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Leveraging Linux when Hardware is a Commodity?
AKInnovation asks: "My company produces peripheral hardware used in commercial applications, such as retail POS. In our market, amongst other such hardware manufacturers, we are the only ones to offer Linux software solutions (drivers). This distinction has recently won us several large accounts. When the hardware becomes a commodity, and you must compete on the software side to keep the money coming in, how can releasing your code as Open Source be rationalized to management?"
It is my opinion that the future of Open Source is "General-purpose codebase re-applied to Custom Computing Scenario".
how can releasing your code as Open Source be rationalized to management?
1. Release your code.
2. Manage your contributing developer community. (Sourceforge)
3. Grow the codebase by doing #2 well.
4. Establish good working relationships with customers, customize the codebase for them. (Customers == people who want customized work.)
5. Add a services department that does #4, and only #4, when you've got #2 under control.
OSS is the grand unifier which sets the standards - pretty high - for everyone. The way you differentiate is by really identifying the needs of your customers and then using the OSS machine to deliver on those needs
; -- the corruption of government starts with its secrets. a truly free people keep no secrets. --
If you are the only ones in your market to "offer Linux software solutions" then you are shooting yourself in the foot by open sourcing the drivers.
That kind of depends on whether you are interested in selling hardware or software. If manufacturing hardware is your forte, then open-sourcing the software drivers will sell lots more hardware in markets that any single company cannot possibly have the resources to develop.
The original article mentioned POS systems. Well, these can be used in bars, doctor's offices, muffler shops, etc, etc. The hardware is identical. But there are such radical differences in the way that each of these different businesses are run that I don't that any one company could concentrate adequately on each different application sufficiently to service them all. Let others take care of the software (read system) differentiation and sell hardware to them all!
Yep, Microsoft is really unable to make a living out of Windows and Office.... Get real.
But he's true. Microsoft would have a hard time selling commodities like O/S + bundled software, Office etc. if we were to start from scratch, without the huge momentum and inertia involved in the 10 years of monopolist tradition of using vendor-locking MS products. There are few competitors in commercial desktop O/S + Office department not only because MS is practicing tough monopolism but also because the market has stagnated, saturated. When was the last time you waited for the next version of your favorite word processor, like in the 80's/90's? Now people implement O/S's and office suites in their spare time and they make it open source.
Do you remember when Netscape was selling their browser? I guess they made a few dimes during the first years but nobody does make money off web browsers anymore, not even from companies. Same goes for making web pages: only a little money is paid for writing HTML, unlike in the late 90's. Web and HTML are commodities. These days companies buy meta software like a CMS instead of web pages. They buy customized software solutions instead of retail products. They don't buy Apache or IIS (if both were on sale as separate products) but a web application framework and custom development on that.
OSS fits the scheme perfectly, where companies only want to pay for their part and get standard software on the basis of their solution. CSS fits in less perfectly but it's still drifting towards the same situation, anyway.
Don't Opera make money from web browsers?
(I agree with your general point though...)
Microsoft is not selling at $50-300 a seat because of functionality. It's selling at that rate because of branding and, to some extent, API control. Branding matters, even in commodity markets. Three companies that spring to mind that also use both these factors (branding, access to something unique under their control) to sell into markets that are considered "commodity" are Apple, IBM, and Sun, all of which do very well selling hardware at prices (and profits) much higher than the Wintel norm.
Oracle isn't selling their database product, though for ease of understanding, that's what they claim to be doing (kind of like mobile phone companies "sell" mobile phones - well, they don't, they sell the service, but they market everything around the phone itself because that's easier for consumers to understand.) What they're selling is the consultancy and support required to set up a tremendously complex database on the technical level. This model hasn't worked that well in some areas, such as selling GNU/Linux distributions, but that's because... erm... well... GNU/Linux isn't - contrary to popular belief - something that's hard to set up.
Right now there are relatively few companies that are selling mass market boxed software as software. Most are selling support contracts disguised as boxed software. There are exceptions, games for instance, but only because every game is very specific. Anyone can write an "Excel compatable spreadsheet" but Unreal Tournament is always going to be the only Unreal Tournament in existance. And it's noticable that prices of games plummet after a few months on the shelves, $50 dropping to $9.99 (pretty much the cost of the materials, box, printing, distribution, and retailer's cut) isn't uncommon.
Would you start a company to sell operating systems? Do you have an idea for an office suite that you'd like to sell? Unless you have a major gimmick in your business plan, you're unlikely to even enter the market.
So how does supporting Linux help you if what you sell is a commodity? Well, all it does really is add value, but, as your boss can probably testify, it doesn't add enough value that increasing the price of your product wouldn't destroy your sales. However, there strikes me as being several solutions to this:
The first is you don't need to support "Linux", you just need to support users. Not all your users run Linux, indeed, not all of them run the operating systems you want to support. Linux, BSD, etc programmers have proven time and time again that they'll support anything with a clock if you can plug it in and if the documentation exists. You already have that documentation - you needed it to write the Windows driver. You can publish that documentation at minimal cost to yourselves, and increase your marketshare without needing to raise costs. The Linux "community" will do the programming for you.
In a reasonable world, that's what you should be doing anyway. Back in the 1980s, most computers I bought - from anyone from Sinclair to Commodore - came with so much documentation you could attack them with a soldering iron and know what you were doing. Even the Amiga 500+, released in 1991, came with circuit diagrams in the manual, and that's one of the most complex non-standard machines I've ever bought. We've suddenly evolved a rather bizarre level of secrecy which ultimately hurts users and also harms innovation.
The second is you can encourage the use of open standards internally and externally. Open standards help level costs, and even when they don't, people will choose a $50 widget over a $40 widget if they don't need any special drivers for the $50 unit. One of the problems here is that manufacturers rarely reali
You are not alone. This is not normal. None of this is normal.
Or how to sell it to management? The reasons it is a good idea are listed by other comments, but unfortunately selling it to your bosses may have nothing to do with why it is a good idea. If you have forward thinking, long term strategy bosses you have a much better chance. If they are convinced that having software for Linux is their competitive advantage, they're probably not going to let that go. Right now they may even be right. Sharing the code before the competition has started developing their own solutions may kill a market advantage. If they open the code at the right time, say just before the competition rolls out their beta software that they spent months developing;), then your company can leverage the advantages of open code (i.e. outside input, bug checking, increased customer input) as the NEW advantage.
Insert pithy comment here.
If your only edge is the POS software, then don't release it as open-source. That would ruin your company, and I thought that was pretty obvious. The only time it would make sense to make software for a POS thing open-source is if the SOFTWARE is a commodity (Linux is an example of this, except with operating systems). Otherwise, it would simply give your competitors a boost.
Of course, if your customers want access to the source, then you can give it to them under a restrictive license (so they still have to buy your hardware). But you don't want to lose your competitive edge.
If you sell common hardware, the only two ways you can really make money are on support and software sales. Opening your code source will only serve to generate competition when other vendors take your source code and start offering their services for a lower price. Then you're back to square one: the software becomes a commodity and you can only make money on support. Which, by the way, the OSS community also strives to make freely available on the internet.
Don't listen to these wieners. Keep your code closed and keep your company in the black.