in Computer magazin (0, Offtopic)

oesoga (1087897) | more than 7 years ago | (#18717345)

We are a web development company [agomnimedia.com] in India and we prefer open source like php to something like asp.net.

Re:Saw this earlier this month in Computer magazin (1)

aztracker1 (702135) | more than 7 years ago | (#18722095)

Well, I know it's run by the *EVIL* Novell corporation, but there's always the option of ASP.Net through mono [mono-project.com] . In fact there was a huge push to extend ASP.Net 2.0 support in mono for the recent Race To Linux [mono-project.com] contest. It's well supported, with applications making way into the default install for several Linux distros, including Ubuntu.. I mean it's not like any major site [tirania.org] is using it...

Simple Logic (0)

Anonymous Coward | more than 7 years ago | (#18717763)

well of course Open Source is only going to help mega-corporations.

It's a lot like slavery: who is going to see the most benefit from owning slaves- a guy who only has one or two to work a small farm, or a wealthy plantation owner who has hundreds of acres and hundreds of slaves? It's the simple economics of scale, and the bigger you are, the more you save.

Welcome to the future, Open Source Serfs!

How is this different from any other business? (3, Interesting)

tomhudson (43916) | more than 7 years ago | (#18716747)

I argue that large system integrators will do best and that open source startups will keep struggling

Substitute restaurants, or retailers, and the situation is the same ... most smaller ones fold within 5 years, some extyablish a niche, some grow, and some get bought out.

This is so pre-dot-com and so obvious that its not even funny. What next: 2+2=4?

Re:How is this different from any other business? (2, Informative)

morgan_greywolf (835522) | more than 7 years ago | (#18717029)

It takes commitment, and that's one of the points of the article, I believe. Smaller businesses can succeed, but it takes an entrepreneur who's totally committed to the business. And by 'committed' I mean so committed that they should be committed. And large companies don't always do well. Kmart was once one of the top 5 largest retailers in the country -- until Wal*Mart and Target came in and ate their lunch. Ford Motor Co., just a few years ago, was the #2 automaker in the world. They've been supplanted by Toyota, and it's only getting worse for them.

Re:How is this different from any other business? (0)

Anonymous Coward | more than 7 years ago | (#18717433)

It takes commitment, and that's one of the points of the article, I believe. Smaller businesses can succeed, but it takes an entrepreneur who's totally committed to the business. And by 'committed' I mean so committed that they should be committed.

That isn't specific to Open Source. It's true of any business startup. Even the most basic "How to start your first business" books will hammer this exact point over and over again. It is, simply put, basic common sense.

"Open Source startups will continue to struggle" is about as insightful as "Some Dot.com business plans are not very well thought out".

Re:How is this different from any other business? (1)

eraserewind (446891) | more than 7 years ago | (#18718197)

And large companies don't always do well. Kmart was once one of the top 5 largest retailers in the country -- until Wal*Mart and Target came in and ate their lunch.

The examples don't support your statement in any way. Wal*Mart and Target ARE big companies. Toyota IS a big company. So they succeed at the expense of another big company, so what? They are just doing the big company thing better.

Re:How is this different from any other business? (1)

morgan_greywolf (835522) | more than 7 years ago | (#18718635)

The examples don't support your statement in any way. Wal*Mart and Target ARE big companies. Toyota IS a big company. So they succeed at the expense of another big company, so what? They are just doing the big company thing better.


Okay. Microsoft, the 800 lb. Gorilla, has failed to capture the personal finance market in any significant way with Microsoft Money, despite the fact that when the fight began, Intuit was a tiny little company by comparison.

Better?

Re:How is this different from any other business? (1)

profplump (309017) | more than 7 years ago | (#18718823)

But they weren't big companies when they started. They *became* big companies as part of beating K-Mart.

Re:How is this different from any other business? (0)

Anonymous Coward | more than 7 years ago | (#18717055)


Thank you! I don't know why people insist on claiming economics change when we apply the theory to the tech world, or to the dot-com era or to open source. The article literally discusses topics on Econ 101 (see a tyical Production & Cost Chapter or an Efficiency Chapter discussing the ideas of Consumer Surplus and you'll see the same graphs in the article.)

They could have just summarized and said "open source software helps keep costs down. The end."

Re:How is this different from any other business? (0)

Anonymous Coward | more than 7 years ago | (#18717339)

wtf does "extyablish" mean? Also, as obvious as 2+2=4 seems to you and most people, it's not always the case. You really need to ask "2 what?, 4 what?". In music, for example, 4 is 2.5 greater than 1. So, 1 + 2.5 = 4. If business were as obvious as you think it is, you'd probably be successful.

Re:How is this different from any other business? (0)

Anonymous Coward | more than 7 years ago | (#18717527)

I figure the guy's dyslexic, and also typoed the "ty". That would cause the spelling "extyablish".

Re:How is this different from any other business? (2, Funny)

Vexorian (959249) | more than 7 years ago | (#18717483)

We couldn't decide the other day

I was saying 2+2=11
My friend insists 2+2=10

Now you come and tell us 2+2=4, thanks for worsening the discussion.

Re:How is this different from any other business? (1)

cyphercell (843398) | more than 7 years ago | (#18717887)

I think he's stating it because open source is not some kind of magic sauce that will make a small startup a resounding succcess overnight, that's a fair thing to state, considering the dot-bomb era.

Re:How is this different from any other business? (0)

Anonymous Coward | more than 7 years ago | (#18720291)

The difference is that in a restaurant, the cooks, wait staff, and dishwashers don't work for free. </flamebait> :)

Here's your free meal, sir. Would you like to purchase meal support to go with it?
 

Is IBM winning? (0)

Anonymous Coward | more than 7 years ago | (#18716749)

MSFT doesn't look like a losing company, does it?

Re:Is IBM winning? (1)

LordOfTheNoobs (949080) | more than 7 years ago | (#18717727)

Don't be silly. It isn't losing, Microsoft is dead [paulgraham.com] , remember?

Re:Is IBM winning? (0)

Anonymous Coward | more than 7 years ago | (#18719155)

>> MSFT doesn't look like a losing company, does it?

We all know that Microsoft is losing market share in the browser market, is getting dominated in the web services market and the music sharing business, and is losing a little market share in the desktop market, but they are hardly losing in the development market.

IIS continues to gain market share in the enterprise market, Visual Studio is updated every few years unlike the OS and Office programs, and it has been proven time and again the TCO is much lower using Windows. I have worked for 2 Fortune 5 companies and I can confirm that most of the Linux based websites and development was shifting to MSFT products because of uptime and lower TCO.

Microsoft has a lot of problems, but I do not see that they are "losing" in this area.

Old news (4, Insightful)

BibelBiber (557179) | more than 7 years ago | (#18716755)

Whoever commits to OS projects is likely more involved in the whole process than an outsider who simply tries to skim off some of the profit. As a customer I'd rather spend my money on a company that is involved in committing to what I pay for. After all developers tend to know best what they have done so far.

Re:Old news (3, Insightful)

computational super (740265) | more than 7 years ago | (#18716945)

That's true... today. However, if corporations start using open source contributions as a yardstick to measure potential candidates en masse, the landscape will change dramatically. Consider college - used to be, you didn't go to college unless there was really a point in learning for the sake of learning. Them employers started demanding degrees. All of a sudden, degree mills start popping up, grade inflation makes 4.0 GPA's meaningless, colleges are pushed to teach "practical" "skills"...

Re:Old news (2, Insightful)

Coryoth (254751) | more than 7 years ago | (#18719657)

However, if corporations start using open source contributions as a yardstick to measure potential candidates en masse, the landscape will change dramatically. Consider college - used to be, you didn't go to college unless there was really a point in learning for the sake of learning. Them employers started demanding degrees. All of a sudden, degree mills start popping up, grade inflation makes 4.0 GPA's meaningless, colleges are pushed to teach "practical" "skills"...
What I find interesting is that corporations using open source as a yardstick has the potential to reverse that trend at colleges, at least as far as computer science goes. If open source projects in general become widely recognised and highly regarded then hands on experience on open source projects related to the hiring field is going to look much more valuable than a CS degree with no promise of actual experience. That could easily lead to a trend where getting a degree is much less important than managing to make significant contributions to open source projects as far as getting a job goes. University can go back to being about theoretical computer science, and people who want to earn job credentials can put in the time on open source and point commit logs and reccomendations from projects maintainers.

I can't wait for RMS to die (-1, Offtopic)

Anonymous Coward | more than 7 years ago | (#18716757)

admid\t it, neither can you.

Re:I can't wait for RMS to die (4, Insightful)

Aladrin (926209) | more than 7 years ago | (#18716797)

No, actually, I think Stallman is a good counter-balance to the 'earn money at all costs' types out there. His extremism balances out the other extreme and let's us normal people see both sides of the equation more clearly.

I may not like the man, and I may not like his zealotry, but when looked at as a piece of the whole, he needs to be there.

Re:I can't wait for RMS to die (2, Interesting)

rucs_hack (784150) | more than 7 years ago | (#18716839)

I'm not too keen on Stallmans ongoing political agenda, but I cannot imagine an open source world without his keystone contributions.

His implementation of Lint (Splint) has reduced me to nervous wreck on more than one occasion, but it did improve my C coding skills.

About the only thing he wrote that I don't use is Emacs. I can appreciate its quality, and have taught its usage in the classroom, but I prefer Vim.

Thing is, politics aside, the guy is one awesome hacker, with few equals and fewer betters. Ok most of those achievements are in the past, but that can't be used against him unless the person making the argument has first exceeded his output.

Re:I can't wait for RMS to die (1)

00lmz (733976) | more than 7 years ago | (#18716859)

If it's this [splint.org] splint, then it's not Stallman's work [splint.org]

Re:I can't wait for RMS to die (0, Troll)

rucs_hack (784150) | more than 7 years ago | (#18717259)

oh? Was it Lint he worked on then? I'm confused, I always thought it was him who worked on Splint

Economics of Open Source - Bruce Perens (1)

jkrise (535370) | more than 7 years ago | (#18716771)

For a really useful and insightfult article on Open Source Economics, I thought Bruce Perens' article was the best.... no catchy graphs, tables and colours, but still very thoughtful and well-researched.

http://www.riehle.org/computer-science/research/20 07/computer-2007-article.html [riehle.org]

IBM has nothing to do with the origins of 'Open Source' or Free software for that matter.. they just tagged along.

Re:Economics of Open Source - Bruce Perens (5, Informative)

jkrise (535370) | more than 7 years ago | (#18716789)

Oops.. sorry, wrong link. Corrected here:

http://perens.com/Articles/Economic.html [perens.com]

Re:Economics of Open Source - Bruce Perens (1, Interesting)

Anonymous Coward | more than 7 years ago | (#18717359)


I refuse to accept articles with bullshit arguments.

If Open Source Works, Why Don't We All Build Our Own Cars?
The author poses this questions, tries to discuss economics, but never mentions the fact that the reason you don't make your own car is because you are able to make youself better off if you specialize in one thing and don't make the car (unless you are the best car maker). its called Comparative Advantage. Tell the author to look it up.

Also, where does he get his numbers from? "Failure Rate of Consortium and Non-Open-Source Collaboration" is "Perhaps 90%, unacceptably high." ... PERHAPS?

Required Market Size for an Open Source Paradigm is "5 and up." ... seriously, these numbers are just made up. All of his in article refernces are just commentary footnotes with the exception of a few cites (the only true valid ones are from the BLS (www.bls.gov)

C'mon people, there are a reason why colleges require professor's to publish in peer reviewed journals.

While some of his ideas may make sense, his artciles should focus on backing up each small argument one at a time.

exactly (1, Interesting)

Anonymous Coward | more than 7 years ago | (#18718253)

While I can stomach Perens in that he is not an FSF loon and at least recognizes the economic justification for proprietary software as a competitive differentiator, his assumptions seem a bit off base in order to support his theories.

Example: IBM is a hardware company.

Fact: IBM's 2006 revenues:

HW: 24.2%
Services: 53.2%
Software: 20%
Other: 2.6%

Re:exactly (1)

Chandon Seldon (43083) | more than 7 years ago | (#18721425)

How is proprietary software a competitive differentiator? Your competitors can buy it too. Custom software can be a competitive differentiator, but proprietary software is strictly a bad deal - you're spending money for the single effect of forcing yourself to spend more money later when the proprietary software company decides to charge you for an upgrade.

I came, i saw, i Slashdotted (0)

unity100 (970058) | more than 7 years ago | (#18716819)

In other news : alea jacta est

Re:I came, i saw, i Slashdotted (1)

lanswitch (705539) | more than 7 years ago | (#18717429)

In latin: alea iacta est.

oh (3, Funny)

unity100 (970058) | more than 7 years ago | (#18717853)

theres latin grammar police in slashdot too now eh ?

Re:oh (1)

lanswitch (705539) | more than 7 years ago | (#18718121)

theres latin grammar police in slashdot too now eh ?
No, it's the latin spelling police.

Actually, both seem to be correct (1)

Tran (721196) | more than 7 years ago | (#18718715)

Probably depends on ones language origin... Growing up in Germany I have always saw it with the "j".

Re:Actually, both seem to be correct (0)

Anonymous Coward | more than 7 years ago | (#18719381)

yeah, j is a perfectly correct spelling, the guy is just a judgemental douchebag who thinks that things are either the way he learned them or incorrect.

Re:oh (1)

BarkLouder (916884) | more than 7 years ago | (#18718963)

theres latin grammar police in slashdot too now eh ?

It's all Greek too me.....

Re:oh (2, Insightful)

Bemopolis (698691) | more than 7 years ago | (#18719207)

My gods, man, didn't you see Indiana Jones and the Last Crusade? By jumping on the 'j' unused in Latin you would have Alfred Molina'd yourself into the abyss, denying yourself a front-row seat to the cool-ass dessication of the head jackass.

See — grammar (er, spelling) has consequences!

i dont discriminate (1)

unity100 (970058) | more than 7 years ago | (#18719559)

against seats. front row, middle row, rear row, i accept them as they are.

Re:oh (2, Funny)

Azathfeld (725855) | more than 7 years ago | (#18721943)

theres latin grammar police in slashdot too now eh ?

No, but there are Latin grammar police.

Re:oh (1)

unity100 (970058) | more than 7 years ago | (#18722319)

what if we take the police as an "organization", as concept ?

Economic insanity (5, Interesting)

HangingChad (677530) | more than 7 years ago | (#18717189)

Millions of people and businesses all buying the same software is economic insanity. It's not at all the same thing as millions of people all buying the same kind of car. A car has intrinsic value related to the cost of the components, software doesn't. Software sunk costs are incurred during development. Once complete the only ongoing costs, outside maintenance, are for distribution and the media. You don't have any intrinsic value of metal and parts in software.

Instead of paying money to buy software, a company can instead choose to pay less money to modify an open source project to meet their needs and leverage the contributions other companies have made modifying the same project to their needs. It's game theory in action. Five companies all pay a little to modify an open source project instead of all five paying a lot for some big box software solution. Collaborate with competitors in the same field for the common product they all need, then compete in pursuit of their market. Game theory.

What was needed for the theory to become disruptive to reality was a base of open source software to start with. We've had that for a while. All the pieces are there. And, as the author pointed out, it presents an opportunity for integrators.

Software really does fit the utility economic model better than a manufacturing model. Which is one of the things that really scares me about the US shipping manufacturing capability overseas and relying on a brain share economy.

Re:Economic insanity (2, Insightful)

maxume (22995) | more than 7 years ago | (#18717743)

The US still exports the second most real goods in the world. The leader? Germany.

http://www.bbc.co.uk/blogs/thereporters/evandavis/ 2007/04/the_state_of_trade.html [bbc.co.uk]

And it is better than that. The manufacturing moving overseas because of labor prices is by its very nature the lowest margin business(because higher margin businesses are more sensitive to things like quality), and to some extent, the least capital intense(because there is generally less political risk in developed countries -- Germany is as unlikely to nationalize Mercedes as the US is Ford, China probably won't do similar, but it is less certain), so losing them is cheap(in the sense that it doesn't take much to build such a factory if all the sudden you need to).

Re:Economic insanity (1)

ClosedSource (238333) | more than 7 years ago | (#18718033)

"Instead of paying money to buy software, a company can instead choose to pay less money to modify an open source project to meet their needs and leverage the contributions other companies have made modifying the same project to their needs. It's game theory in action. Five companies all pay a little to modify an open source project instead of all five paying a lot for some big box software solution. Collaborate with competitors in the same field for the common product they all need, then compete in pursuit of their market. Game theory. "

I think you've rather "cooked the books" a bit here. It's not at all clear that modifying an OS project is going to cost less than buying one. In the case of complex applications like AutoCad, it would take considerable effort to bring open source versions to the same feature level. A company would probably have to hire additional employees (this is not a job for a typical IT type) with all the costs associated with it. There is also the issue of compatibility: you will be at a competitive disadvantage if you use tools that other parts of your industry don't use unless those tools provide unique value. Even if in those cases where it would appear to be in the long run, companies can't always choose the long term view.

The collaborative model also carries added costs. There's the cost involved in managing the multiple-company development (e.g. Who's in charge?). There's also the added cost associated with the analysis required to determine the line between collaboration and competition as well as the potentially large cost of coming to the wrong conclusion.

When you look at this issue from a real-world perspective things become more complicated than an academic view can appreciate.

Re:Economic insanity (1)

99BottlesOfBeerInMyF (813746) | more than 7 years ago | (#18719285)

It's not at all clear that modifying an OS project is going to cost less than buying one.

Of course not, but conceptually, the larger a project is and the more used it is, the cheaper it should be by comparison. If you're a ten person company and need a special calculator, it may make a lot more financial sense to buy a commercial offering. If you're a 20,000 employee corporation and you need some software that everyone else also needs, the open source model will almost always provide it at a tiny fraction of the cost of buying a commercial license to it.

The collaborative model also carries added costs. There's the cost involved in managing the multiple-company development (e.g. Who's in charge?).

This is in no way inherent in the open source model. Open source does not even mean developed in house. There are many open source projects centrally managed by a core team who do work on that project on contract to anyone who wants to pay, or even whenever they get enough pledges for a given feature. In any case, the cost associated do not scale at the same rate as licensing costs. In many cases using open source is free, aside from the same incidental costs that come with commercial software.

When you look at this issue from a real-world perspective things become more complicated than an academic view can appreciate.

Linux. Who develops it? Lots of commercial companies and it saves them (including my company) a whole lot of money. The open source business model is not academic, it is a real world reality and has been for decades.

Re:Economic insanity (1)

ClosedSource (238333) | more than 7 years ago | (#18720809)

"This is in no way inherent in the open source model. Open source does not even mean developed in house."

I was responding to this:

"Collaborate with competitors in the same field for the common product they all need, then compete in pursuit of their market."

It might not be inherent in the open source model, but it was I was responding to. In any case, I don't think that many open source projects are going to change priorities in response to outside companies' needs unless the contribution is very high.

"Linux. Who develops it? Lots of commercial companies and it saves them (including my company) a whole lot of money. The open source business model is not academic, it is a real world reality and has been for decades"

Linux of course, is an atypical case, but the core development wasn't done by commercial companies anyway (although they've done a good job of branding their own distros to profit from unpayed developers).

Re:Economic insanity (2, Interesting)

99BottlesOfBeerInMyF (813746) | more than 7 years ago | (#18721193)

I was responding to this: "Collaborate with competitors in the same field for the common product they all need, then compete in pursuit of their market." It might not be inherent in the open source model, but it was I was responding to.

I don't see why you're interpreting "collaborate" to imply that the collaboration has to take the form of hiring an internal developer, instead of hiring a contractor, or simply providing funding to a project along with recommendations.

In any case, I don't think that many open source projects are going to change priorities in response to outside companies' needs unless the contribution is very high.

I'm not sure I understand. My company uses a lot of open source software (as well as closed source). If we need that software to do something it does not already do, we either have a developer code that, or pay someone else to do so, then that code gets contributed to the project. Anyone can influence the priorities of an open source project to the extent they need by investing in just that need, while all other, shared needs have already been paid for.

Linux of course, is an atypical case, but the core development wasn't done by commercial companies anyway...

I think you are factually incorrect. The vast majority of both the Linux kernel and the userspace applications have been paid for by commercial companies.The same is true of all the BSD projects, apache, OpenOffice, GIMP, and almost every large project I can think of. There is this myth that most open source development is done by unpayed hobbyists, but every time anyone looks into it they discover that is not the case and almost all the major contributors are paid to work on a project by various interested companies. We've got a hundred or so developers at my current company and almost all of them contribute to one open source project or another to some degree, on the company dime because it benefits our company to do so. What Linux can't handle that many NICs in duplex mode, well we'd better fix that since we're selling servers built on it. What OpenBSD has issues with that graphics chipset, well, we'd better get that running for console mode on our offering based on that. What Apache has a security hole, well since we have a Web interface we'd better fix that. What the perl interpreter barfs on that, well we'd better fix it and submit a patch. That is how open source development is done.

Re:Economic insanity (0, Troll)

ClosedSource (238333) | more than 7 years ago | (#18721335)

"The vast majority of both the Linux kernel and the userspace applications have been paid for by commercial companies"

So are we taking the position today that Linux development includes userspace applications and thus Linux's security and stability includes all of those applications, or are we taking the position that Linux is just a kernel and some GNU libraries? The story around here changes so much, it's hard to keep track.

Re:Economic insanity (1)

99BottlesOfBeerInMyF (813746) | more than 7 years ago | (#18722415)

So are we taking the position today that Linux development includes userspace applications and thus Linux's security and stability includes all of those applications, or are we taking the position that Linux is just a kernel and some GNU libraries? The story around here changes so much, it's hard to keep track.

Please stay on topic. You comment has nothing to do with the point I made. We were talking about cost of development and who does it. It is the same for the kernel, the userspace or both combined. If I had not already commented in this thread I'd mod you down as off topic or a troll, because you are both right now. How you have a score of two, when you can't even address the topic at hand are are instead trying to argue a completely different and irrelevant point is the real question here.

Re:Economic insanity (1)

ClosedSource (238333) | more than 7 years ago | (#18722717)

My comment was relevent because you claimed that Linux was primarily developed by commerical companies and you sited userspace applications as part of your evidence. Given that the definition of what constitutes "Linux" is very fluid on Slashdot, I was trying to determine what definition you were using and the implications for that choice. Sorry if defining your terms bothers you.

Re:Economic insanity (1)

zotz (3951) | more than 7 years ago | (#18720087)

"I think you've rather "cooked the books" a bit here."

OK, but haven't you done the same thing?

Don't you think that The American Institute of Architects (for instance) could fund the development of a Free CAD application to suit their members needs for less than the members pay in licensing currently? Couldn't the associations oversee the work so the individual members did not have to deal with the day to day issues if they chose not to? Wouldn't this shift things back the other way?

all the best,

drew

http://www.youtube.com/profile?user=zotzbro [youtube.com]

Re:Economic insanity (2, Insightful)

dan the person (93490) | more than 7 years ago | (#18720293)

Don't you think that The American Institute of Architects (for instance) could fund the development of a Free CAD application to suit their members needs for less than the members pay in licensing currently?

No. In the same way the writers institute of Japan couldn't fund a better wordprocessor then MS Word, Wordperfect, or openoffice etc. Free market competition and economies of scale.

Do you think the Association fo Computing Machinery could fund the best software development environment for their needs? Who needs gcc, eclipse, or Visual Studio? Better to centralise our efforts surely?

Event the soviets recognised the importance of competing design studios.

Re:Economic insanity (1)

zotz (3951) | more than 7 years ago | (#18721839)

"No. In the same way the writers institute of Japan couldn't fund a better wordprocessor then MS Word, Wordperfect, or openoffice etc."

Fund it, not write it.

all the best,

drew

Re:Economic insanity (1)

ClosedSource (238333) | more than 7 years ago | (#18720945)

"Don't you think that The American Institute of Architects (for instance) could fund the development of a Free CAD application to suit their members needs for less than the members pay in licensing currently?"

And where exactly do you think the money going to do that is going to come from? Membership in AIA is about $210 a year already.

Re:Economic insanity (1)

zotz (3951) | more than 7 years ago | (#18721899)

"And where exactly do you think the money going to do that is going to come from?"

Perhaps I wasn't too clear.

Are the members paying yearly licensing fees (or average yearly purchase costs) for their CAD programs now? If you could wink and ignore the chicken and egg problem, couldn't they fund the Free Software replacement with a portion of those fees? perhaps they would need to pool with their other continent/country counterparts?

all the best,

drew

Re: AutoCad "cooked the books" (1)

g2devi (898503) | more than 7 years ago | (#18720623)

You're forgetting one thing. Most people don't need 100% of the features in an application like AutoCad and it's often possible to bootstrap other applications.

Here's one approach you could duplicate AutoCad:
1) Modify Blender (or some such 3D modelling app that's more appropriate) to save and load AutoCAD-compatible files. Yes Blender is a pain if you want to do AutoCAD-type work, but at least it allows you to get the job done.
2) Add the most important (missing) AutoCad features to Blender.
3) Add component libraries to Blender to include as many as the AutoCAD libraries as possible.
4) Add AutoCad-type scripting to Blender
5) Improve the user interface of Blender to be more like AutoCAD
6) ...[you get the picture]...

It may take a few releases and a few years, but an AutoCAD-capable clone should be possible.

Re: AutoCad "cooked the books" (1)

ClosedSource (238333) | more than 7 years ago | (#18721057)

"Most people don't need 100% of the features in an application like AutoCad and it's often possible to bootstrap other applications."

Yes I'm sure there's a lot of non-architects who don't need the power of an application like AutoCad. For them there's already a number of $20-$50 packages that will do the trick, no additional development is required.

Re:Economic insanity (1)

mpapet (761907) | more than 7 years ago | (#18718113)

Millions of people and businesses all buying the same software is economic insanity.

No, it's not. The people that spend the money on software more than once get at least as much value out of it as they gave to the entity selling the software. Economically, we are in a situation in the technology market where a monopoly has become a price maker. (look "price maker" up on wikipedia) There are severe limitations in the market for computer software and hardware as a result of this monopoly.

Instead of paying money to buy software, a company can instead choose to pay less money to modify an open source project to meet their needs and leverage the contributions other companies have made modifying the same project to their needs.
This sounds good, but in my experience, it is a low-probability event. Rarely is the code base flexible enough to make a build decision. (versus the buy COTS)

Software really does fit the utility economic model better than a manufacturing model
Some software does. Definitely not all. What's nice is that there's room for both.

OSS definitely has a multitude of benefits and is a beautiful counter-attack on the Microsoft's monopoly.

Wrong assumption/bad business decision (0, Troll)

DogDude (805747) | more than 7 years ago | (#18718283)

Collaborate with competitors in the same field for the common product they all need, then compete in pursuit of their market.

Why would any company willingly give up any competitive advantage? That's business suicide.

Why would I, as a business owner, give my good, custom, closed software away to competitors that don't have anything like it, just in the hopes that my software will be marginally improved? In the meantime, assuming that my competition CAN improve my software, I'm giving my competition a huge advantage they didn't previously have. It's a LOT of risk, with minimal reward, for people who already have a software advantage.

Re:Wrong assumption/bad business decision (0, Troll)

Anonymous Coward | more than 7 years ago | (#18719565)

You're such a master of the obvious, DogFucker. It's truly awesome.

Re:Wrong assumption/bad business decision (1)

dan the person (93490) | more than 7 years ago | (#18720539)

Why would I, as a business owner, give my good, custom, closed software away to competitors that don't have anything like it, just in the hopes that my software will be marginally improved? In the meantime, assuming that my competition CAN improve my software, I'm giving my competition a huge advantage they didn't previously have. It's a LOT of risk, with minimal reward, for people who already have a software advantage.

Because in 12 months time your competitors will have a software advantage, either because they have pooled there resources together directly, or indirectly by purchasing the same software package. Unless you have 70% market share, or the pooled or 3rd party developer is rubbish, they will have better software.

Simple answer: core competencies (1)

g2devi (898503) | more than 7 years ago | (#18721055)

> Why would any company willingly give up any competitive advantage? That's business suicide.

Not really. The key phrase you're forgetting is "core competencies". Companies collaborate outside their core competencies all the time. It's a great way of lowering costs without giving their competitors the edge (since their competitive advantage is not being shared).

Here are some examples where collaborating outside your core competencies makes sense:
1) Software companies to collaborate an a common installer. The installer is important but no-one buys software because the "installer is cool", so collaborating with your competitors is a no-brainer.
2) Integration consultants collaborating on making open source software more flexible. Integration consultants, by definition, write very little software. Their skill is in their head and being able to tie software together. The more software they can tie together, the more business they get and the less software they can tie together the more likely one of their clients will want to buy a prepackages solution or build from scratch. Collaboration makes sense here too.
3) Your farming business wastes a lot of money getting water from a river ten kilometers away. There are seven competitors between you and the stream. You have two choices -- go it alone or collaborate. If you go it alone (assuming it's possible), you'd spend a bundle and take a lot of time and but not gain much competitive advantage over the competitor closest to the river. If you collaborate, you can spend less and use the savings to improve your farming efficiency. Which would you choose?

Re:Wrong assumption/bad business decision (1)

Catiline (186878) | more than 7 years ago | (#18721727)

Why would any company willingly give up any competitive advantage? That's business suicide.

Why would I, as a business owner, give my good, custom, closed software away? ... It's a LOT of risk, with minimal reward, for people who already have a software advantage.

But the argument isn't meant applied to the custom business logic applications. When you have something like that it makes perfect sense to spend thousands of dollars to protect the secrets in it that makes your business run so well.

On the other hand, generic software like your word processor, database, web server, or operating system don't contain those secrets; that's why they're "generic". For those applications, why not swap expenses with your "competition"? (Note: competition is in quotes in the prior sentence since, these being generic programs, vendors in other fields will also have incentive to contribute - and you do not directly compete with them.)

Re:Economic insanity (1)

marcosdumay (620877) | more than 7 years ago | (#18722659)

That also cuts for commecial proprietary software, since distributing the costs on lots of consumer is what they do. In fact, your argument works only against in-house developped software.

FOSS have a clear advantage if you think about multi layered software, where a stack of libraries is used by another stack of libraries, and so on until you get to the user program. Proprietary software's cust grows exponentialy when the number of stacks grows, that happens because capital wants to be rewarded every time it change hands, and proportinaly to the amount changed. But FOSS can mix itself freely, without overhead.

Now, one'd need more than pure economics to see how that is important. For most other business, that effect is negligible.

OSS only shifts the problem, dont solve anything (1, Insightful)

Anonymous Coward | more than 7 years ago | (#18717211)

IBM is winning because IBM sell hardware, and since you can't copy hardware...well you are forced to buy at the price asked if you need something from them....
Open Source is only a solution for IBM to maximize its margin by lowering the cost developpement by shifting cost to other companies or naives individuals.

and of course, open source still offers NO guarantee of working.

but well at least, you can have it for free.....

Re:OSS only shifts the problem, dont solve anythin (0)

Anonymous Coward | more than 7 years ago | (#18717361)

This is complete rubbish. I work for an open source company with good links with IBM and you probably work for an IBM customer which explains why you think IBM is the only option.

Let's look at their hardware business:
1) Laptops & PC's - er, no, not anymore.

2) xSeries - Intel x86 commodity hardware. But, most people seem to be going to HP or Dell...

3) iSeries - backend with good presence in retail, logistics, manufacturing, insurance. Yes you can run some open source stuff on it like Apache, MySQL and PHP and they are trying to promote this, but many customers are just running x86 commodity servers and hooking them up to connect to the DB2 databases running on these machines. More hardware sales? Probably not loads.

4) zSeries - Mainframes - some zLinux. Most people thinking of running Linux on Mainframe? Not loads.

Re:OSS only shifts the problem, dont solve anythin (0)

Anonymous Coward | more than 7 years ago | (#18717503)

oh, I forgot pSeries - their PowerPC based servers, which is OK because most other people have too...

Re:OSS only shifts the problem, dont solve anythin (4, Informative)

mark0 (750639) | more than 7 years ago | (#18717393)

IBM is winning because IBM sell hardware

Hate to burst your bubble, but IBM only makes a bit more on hardware than it does on software. IBM is winning because they sell services. Have a look at their 10-Q [edgar-online.com]

In millions:
Hardware: 5,583
Software: 4,406
Services: 12,017

Re:OSS only shifts the problem, dont solve anythin (0)

Anonymous Coward | more than 7 years ago | (#18717505)

I was not telling IBM was succesful 'because' of hardware, I was telling the only use to IBM for OSS is for their hardware branch (to get rid of AIX that is costly to maintain).
They don't give a shit if it is closed or open source in their Services branch anyway.

Re:OSS only shifts the problem, dont solve anythin (1)

eraserewind (446891) | more than 7 years ago | (#18718969)

Agree completely. Their services branch will recommend and implement Windows as your corporate desktop, and whatever else proprietary as your business tools.

Joel Spolsky said it first (2, Interesting)

Latent Heat (558884) | more than 7 years ago | (#18719831)

Commoditize the complement to what you are selling.

If you are primarily selling services, software that you need to provide those services is a cost. If you commoditize software, you create more opportunity to make money from services. Those fancy four-color graphs are simply restating something Joel On Software said a while back in words.

Re:OSS only shifts the problem, dont solve anythin (0)

Anonymous Coward | more than 7 years ago | (#18721331)

But IBM software's profit margins are something like an order of magnitude larger than their service profit margins.

Open Source Strike? (1, Interesting)

Anonymous Coward | more than 7 years ago | (#18717247)

First of all, there is a lot of money spent on Open Source (distros, hardware vendors, service providers, people who would've otherwise paid for s/w, but now produce stuff with free tools, etc). We are talking about millions of $$ which would be enough to give $10k to every oss project out there.

From all this money a tiny 1% actually reaches OSS developers and it is usually only for mainstream projects. The cash flow is broken. Sure, OSS people give away their work for free, but if money is made from it, it would be good if the people who've put effort on something can get a fair contribution back.

Now they tell you, "do your best and maybe you'll be hired in one of those 100K/year jobs".

But should you contribute high quality software to an industry that doesn't pay back?
You can write software that is not suitable for commercial distros, yet people can download it and use it instead of commercial alternatives.
It is a different mantra. "Fund us or we'll put you out of business" :)

Re:Open Source Strike? (2, Insightful)

KenRH (265139) | more than 7 years ago | (#18717583)

The basic idea behind open source in not to write software to make money,
but because you need it. You open source it so other people that has the
same or simmilar requirements can chip in.

Then it doesent really mather that 98% of your users never contribute as
long as the projetcs commuity is large enough to drive the software forwards.

That said, there is ways to make money from open source, mostly by services
like consulting, customising og support.

Re:Open Source Strike? (3, Insightful)

eraserewind (446891) | more than 7 years ago | (#18718879)

Look, you should never do an Open Source project to get hired somewhere. You should do it because you enjoy doing it and it's your hobby. IBM earns multi millions each year. Red Hat earns less multi millions, but multi millions all the same. They don't need your charity. <your niche interest community goes here> however benefits greatly from any contribution you make. If you want to get a job somewhere special, then first get a job somewhere else slightly less special.

The cash flow is not broken. The cash goes to those who deliver what the customer wants, and who charge for it. Firstly, IBM, Red Hat and the like. Secondly, the makers of useful products that charge for them.

The makers of useful products who give them away, on the other hand, I thank from the bottom of my heart, since you saved me filling out a PO and numerous levels of approval.

it would be good if the people who've put effort on something can get a fair contribution back.
They can! Feel free to charge for your product! If it's any use, somebody will pay you for it. But you can't both give it away and charge for it.

Don't get me wrong, I am not dismissing Free Software (which has legitimate political aims) or Open Source (which has legitimate practical aims), but as an individual you should only contribute where you would anyway contribute. i.e. in projects that qualify as "your hobby" (or "your mission" if you have strong beliefs)

Re:Open Source Strike? (1)

chromatic (9471) | more than 7 years ago | (#18721915)

But should you contribute high quality software to an industry that doesn't pay back?

There's no way I could contribute as much free software as I've used.

Dont understand it (3, Insightful)

140Mandak262Jamuna (970587) | more than 7 years ago | (#18717279)

Though I like what he says, I am not sure I understand it well. His figure three has comparison of prices quoted to customers for the open and closed sources. He shows constant price quoted, irrespective of the number of items sold for the closed source model. But we all know that it is not true. MSFT charges much much lower price/per unit sold to large customers. Infact "unlimited use licenses" sold to Dells and HPs mean that they pay a flat fee irrespective of the number of units sold.

MSFT also has very "innovative" pricing schemes. In one instance, paying a flat fee per every computer owned by the univ, whether or not it has Office installed, was cheaper than paying per copy of Office. Effect of such pricing is that, there is no incremental cost to a dept to run Office. To use any other software, the dept head has to budget for it and justify the cost to the bean counters.

All I know is this, MSFT is far more sophisticated in playing Corporate pricing games, budget games and such things than any simple model used for research purposes by Open Source advocates.

My most common grouse is that the key is Open Standards, not Open Source. If MSOffice and OS products conform to a open standard and anyone can develop applications that cleanly interoperate with them, the playing field will be level. There will be many vendors, some playing at the Open Sources and some in Free Software, some closed and for-profit players. Without leveling the playing field one can not see how Open Source is going to win. But what do I know.

If I am so smart why am I coding for a living instead of smooching with the bean counters in the country clubs?

Re:Dont understand it (2, Interesting)

99BottlesOfBeerInMyF (813746) | more than 7 years ago | (#18717489)

All I know is this, MSFT is far more sophisticated in playing Corporate pricing games, budget games and such things than any simple model used for research purposes by Open Source advocates.

Most of what you cite are simply strategic pricing by MS. Discounts for large customers help motivate buyers to remain loyal if they want to remain large customers instead of be undercut by the competition. This is differential pricing, classic monopoly maintenance. Pricing schemes for education help remove the tendency of price sensitive, but highly capable university clients to move to cheaper, open source products. None of this really relates to the models presented which are a point case revenue model.

My most common grouse is that the key is Open Standards, not Open Source. If MSOffice and OS products conform to a open standard and anyone can develop applications that cleanly interoperate with them...

Umm, great, but this doesn't have anything to do with the revenue schemes of open versus closed source software development. You're confusing two issues. With open standards the market can operate freely in a traditional, capitalist manner. Open source is not needed for this. With open source, some users and developers of software can more efficiently create software and undercut the pricing of the traditional closed source models. Basically this study asserts that in a free market, open source will win because it is more efficient, just like any other more efficient process for doing the same thing. Whether or not we have a free market, or if open source development can win in a non-free market, such as the current monopoly/lock-in situation is another topic. This isn't about whether MS will be toppled. It is about whether you can make more money and pay less with open source software in general, as compared to closed source software (using the development methods and pricing schemes they commonly do today).

Re:Dont understand it (1)

MartinB (51897) | more than 7 years ago | (#18718939)

My most common grouse is that the key is Open Standards, not Open Source. If MSOffice and OS products conform to a open standard and anyone can develop applications that cleanly interoperate with them, the playing field will be level. There will be many vendors, some playing at the Open Sources and some in Free Software, some closed and for-profit players. Without leveling the playing field one can not see how Open Source is going to win. But what do I know.


Well of course it is. Everyone should have the choice whether to buy BSD licensed SW, locked proprietory SW, or any point in between, based simply on a price/functionality balance. And companies should have the choice for every application they release to license it the way they want, which also goes into the buying decision mix.

For companies that *do* sell SW with a spread of licenses (IBM being a prime example), Open Standards an obvious end-game that suits them very well. And of course, it means more work for the higher value consulting analysis that determines *what* should be integrated and *why*.

(Disclaimer: I work for IBM, but have no particular inside knowledge here)

myopic logic (3, Interesting)

chaves (824310) | more than 7 years ago | (#18717401)

"While this explains some of the volunteer work, it doesn't explain why companies today employ people who contribute to open source projects on company time."

Maybe it is because the company sees the open source project as a strategic component to its product or service offerings and its in their best interest that the project succeeds and they can influence its direction?

"Il-Horn Hann and colleagues found that the salaries of Apache Software Foundation project contributors correlated positively with the contributor's rank in the Apache organization [6]. They therefore concluded that employers use a developer's rank within the foundation as a measure of productive capabilities."

For me, that is not right conclusion, or at least not the only one. It is often the case that people contributing to open source on company time only started contributing because they were told to by their employers. A developer salary at his company and their rank within the open source project are both determined by his technical skills and teamwork abilities.

ibm? (2)

rumli (1066212) | more than 7 years ago | (#18717635)

Neither the article nor the summary mentions IBM.

Re:ibm? (1)

driehle (793340) | more than 7 years ago | (#18722609)

IBM got edited out sometime during the three years it took to get this paper published (as opposed to 5 hours it took on slashdot). Wherever it says large system integrator, you can safely substitute "IBM and the like".

Gmo3 down (-1, Flamebait)

Anonymous Coward | more than 7 years ago | (#18717697)

In addition, Disturbing. If you to stick something

not bad (0)

Anonymous Coward | more than 7 years ago | (#18717753)

I've been waiting for trained economists to attack problems such as open source and wikis, file sharing and digital piracy, brand knockoffs, online classifieds, offshore IT employment, and reality TV w/o either lapsing into platitutes or ideologic diatribes on one hand, or presenting a scholarly tract dense with footnotes but meager in insight. This article coins a useful phrase "commercial open source" (well, I'm sure he wasn't the very first, but nobody ever is as Google reminds us) and even has supply and demand curves!

I hope to read an expanded verion from the author as he continues to research this subject.

good article (3, Insightful)

MarkWatson (189759) | more than 7 years ago | (#18717881)

I especially liked: "Every dollar a system integrator saves on license costs paid to a software firm is a dollar gained that the customer might spend on services."

My vision for the future (from an independent consultant's viewpoint) is the development of such a rich open source ecosystem that the cost of building unique applications is drastically reduced. As development projects become less expensive, companies and organizations will fund more projects because the cost to benefit ratio gets lower - and "fringe" projects start to get funded.

MiNus 1, Troll) (-1, Offtopic)

Anonymous Coward | more than 7 years ago | (#18719505)

shit HTML (1)

Edie O'Teditor (805662) | more than 7 years ago | (#18719607)

Somewhere within the unspeakable darkness of the 97 layers of nested tables lurks some evil thing that causes it to trim about the last 3 letters of each line when printed. Lame lame lame.

what is the economic impact of...? (0)

Anonymous Coward | more than 7 years ago | (#18721995)

That is, what is the economic impact of being able to 1) see and study and understand the software via its sources, and 2) the ability to make changes without having to wait for vendor schedules, or argue for getting the enhancement at all?

What is the economic impact of de-facto open standards that arise because the reference implementation is widely used? (like, lots of Java developers in the job market)
Load More Comments
Slashdot Login

Need an Account?

Forgot your password?

Submission Text Formatting Tips

We support a small subset of HTML, namely these tags:

  • b
  • i
  • p
  • br
  • a
  • ol
  • ul
  • li
  • dl
  • dt
  • dd
  • em
  • strong
  • tt
  • blockquote
  • div
  • quote
  • ecode

"ecode" can be used for code snippets, for example:

<ecode>    while(1) { do_something(); } </ecode>