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Free Open Source Software Is Costing Vendors $60 Billion?
conan1989 writes to tell us that a recent report from the Standish Group is claiming that open source is costing the traditional software market somewhere in the neighborhood of $60 billion per year in revenue. "MySQL Marten Mickos has often spoken of 'taking a $10 billion market and making it a $3 billion market.' If you consider that open source has taken out $60 billion of traditional software revenues there will be a bloodletting in the proprietary world soon enough. It's a great time to be an open source company."
I pointed this study out yesterday during the "Is Open Source the Answer To Giving?" discussion and was promptly modded up, down, up, down, ad infinitum (probably because I was trying to merely provide the unpopular side/view of the issue but I digress).
More importantly, you should pay attention to the several insightful and interesting comments that followed which point out French Economist Bastiat's Parable of the Broken Window.
Whether you hate it or not, it does no good to ignore this contempt that so much of corporate America holds for open source! Take the time to inform your boss or coworker who claims losses directly to open source efforts.
My work here is dung.
This idea is an instance of the broken window fallacy. If the money had to have been spent on proprietary software, it wouldn't have been used for other things. In the end, FOSS software is a win for us all.
This kind of "Look how much money we're not making" is stupid regardless of who is espousing it. They're trying to prove a negative, and monetize a handful of nothing, and the sick part about it is that they honestly think that they're not completely crazy.
This is just like the RIAA trying to put a dollar figure on money lost to filesharing, or the press trying to put a dollar figure on "productivity loss" based on this or that sports event. They just need to get a freaking life, and start trying to measure things that exist.
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
We just completed a study for a company selling bottled oxygen: the free availability of air on the planet causes them losses in the neighborhood of $866 billions in revenue -- annually!
In theory, money exists merely to facilitate the barter system by providing an abstract representation of wealth. We tend to associate a high dollar velocity with wealth creation, though the two are not really the same thing.
Open Source software is, by any reasonable definition, valuable. The individual programs are useful products that people want. Their existence makes the community (in this case, the whole planet) more wealthy. Therefore, open source is not the value-sink that its competitors would dress it up as being.
Another fallacy that is often used in reports like this or reports on software piracy is the idea that every copy that is floating out there for free would have been paid for if the software was somehow not available for free--either legitimately through FOSS or illegitimately through piracy.
That's simply not true.
For example, I can download Apache Derby for free and have a SQL engine for my various projects. Had Derby and MySQL and the like not been available, I wouldn't go out and buy a SQL product--chances are, I'd home grow my own custom database. For many of my projects SQL is overkill, but because its free, I may as well use SQL than a couple of fixed-width flat files--even though fixed-width flat files would probably work just fine.
Back in the 80's I knew a fellow who collected pirated software. He never used the software--he just collected it because he thought it was cool. Realistically, had it been impossible for him to collect software he would have never bothered. So realistically speaking while he had thousands of dollars of pirated software on his computer, because he never used it or had any need for the software he copied (it was just a weird hobby of his), he would never buy the software even if it was impossible for him to otherwise obtain copies. So he never represented a sale to the software makers whose wares he was copying.
One also has to wonder what economic benefit has arisen from FOSS. While its true that, for example, I'd hate to go into the database business--it's a complicated business and there is no money to be made because of MySQL and Derby and other free database engines out there--end-user applications seem to be thriving. "Infrastructure" software--stuff like databases and web servers and the like have become free, and going into a business to sell a $10k software solution to compete against Apache Tomcat would be silly. But on the other hand, how much value has been built on top of that infrastructure that simply wouldn't exist if that infrastructure was expensive and the barrier to entry high?
I don't think the broken window scenario applies to this situation. Nothing is being destroyed, so the question isn't one of having to buy something vs not having to buy it. The question is buying expensive vs buying inexpensive, which is simple supply/demand economics. I'd go even further, and suggest that the "loss" is fictitious. It is really an overestimate of the sales on the proprietary software vendor's part.
If there is a loss anywhere, it's that only a fraction of the $60 billion is winding up in the pockets of open source developers. Granted, they're in it for the satisfaction of writing well written code, and the peer recognition that comes from that, but it wouldn't hurt for them to see some green from it as well.
When our name is on the back of your car, we're behind you all the way!
If, instead of saying "open source has taken out $60 billion of traditional software revenues," the article said "open source has saved businesses over $60 billion in expense compared to traditional software," don't you think people might view it differently?
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