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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.
What happened to all open source software is crap arguments?
Surely companies likes Microsoft were not jesting!
Change is certain; progress is not obligatory.
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.
They should have left their research closed. Now anyone can take their research, reverse engineer it, and repackage it under a Creating Commons license.
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.
Stanford, the birthplace of SUN, one of the renowned distributors of a once true and mighty closed and proprietary Unix, that almost fell off the face of the planet in part of it starting to become irrelevant compared to open sourced OS's and systems (Linux, BSD, etc).
The SAME Sun, which has now open sourced almost their ENTIRE IP portfolio in the Open Solaris project, thereby bringing relevancy BACK to Solaris and it's suite of products.
The same Sun which utilizes hundreds of code donors to it's projects, and big communities around storage, ZFS, etc.
Closed, commercial systems have a place, and many of them do well, but when markets change, can they change quickly enough? Lessons show us that they cannot change quickly enough. Or do the closed proprietary systems try and change the market the suit their needs?
Look at IBM, HP, Sun, and even Dell now relying on open *nix systems driving huge sales numbers.
The markets have changed, its those who do not follow trends, or fight the trends who become irrelevent.
The open source model will probably change in a decade, or a century and it too will have to change.
The paper is just a way to appeal to stiffley business suit class of people afraid of change.
Brent Jones
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?
Comment removed based on user account deletion
The paper is freely available for everybody to learn from, in fact the Jan-Feb 2008 issue is fully of very interesting article (what month are we in now?).
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.
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
You see, this is clearly a calculated move in the epic power struggle otherwise known as the Cal/Stanford rivalry. Do you really think it's a coincidence that the world's leading institution in the field of hating Stanford also happens to be the 'B' in BSD? You can soon expect a ferocious counterattack of Unix hacking, liberal politics, and lateral passes.
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.
There is always there is always the flip side course for 99.99% of other non-software businesses, which is far more justified as a MBA course.
All those objective that open source software fulfil and core subjects for the majority of businesses.
Open source software, managing software overheads more effectively, their profits are your costs.
Open source software, minimising retraining and re documentation, only implement worthwhile changes.
Open source software, avoiding supplier forced costly upgrades and managing them at your pace.
Open source software, using publicly audited software, hidden software faults cost you money.
Open source software, avoiding data lock in, don't be forced to pay for your own data over and over again.
Open source software, avoiding training costs, open source software for education, save on taxes whilst saving on overheads, double plus bonus.
Chaos - everything, everywhere, everywhen