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Stanford Teaching MBAs How To Fight Open Source
mjasay writes "As if the proprietary software world needed any help, two business professors from Harvard and Stanford have combined to publish 'Divide and Conquer: Competing with Free Technology Under Network Effects,' a research paper dedicated to helping business executives fight the onslaught of open source software. The professors advise 'the commercial vendor ... to bring its product to market first, to judiciously improve its product features, to keep its product "closed" so the open source product cannot tap into the network already built by the commercial product, and to segment the market so it can take advantage of a divide-and-conquer strategy.' The professors also suggest that 'embrace and extend' is a great model for when the open source product gets to market first. Glad to see that $48,921 that Stanford MBAs pay being put to good use. Having said that, such research is perhaps a great, market-driven indication that open source is having a serious effect on proprietary technology vendors."
Reminds me of Microsoft's strategy. Except for the "judicious improvement," and it doesn't seem like it will work for them in the long term anyway.
The professors advise 'the commercial vendor
So many obviously smart people confuse proprietary with commercial. The two are orthogonal. Back in the 90s this might have been academic, but there are now many commercial open source companies. Get with the program.
How we know is more important than what we know.
Knowing the enemy's potential avenues of attack is a wonderful asset. It makes counter-attacking and defending much easier.
... to a certain extent, anything that's not free (free as in beer) and has utility will become free to certain users?
Enlightenment
Of course, then the commercial vendors will turn to DRM. Then the freely obtained product will become superior to the one obtained by buying it from the vendor. With the vendors focused on the loss of sales, FOSS will continue to innovate.
Good luck, even with that "embrace, extend, extinguish" in effect.
I'd actually be disappointed if information like this weren't being taught in Silicon Valley!
unless your product is targeted at such a small subset of users that noone in the OSS world would bother to create a competing product there will always be some geek out there willing to dedicate all their spare time to create something that will compete with your product... for free. What proprietry vendors need to do is charging for software as a service and provide support packages that the OSS world don't bother to do.
-- Sex is the antonym of pringles. Once you pop it's time to stop.
I'm happy to see that the suggested strategies are ones which carry significant drawbacks. Segmenting markets and keeping everything closed does indeed give you control, but it also slows the very network growth that makes products become successful. And it frequently leads to user frustration (because of, for example, DRM, or the lack of support groups, or the inability to find or construct fixes/hacks as needed).
This is good news in the sense that any strategy to fight open-source means that you emphasize the gap between open-source and closed-source products: the open-source product's advantage is the openness, the community, the ease of distribution, the non-naginess, the network effects, the hackability... and the more closed the closed-source products try to be, the more these items become product differentiators, which the open-source product can point to as big advantages.
So, I do hope closed-source projects go ahead and implement those user-hostile strategies. It will only serve to make open-source products look that much better by comparison. As other posters have pointed out, there is no fundamental divide between "open-source" and "commercial". So I would think the better strategy for MBAs thinking about open-source is "if you can't beat 'em--join 'em". Or in other words, why get involved in closed-source business ventures when an open-sourced equivalent inherently leverages network effects?
The 90s called, they want their argument back.
Many programmers are paid to work on free software these days.
In fact, the problem isn't finding jobs, the problem is finding programmers.
How we know is more important than what we know.
Wouldn't there cease to be many programming jobs where there once were?
No, why would there be?
Wouldn't that lead to lower paying programming jobs in turn leading to less cs graduates and lower quality software?
No, why would it?
Got any other FUD you'd like answered?
From the press release that this guy links to (the paper is actually here):
A recent paper on this topic by Mendelson, coauthored with Deishin Lee, PhD â(TM)04, now a faculty member at Harvard Business School, is not a how-to manual for hard-pressed executives. Rather the researchers have built a theoretical model explaining the choices open to commercial firms. âoeAlthough open source is the lead example of our work, the principles certainly apply to other businesses, including, for example, the media business,â says Mendelson.
Heaven forbid that somebody actually study how businesses choose between free and proprietary software! That's of no good whatsoever! And of course free-as-in-speech definitely does not extend to a university allowing its academics to publish material which might be bad for open source. Clearly Stanford should've had these two men killed and fed to rabid, pestulent chipmunks, rather than allow this affront to reach the press.
No kidding!!! What do you say at this point?
In the long term, what happens if all software ends up being free?
In the present, all software is free http://www.ubuntu.com/ http://thepiratebay.org/
Wouldn't there cease to be many programming jobs where there once were?
No... Most software would still be developed in-house. What will cease is companies who can make a bloated program that is badly written and gain millions for it.
Wouldn't that lead to lower paying programming jobs in turn leading to less cs graduates and lower quality software?
No. It would only serve to increase the quality of code as the fact that it compiles does not mean that it is good code. Open source software has no secrets, the quality would go up because anyone could fix it.
I know some companies do alright supporting products they've written and give away freely, but I can't see that extending to applications beyond some mission critical business system type things.
Ever heard of the Geek Squad? They make a fortune supporting products that they never even written and most are trivial applications (Windows, iTunes, etc)
I've long wondered things such as this. OSS sounds great at a glance, but I really have a poor concept of where it will go in the long run. I like writing software, but I also like being able to pay my bills.
Where do you work now? Chances are, that company will still develop applications in house, not to mention that you would be in charge of changing various OSS programs to better fit the needs of the company.
Taxation is legalized theft, no more, no less.
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Comment removed based on user account deletion
The slashdot summary author (mjasay) appears to see the world through a lens which makes the developers of open source software victims of some nasty MBA conspiracy.
The academics who wrote the underlying article go out of their way to say that their writings are not a 'how to' manual for MBAs, and that open source software is only one example.
The article is simply a recent take on 'How to compete with free,' an important MBA marketing topic for decades. 'How to compete with free' can be considered a subset of how to compete in general, and the gist of any marketing solution to 'how to compete' will be based on building value in the product.
One method to build value is to increase switching cost through lock-in. Even free / advertising supported services do this: my.yahoo, iTunes, gmail, hotmail and countless others.
If you read the underlying academic article, you just might notice that most of the tools presented now are analogous to the tools presented at Sanford in the early nineties to the MBAs who eventually went on to Coke and Pepsi to fight the scourge of FOSW (Free Open Source Water).
Open source water survived just fine. As long as open source software continues to offer value, it will continue to thrive.
Marketing is marketing. MBA courses are MBA courses. Same shit, different year.
__ Someday, but not this morning, I'll finally learn to use the preview button.
Why is Slashdot so biased towards open source?
Clever post, but check out this subtle fact: the authors are absolutely practicing what they preached in that very article:
market segmentation: you get the watered down summary for free, but have to pay for a journal subscription to get the actual article
market seeding: give this version away for free (and I suspect that they'll even send a .pdf of their related working papers) in hopes of capturing customers for the more expensive version (a.k.a. attending their b-schools, or hiring them on as consultants).
In reality though, academic theorists are absolutely the most open source colleagues I've ever had. As long as you adequately cite them, you'll be their bestest friend if you embrace and extend their material. When tenure and promotion decisions are to be made, b-school deans might not be so savvy as to know how good your publications are, but they can easily see how often you work has been cited. Don Jacobs, former dean of Kellogg, said it best, "Maybe we can't read, but we can definitely count."
__ Someday, but not this morning, I'll finally learn to use the preview button.
it is my understanding that most of these paid OSS jobs are funded by proprietary software.
That is what you understand wrong.
You imagine people will keep working on software out of altruistic desire forever? Many people I know are in this profession solely for the high salaries. Once OSS peanut-salary is the norm, they will dump this profession like a cheap rental suit.
I dunno where you get your information from, but again, you're completely wrong here. There's no difference between the salaries of programmers who work on free software and the people who work on proprietary software.
I'm just figuring you're a troll now.
How we know is more important than what we know.
The only thing I don't like about that quote is that it only predicts the sequence under the assumption that you'll win.
First they ignore you, and many simply remain ignored.
If not they laugh at you, and many are still ridiculed.
If not they fight you, and many are fighting or losing.
If not, then and only then will you win.
Honestly it's not much of a progress meter. What I think is the real progress meter is that open source software is becoming more and more usable and it's not something you can "undo". You can't drive it bankrupt, you can't buy it up, you can fight the distros and the outer layers but you can't stop the underlying OSS development. Even though it feels glacier-slow at times I've seen how far it's come in the last ten years - ten more years like those and it'll be slowly rolling in almost anywhere. No huge splashes, no revolutionary releases, no "year of the Linux desktop" just slowly pushing the others out.
Live today, because you never know what tomorrow brings
I find it very rare to find a average Joe who will not obtain a illegal copy of software if he could unfortunately.
Considering how popular VLC, Media player classic, Pidgin, Linux are... I would have to disagree.
Change is certain; progress is not obligatory.
You realize, of course, that long before FOSS was big, over 80% of software written was never sold. It was developed for internal consumption. That's a huge piece of the pie.
As for software sold to others, have you ever heard of "support contracts"? That's where folks like RedHat make their money. Even Microsoft makes money on support. They make a lot of money off of certifying people to work on their software too.
And then there's sponsored development. This is where the two paragraphs above intersect. Suppose Company X really like some package Y, but it's missing some feature it really needs. It can code it itself (the old internal development model) and spend the money internally, or it can hire someone outside to implement the feature. Not an ounce of altruism there. The FOSS license ensures that the feature is able to become part of the overall product. Company X derives direct benefit, and likely has strong influence over the shape it takes.
IBM doesn't send zillions of patches to Linus out of altruism. They send patches because they want Linux to behave better and have the features they want so they can ship more servers. Freescale doesn't send patches to Linus out of altruism. They do it because they want Linux to run well on their embedded chips so that more people will buy them. And so on.
You've got this vision that this is all a big charity. No, it's enlightened self interest.
Program Intellivision!
In the spirit of http://xkcd.com/463/, commercial software that competes like this will slowly lose the battle.
Instead of fighting for the same turf as open source, they should be finding markets that aren't served by open source. Niche markets and new markets are great places for commercial vendors. Generic applications used by everyone that are constantly reinventing the same wheel will be open sourced and the market will shift.
Don't try to make a better web browser or office application. Instead, focus on the pace maker control system or credit card fraud detection system. Focus on things that are worth money to a narrow market and don't have a lot of competition from open source because their isn't demand for bored developers to build a cheaper mouse trap.
Stop doing it wrong.
it's capitalism - as long as iot's within the bounds of the law it's all about competition and squeezing your competitors out
That's not what capitalism is about, capitalism encourages competition. What you're proposing, monopolies, is what what Adam Smith the Father of capitalism was opposed to. He didn't even like patents calling them a necessary evil. To Adams capitalism provided a fair or equitable and optimum outcome for everyone.
Falcon
Should there be a Law?
You had a snide answer. Oh, and it's "your understanding", not "you're understanding".
He didn't say anything about little boxes.
By the way, AC, in answer to your question, and to actually illuminate rather than just tell you that you misunderstand:
Most software is written to serve the in-house needs of large-ish corporations. They need to manage their business, and to be competitive their business has to differ from other businesses serving similar needs. So they have large quantities of software to manage their inventory, coordinate their workers, manage their books, determine if payment they've been given is fraudulent, etc. The little details of all of these things are specific to the business rules of any large business.
Often those needs could be fulfilled by some commercial software, if it weren't for the hundred little things that the company needs done differently. If some open software can do basically the same thing as the commercial software, it's in the company's interest to add the features needed to support their business needs. This typically has to be done without exposing their business specific rules (i.e. without making those rules open source), but you can just make the software configurable and put the rules in some configuration file outside the OSS app.
Frankly, the only times I make changes to OSS software for pay are for basic infrastructure software (e.g. apache, ant, etc) when there is a bug or an obvious feature missing. The actual software that fulfills whatever business need is fully proprietary, except for some of the infrastructure.