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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."
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.
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?
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?
Ok, tell me, in general in a company (not even a software company) why are most programs written? A) To make a million in sales B) To fix a need that the company has so it can run better. The answer is B. Most software developed by companies is in-house software. Meaning, that even if all software was open source tomorrow, those people would still have jobs developing software.
Taxation is legalized theft, no more, no less.
That will compete? Maybe. That will compete well? That's another story. Photoshop is still worlds better than GIMP. There's still no real competition for AutoCAD. How are those open source games doing against their commercial counterparts?
Thinking that open source is naturally better than closed source is just as foolish as thinking closed source is naturally better than open source.
What makes me laugh is that there is such an "Us Vs Them" tone in all of it. It's like the nice business people think that all the open source guys are just waiting to kill their babies! I mean settle down.
Make money and make a reputation through making and marketing GOOD STABLE WORKING software. Don't try to do it by making a big bag of shit and blocking anyone trying to compete.
Oh, hang on, yes, now I see the potential problem for the business types...
Moved to http://soylentnews.org/. You are invited to join us too!
What makes me laugh is that there is such an "Us Vs Them" tone in all of it.
Right. And the discussion below won't have a similar tone... :)
What makes me laugh is that there is such an "Us Vs Them" tone in all of it. It's like the nice business people think that all the open source guys are just waiting to kill their babies!
Wait, thats not our ultimate goal? I dedicated my life to a lie!
Liberte, Egalite, Fraternite (TM)
It's like the nice business people think that all the open source guys are just waiting to kill their babies! I mean settle down.
I agree, they really have nothing to worry about in this regard. The open source baby killing project is not even in beta yet, and there are compatibility and dependency issues that will keep it out of the linux kernel for quite some time. The closed-source world, especially Microsoft, is years ahead of OSS when it comes to infant termination software. But if there's anyone out there in slashdot-land who would like to lend a hand please grab the sources from freshmeat and pitch in!
Not neccesarily. This argument is commonly abused. Capital is needed for the production of certain (a few, certainly not all - as we know) creative works. Commercial films and software would be nothing like what they are today without capital to pay the developers for all their efforts. It is therefor logical to charge a fee for reproduction in order to repay the debt that development incurred. It's also not too impolite to try to make a profit.
There is a point where all these things start to go wrong. These companies will all start to try to maintain monopoly status, and sabotage competition in any way possible. They will hold on to a work which is long out of date (particularly the movie industry, but software companies also do this) and continue to milk the population long after the initial debt has been made and several people have become filthy rich. They will completely ignore market situations and the customer's needs and charge whatever they want for their products.
Software is one of those products that does not require a lot of equipment to produce, just a lot of time. There are plenty of people in this world who have way too much time on their hands (damn I wish I was one of these) and invest it in free software. Over the years free software has evolved to be surprise competition in the software market which used to be (and still is, depending on your views) the playground of Microsoft, Apple, IBM, Adobe, ect, ect. Since there is now competition, it would seem logical for the price of this commercial software to drop - but to avoid that, we apparently designed a whole college course on how to break all the rules and play unfair.
I threw away another couple mod points to write this :/
I always wondered why they called it that...
Well, they *have* been known to kill their wives. :-(
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!
You are of course wrong in the business sense:
Doctors: Keep your patients sick but convincing that they are improving if they just keep coming to them.
Taxi-Drivers: Take the longest route possible, always.
Software Developers: Lock in your customers in every conceivable way.
But... the future refused to change.
I.e business types.
All your base are belong to Wii.
The closed-source world, especially Microsoft, is years ahead of OSS when it comes to infant termination software
Well... my copy just failed with a Vaginal Ring of Death... I demand a 3 year warranty and diapers for my newborn...
Cheers!
Atheist: Buddhist in a Prius
Quite the opposite! It's them vs. us.
http://www.rootstrikers.org/