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Open Source Economics and Why IBM Is Winning

Posted by kdawson on from the committed dept.

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!"

6 of 146 comments (clear)

  1. Old news by BibelBiber · · Score: 4, Insightful

    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.

    1. Re:Old news by computational+super · · Score: 3, Insightful

      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"...

      --
      Proud neuron in the Slashdot hivemind since 2002.
  2. Re:I can't wait for RMS to die by Aladrin · · Score: 4, Insightful

    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.

    --
    "If you make people think they're thinking, they'll love you; But if you really make them think, they'll hate you." - DM
  3. Dont understand it by 140Mandak262Jamuna · · Score: 3, Insightful
    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?

    --
    sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
  4. good article by MarkWatson · · Score: 3, Insightful

    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.

  5. Re:Open Source Strike? by eraserewind · · Score: 3, Insightful
    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. 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)