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Is Open Source Software a Race To Zero?
gozunda writes "My company is an open source software vendor/developer. We maintain a popular open source project and keep ourselves afloat by producing commercial products derived from or extending the value of the core project. Over time we've seen our business model eroding as other open source projects produce free versions of the same extensions and utilities that are our bread and butter. Something that was worth $5K last year is suddenly worth $0 because the free version is just as good as the paid. This same cycle is obviously having an impact on pure-play commercial software vendors. Is open source ultimately a race to zero? In ten years will there be any cost associated with commodity (non-custom) software? If not, will there still be a 'software industry' as it exists today, or will software simply be a by-product of the operation of other industries? Is that a good thing or a bad thing? As a professional developer, do I need to fear this or feed it?"
Yes, and there's nothing new with that.
Just because your software is open source doesn't mean that you get to sit on your duff and collect money off your paid extensions in perpituity. Just like any other software company, if you want to keep food on your metaphorical table, you've got to continue to innovate and improve. Otherwise, just like any other software company, your competitors (in this case, open source develoeprs) will eat your metaphorical lunch.
For what it's worth, though, nothing would be different if your software were closed source, except that your user base would probably be smaller and, depending on how necessary your software is, open source competitors would be even more eager to push you out.
My company makes sure that doesn't happen by continually inventing things. Sure, a lot of people are afraid of big corps and patent troll fake-outs, but we've decided we're not, and we're moving.
Personally I don't see there being a lot of value in paying for new versions of spreadsheets and word processors over and over again. There's not much, to me anyway, that's been added in the past 10 years. It keeps M$'s revenue stream high but is there value to me?
If software became more about producing new product instead of reworking the same old stuff in the language of the month I would be happy and I think there would be just as many jobs.
That's all strictly opinion, with no facts to support it.
-- Programming with boost is like building a house with lego. It's a cool but I wouldn't want to live in it
You are correct with the race to zero when you talk about developed code... The more time that goes by, the more it will erode existing code bases.
As far how to deal with it... Change your business strategy to help your users more. Meaning, instead of selling code, consider working on a support model where you offer support and monitoring services to your user base. Also, another good strategy is a hosted approach. Meaning, maybe you can offer connectivity to your users...
In the long-term there is little doubt in my mind that that proprietary software will be mostly obselete for a number of reasons. First is certainly cost, but security and quality are good other reasons. As a comany you can either change or die. The choice is yours..
The problem is OSS businesses are doing things the wrong way. Rather than do it Red Hat's and some business's way of adding in features in the community version they instead make the community version spartan and the paid one with support oozing with features, naturally this makes it a great target for some weekend coder to take that version and reverse-engineer or just get the source of the paid version and add it to the free version. Paid versions = Stable versions, community versions = unstable versions. Keep that in mind and your business will not have the community rebelling and forking your project every other month.
Taxation is legalized theft, no more, no less.
marginal cost (I'm not entirely familiar with the term, but it appears to be approximately the cost of manufacture).
Marginal cost is the cost of making the next one of whatever you're selling. In software, this is a little tricky because the raw material cost of the next copy is bandwidth or the CD/DVD media. The marginal cost of the first copy is the big one... it absorbs all the cost of development.
So, in this way of analysis, software companies take a big loss developing the software, then can make it back by selling enough copies, then can afford to make it near-free because the sales are pure profit.
Open source or commercial. WinZip's value to me is also effectively $0, since on Windows I have 7zip which does the job competently enough, and on Linux I have multiple tools to choose from.
It can get even worse, Vista's value for me for instance is negative -- I wouldn't use it even if given it for free, because I'm perfectly happy with Linux at home, and even installing it would be an inconvenience in exchange for no gain.
Even without free software such things happen: the value of a buggy whip is $0 for me, because I have no use for one.
The world provides no guarantee that you can forever be profitable at the thing you currently make money on.
Many years ago, people spent their lives painstakingly copying books. Today, we have printers that can do the same thing at a tiny, miniscule fraction of the cost.
More recently, people made money doing repetitive calculations, over and over again, and compiling the results into books. Now, obviously, computers can do it faster, cheaper, and more reliably.
Perhaps you're used to writing operating systems for a living. Well, operating systems are now valuable enough that people are willing to spend effort to make them free - CEOs realized, hey, I *could* spend $100,000 on licenses of an operating system. Or, I could spend the equivalent amount of money by taking an existing operating system and improving it for me . . . and for all future users . . . and then not have to spend $100,000 on next year's licenses, but instead just spend a relatively tiny amount of money maintaining our local patches.
And, hell, I could submit those to the central repository too. And now they'll maintain it for us.
Here's what it all comes down to. The core software in a computer is now too important to pay for. If you pay for it once, that implies you can be asked to pay for it again . . . and again, and again, and again . . . and if it's that important, you may simply have no choice. You don't want to contract out the necessities to someone who can withhold them on a whim - you want them available to you, for free, whenever you desire.
I don't know about you, but if I had to pay some dude $50 every time I wanted to flush my toilet, I'd be buying my own toilet with free flushes pretty damn fast. And, at the risk of stretching the analogy, I think people are tired of putting up with Microsoft's - or any other large company's - shit.
Breaking Into the Industry - A development log about starting a game studio.
Honestly,
the way to go is to have it be open source, and then your company should be willing to 'contract out' and do customizations on demand for their clients. I do a lot of customization of my company's software (nobody likes it 100% out of the box, no software ever does things just the way the client wants). If your company charges for customizations, then you build up a base of customizations. If you find that 20% of your customer base wants the same customization, just incorporate it into the build. If it's only 1 customer, it's not worth including. Think of it as sort of a Darwin inspired method of evolving your application. Those changes that are needed bring in money, and the more money brought in the more likely a change get's added to the base code. Then more customization requests come in, and the cycle repeats. Unlike M$ where M$ decides what you want and then rams it down your throat with a dirty toilet plunger (sorry, all I can think of to equate to Vista).
You just have to develope OSS applications, very carefully.
You have to make it prone to breaking, unintuitive and with a horrible user interface. That way, you can earn money forever by support contracts and paid-for maintainance/seminars/schooling.
The worst you could do would create a "just works" application, because that way you would steal your own future.
HI O WISE PRINCE. WHT TOOK U SO DAM LONG?
In the sense of "who pays for it and why" most software has always been a by-product of other industries. The stuff that isn't(mostly games and consumer utilities) is highly visible; but there just isn't that much of it(and, even then, much of what you are buying in your package of Quake or Quicken isn't software per se; but software wrapped around art or accounting expertise). Open Source, though, has really accelerated the move from the "who pays for it and why" sense to the "quite literally produced by" sense of by-product.
Whether this is a good or bad thing depends on who you are. For a substantial percentage of developers, it probably doesn't make much economic difference. Somebody always needs to write the software, whether those somebodies are all bunched together at SomeBodieSoft Inc. or spread across SomeBodieSoft's former customers. People who have invested in selling software are likely to suffer a net loss(as a whole: Redhat may be doing fine; but their gain will be less than Redmond's loss). People who have traditionally bought software will likely enjoy some gains, mostly captured from the losses of the sellers. I suspect that a certain number of software operations that are on the cutting edge will remain proprietary, and largely as they are today, as will producers of software packages that are mostly about non-software stuff(a big-name videogame, say, has economics much more like a movie than like an OS. Games will probably use more OSS plumbing and libraries and stuff; but will continue to be sold more like media).
"My company is an open source software vendor/developer. We maintain a popular open source project and keep ourselves afloat by producing commercial products derived from or extending the value of the core project."
If I understand this correctly I think the business model is what would keep me away in the first place.
I am happy for "the same code base" to be available gratis with no pro support or for a fee with pro support, or free with paid pro support available.
But since one of motivations for operating in the Free software realm is to get myself out from under the vendor lock in problem, your business model makes me mistrust you. And note that this is not a case of wanting everything gratis as there is a situation I know of now where we cannot consider moving to the Free software option because currently there is a Free software option but it does not have the needed paid for support option at a competitive price that we are aware of.
I still think there be to be some future for industry association funded software development and support. But perhaps I am way off base on this as it has seemed obvious to me for years and I have seen no move towards this in all that time.
Now, if the world can get all to software it could need "developed" gratis by people who get a kick out of it so much the better but somehow I think that people will be able to get paid to develop software for a good long time to come. Getting paid for a monopoly on producing and distributing copies of software is another matter.
all the best,
drew
--
http://zotz.kompoz.com/
FreeMusicPush If you want to see more Free Music made, listen to Free
And since the base is open, the investment in time required to make a competitive product is just the extension itself. Usually something a motivated user can and will do.
And no, it's not a bad thing. But it does mean a changing business model. I really don't think there will be much in the way of pure play software businesses in the future. I also think the "support" model is a mirage.
Software will be what it has always been for me and many others... a necessary component of a larger system or product that does have a barrier to entry (for me, that's embedded systems).
except the last stage never happens. As companies don't like change, they can't see their software is worth less over time.
Supply and demand fails for software as the cost of one copy isn't very different than a million copies. Unlike dell for each unit sold costs money to make, Software only costs you once to make.
The only thing that makes software less valuable is a better version.
i thought once I was found, but it was only a dream.
One of the big keys to making money off of software is specialization. Great versions of most any type of general program can be found in open source form. However, projects that develop for very specific needs of many different industries are often perpetually stuck at a fledgling stage. When you address the very specific needs of a certain type of user, it is easy to find markets that can be profitable for commercial software, while at the same time not being widely interesting enough to be addressed by the open source community.
I work with a Government agency in Ireland, (I work for a university to avoid confusion). We developed a really innovative information system with them, a web-based system which allows flexible mapping, GIS work, sophisticated calculations, open ended queries, loads of pre-specified reports and more. It is entirely open source.
It would have been economically unfeasible, and, I think, technically impossible, with closed source software.
The developers were paid, and are still being paid, quite a large amount of money to build this for us, maintain it, and keep it moving forwards. My view is that give great value for money. All the stuff they develop for us is GPLed.
This seems like quite a viable model to me. What's not viable is the 'write a better video-processor' model which you describe. You need to work with your clients, support them in improving productivity, ease of use, cool new features, whatever it is they need for their business.
Good luck,
Anthony Staines
-- Anthony Staines
Well, some of this is inevitable, and something you can't change. People are spending time writing free software, and it will undercut commercial software... and you can't stop these people. The fundamental problem is pretty much exactly as MS says it. A commercial software is written, extensive R&D is done on the target market in order to design it, it's released, and a year later somebody else has simply copied the idea. It goes to show that the SOFTWARE isn't the important part there. It's the IDEA. This is why MS makes claims about innovation all the time. Most of the industry already knows this, and their solution is simple: protect the idea. Patents. And you know what? I can't think of any better idea. The alternative is to let it continue. Maybe that is an alternative. The best we can do then is guess about the future... will people just stop investing in R&D? I don't know for sure. And if you're idealogically against patents for some reason, well... I can't help you! There are some people ideaologically against private property ownership at all. I can't help them either. =)
Really, I'm surprised you still selling opensource solutions without being driven out of the market.
I didn't say you should switch to closesource. My friends' companies develop with, on, from opensource projects and still make profit with them. Why? Because they know how to keep up with the market.
They sell Appliances, like those CISCO routers and Checkpoint firewall, but perform some other functions like MTA, Virus scanner, load balancers, etc.. Appliances with opensource elements in them, such that they can be trademarked and brand-protected, can be maintained, without paying huge royalty. Above all, you can still contribute opensource projects back to the community, and keep it growing.
This is just one example to make use of opensource projects. Honestly I don't really know your business so I don't have further suggestion for you. But I'm very sure the problem doesn't lie in adopting opensource projects. Someone else makes money with them, if you can't, don't blame opensource projects, blame your marketing strategy.
There is no market for selling a commodity with a zero cost of production. This is basic economics. If you want a good business model, sell something that doesn't have a zero cost of production. If you want to be in the market, then you have to do this by selling software that doesn't exist yet, since any software which does exist can be reproduced for zero cost.
The commodity off-the-shelf model for software only works because we have laws that let us pretend that software is a product.
Look at the market for commercial writing for an analogue. The vast majority of writers are employed writing for newspapers, magazines and web sites. Quite a lot are employed for in-house publications. A (comparatively) very small number write books. The software industry is exactly the same. Most developers are employed writing bespoke software. For these, open source lowers their costs, because they are not selling a product, they are selling a service: writing some software that solves a given problem for their customers. If they build their solutions on easily-modifiable, open source, commodity building blocks then they can charge less or profit more.
It sounds like this is what you are doing already, but you are seeing the number of people who need more than the commodity version shrinking. You now have two choices:
Option 1 is a good short-term solution, but again you will find that you eventually have a shrinking market. Option 2 is more effort, but a good long-term business model. Hopefully your existing customers already trust you to do a good job, and you can get them to recommend you to their suppliers and customers when they have other problems.
I am TheRaven on Soylent News
The whole notion of a software "industry" is a new and novel idea whose time is more or less come and gone.
Speaking as a long-time software developer, I find it hard to believe that software has been considered a "product." It is so amorphous and ever changing, it is hard to say that a "purchase" has any durable value what so ever.
Prior to the "write it once and get rich" mentality that ISVs dream of was the software as a service mentality which is seeing a resurgence.
Also note, most software written does not run on personal computers, in runs in microwaves, embedded devices, phones, routers, TVs, etc. Only a few companies really make money selling "software." Most P.C. based "software" companies make money selling a service around their software.
For instance, "QuickBooks" is a software product and has a lot of competition, but it is the service that keeps it afloat. TurboTax is the same way, they work all year to have the next years revision ready.
The "write once" software industry has only existed for a short time and for a very fortunate limited few. For people like myself, who have been developing software since the late 70s/early 80s, I don't see any major problem because I don't really see any real effect on the vast majority of the market.
Or try reading the next two paragraphs after your quote.
And of course stallman is talking about something completely different. Company mentioned in the slashdot post seems to make its money from developing non-free software (extensions to a free software product but that's irrelevant in terms of them being free or not). Stallman is just claiming it is possible to be paid to develop free software directly.
He is clearly not claiming it is impossible to make money developing non-free software.
So exactly how does what he said have anything to do with the situation in question???
You're also, (to Him), a girl.
Now go round the hardware store. In ours there are several kinds of push fit and screw fit plumbing. The pipe is plastic, you cut it with a simple little tool. I recently had to replace the water softener and the new one had different plumbing. It took me nearly half an hour to put in four bends and a few joints.
That's the race for the bottom. Basic plumbing skills now take a day to acquire and, by following the instructions, you can do a safe job. But plumbers are still employed. I'm not about to service my boiler, or install a bath. I have more sense than to try to put in an oil tank and all the safety equipment, following all the codes.
It's like that with software. It is not a race for the bottom, it is called progress. An SMTP server is now a basic piece of kit. The learning curve for spreadsheet design is, basically, over. Unlike the so-called creative arts, engineering does not recognise the idea that somebody should be rewarded forever for a one-off contribution. In a knowledge society, new knowledge has value but old knowledge is free.
Eventually, kicking and screaming, I expect we will get Open Source Law, and so-called lawyers will no longer be able to charge excessively for basic legal advice in simple cases. But specialist lawyers and the Supreme Court will still be needed, because there will still be hard cases. The same should really apply to all professions. And if you want a guaranteed source of income, make something essential that wears out. Grow food, make clothes or shoes.
From scarped cliff or quarried stone she cries "A thousand types are gone, I care for nothing, no not one."
Can I just say that as a user the "survive on service" model makes me uncomfortable. We're disencentivizing making robust, easy-to-use software in exchange for one that requires some degree of brokenness to survive. I'd rather pay someone for their software than being stuck with their services because their software is somehow unintelligible.
The ______ Agenda
This only goes so far, then you need to start looking at other markets where there may be already entrenched players or other barriers to entry.
In this case they are just giving it away, traditionally businesses have regulations to prevent this soft of behaviour as in many cases it's deemed anti competitive and ultimately detrimental to the customer.
I think Open Source is well on course to polarizing the software markets now. Its tending more to favour corporate giants who offer the full one stop range of services and very small niche players that carry on under the radar of Open Source. Medium sized businessess are gradually being erroded as they are usually the ones most vulnerable to revenue loss as comparable Open Source offerings improve in quality.
Do not try to read the dupe, thats impossible. Instead, only try to realize the truth
What truth?
There is no dupe
The benefit of OSS is that you can establish and grow a base very quickly. Successful OSS companies leverage the fact that people can download and try their s/w on their own timeline. You leverage that fact as the main marketing tool, with people posting to /. and writing up in trade rags about this cool new project to check out.
Once the s/w gets a footprint with the costumer, they recognize the value of it and now want customizations and/or support because the s/w has VALUE only after they've played with it.
The model you are proposing is about increasing VALUE only after they have bought into the core product.
It's a simple matter of complex programming.
As is often the case...it depends.
If you are working on software that's of interest to developers, someone who can will almost certainly build a FOSS version of it rather than pay you. With a few very notable exceptions, FOSS development is essentially self-serving. On the other hand, if your product is aimed at a non-techie audience, it's unlikely to stimulate FOSS competition.
The Gimp is an excellent example. It tends to be compared to Photoshop, but the comparison is unfair. Photoshop is a heavily-funded complex product aimed at a community that uses computers as tools and has no interest in how those tools come into being; it has nothing to fear from FOSS. In terms of its capabilities, The Gimp has yet to reach the level of my five-year-old version of Jasc Paint Shop Pro, and its features curve is leveling off. It's fairly evident that The Gimp has reached a point where it's good enough for the developers and their friends. They may add a few features for the fun of meeting the challenge, but I don't see myself switching from Paint Shop to The Gimp any time soon, or ever.
There will always be a commercial software market, but not for development tools, operating systems, or technical utilities. The big players will continue to fund development of open software that will allow them to compete with Microsoft, and the occasional labor of love will crop up. For the rest, it's either pay for it, or no one will build it.
I'm a Programmer. That's one level above Software Engineer and one level below Engineer.
Sun, IBM, Red Hat, Microsoft and thousands of consulting firms (big and small) make LOTS of money by giving away free software.
You use that free software to sell SCARCE resources: services (business analysis, custom programming, expert installation, production support, training, etc...), hardware, non-free software, etc...
They hypothetical programmer loses their house because you believe they simply write software, give it away for free, and collect a paycheck. The reality is that the real OSS programmers are much smarter than that. The software is only a PART of their business model. It is a sales and marketing tool, and an effective one at that!
If you can only see the "OSS programmers don't make any money", then you should not consider running a s/w company, especially one that would leverage an OSS model. There is WAY more to running a s/w company than creating software. You stick to the cubicles and whiteboards, let non-myopic people run the business.
It's a simple matter of complex programming.
If an innovation can be easily duplicated by hobby coders, or a bunch of outsourced code monkeys, it was not much of an innovation.
The hardest part of innovation is coming up with a good idea. Implementing the idea is often the easy part.
And here's hoping that intelligent, capable, and dedicated individuals can contribute to CS -- no matter where they were born.
Amen.
It's always a long day... 86400 doesn't fit into a short.
Empirically, supported software usually has fewer bugs. As for ease of use, some software is inherently difficult to configure, or has intrinsic nuances that cannot be coded around. For example, a security package (such as SELinux) needs to be tailored, and it needs to be tailored by an expert, or else the benefits are reduced. Supported software is backed by experts who can not only tailor such a package, but update the policies as security needs evolve. This is not about typical desktop software, where one-size-fits-all is an acceptable approach. A company can choose to hire a full time expert, whose services are only needed some of the time, or save money by buying support from a company that already employs experts. It is sort of like a bank: the experts derive their salaries from the support contracts of multiple companies, and as long as those companies do not all require that support at the exact same time, the system works.
Palm trees and 8
I'm here with the "it depends" answer. It depends on the application you're writing and supporting, and certain apps will give you a better chance of success. How about an OSS competitor to MS Outlook? Given all the people who have Outlook-centric lives, I'm surprised there isn't a good OSS alternative out there.
This is a classic manufacturing issue. The killer point is when an expensive item becomes cheap due to mass production. The makers of expensive items seldom survive that transition.
Historically, this has happened time and again. It happened to basic watches around 1890, when Ingersoll introduced the $1 pocket watch. The watch industry got hit again in the 1980s, when quartz crystal watches became both cheaper and more accurate than mechanical ones. (Neuchatel, Switzerland was hit hard by that.)
One strategy is to position a product as a luxury item. Rolex took that route in watches. Their CEO actually says "We are not in the watch business, we are in the luxury business. Apple positions themselves that way in computers and audio/video gadgets.
If that doesn't work, you're toast. There used to be a high-end graphics hardware business, with companies like Evans and Sutherland, Dynamic Pictures, Matrox, and SGI. They all got clobbered when gamer graphics cards got good enough to take over pro jobs. I visited Sony Pictures Imageworks around 1997, when all their animators had SGI workstations, with a few PCs being tried out. When I went back in 2001, everybody had a PC, with a few SGI machines still around to run legacy stuff. SGI went bankrupt in 2006.
Open source is just another form of commoditization. Most open source software isn't very original. There's usually some predecessor commercial product that did roughly the same thing. Open source is the same kind of competitive threat as white-box generic hardware.
"The world provides no guarantee that you can forever be profitable at the thing you currently make money on."
I suspect the issue isn't perpetual income but is it fair competition? Are the rules that OSS plays by fair to only a minority?
I'm curious what universe you live where the notion of "fair" has anything to do with surviving - whether as an organism or a company. Where I'm from the world has always been a cold, heartless bitch when it comes to any competition other than friendly games.
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OSX and Linux started around the same time in terms of popularity and market share. Yet nearly 10 years later RedHat is still a peanut gallery while Apple is a powerhouse.
You might be able to say that in the desktop market, but the exact opposite is true in the server market.
From what I've observed over the years, OSS works great on the server/enterprise side, where there is significant money to be made in support services. On the other hand, end-users don't buy support contracts, leaving almost no money to be made there to pay developers, so closed source wins.
What is really happening with open source is that the value proposition has changed. With closed source the value is attributed to the software itself. Some open source businesses try to kludge themselves into this model as well. In reality what the open/free software movements have done is shown that the real value is in the time and effort of the developer. Once the market realizes that they are paying for service and expertise from the developer, the market will start to make sense.
Cheers!
CS
Most development happens in-house.
The immense majority of developers need not to worry about a substantial reduction in the job market.
IANAL but write like a drunk one.
And yet Red Hat's profit and revenue keep on growing.
Do you even lift?
These aren't the 'roids you're looking for.
Don't forget file format lock-in and network effects.
If you're the only one who can make a 100% compatible word processor ... and everyone uses that file format ... then you can do just about whatever you want. As long as the damage you are causing to your customers is less than the cost of them migrating (and causing problems with THEIR suppliers and customers).
That's why there was such a big push for ODF. Once the file format is standardized, ANYONE can write a word processor and compete on quality and support instead of lock-in.
Effectively driving the cost of word processors down to zero.
Everyday tasks on the computer will eventually be in the same boat. "What?!? People used to pay for word processors?!? To listen to music?!? To watch movies?!?"
How many people reading here can easily program and reproduce the game "Pong"? I'm sure Atari guarded that knowledge back in 1972.
Literacy and the printing press was the first innovation making technology reproducible quicker. The internet is doing the same thing now. My guess is when cheap 3d printers can reproduce electronics instead of just plastic figures, we'll see the next jump.
Enjoy that you can sell that peice of software for 5k right now and accept that its not worth it. If you want to continue making money off it, stop trying to make back your entire development cost on your first sale and charge a price for it that makes it so no one else is going to bother doing it themselves, its cheaper to just buy yours.
You were doing relatively well up to here. If you make minimum wage ($6.55 in the US), you will make $13.1K/year. That means you have to sell at least 3 of your so called "not worth it" $5k software just to make that (this is not including overhead). The equation is really simple - cost/unit x # of paying users/year = your yearly wage. BTW, if you don't like paying everything up front, you should hate the GPL, since that is *exactly* what GPL encourages.
Thats the way every other industry works, developers are just too stupid to see that at the moment, and the people we sell to are just now starting to catch on to that as well.
There are few other industries that have this problem. If you make hardware (say, memory chips), if a competitor comes in and gives away memory for free, they are charged with dumping. The only industry that I can think of that deals with "free" content is the broadcast industry and it's not a bunch of roses there either.
This scenario is the same with others that have to compete with product dumping. The ones that can survive in the environment are ones with a "brand" name. All the small frys go under.
"Yes, but then you won't be building a community because you've already decided that the s/w you make "doesn't need to be fantastic".
No organization with that mindset is going to build a thriving OSS community."
The goal of a business is to make money, not create "a thriving OSS community". A large community can help, but it many cases it just works against you as a company. This is because many of the same people that are using your product have the ability to fork it and compete with you.
OSS communities also have a history of containing people that not only will not pay for your software, but are against paying for software in general. Strike #2.
"Once the s/w gets a footprint with the costumer, they recognize the value of it and now want customizations and/or support because the s/w has VALUE only after they've played with it."
Support and custom jobs are a nightmare. I would much rather sell licenses to a proprietary application than become a glorified freelancer. This is why OSS businessmen have a free, open source version, and an enterprise version. They use the free version as a sort of a freeware/trial for the large, enterprise version.
If you think it's tough to be an open source vendor, just imagine what it's like as a proprietary vendor who might have an even bigger investment at risk -- watching the open source market chipping away at it. I don't mean Microsoft or the other major players, as they have already had more ROI than they deserve. After all, it was overpriced "cash cow" products (originally Unix itself) that led to the open source concept in the first place.
The rise of Microsoft marked the halfway point in the race to the bottom. Back in 1980, IBM needed a cheapie OS that would not add $3000 of licensing fees to what was already a $3000 product. The market for $6000 PCs was less than 5% of the potential market for $3000 PCs. IBM was perfectly capable of adapting Unix for the mission, but not without bloating the cost. And besides, the original 8088 was not much of a CPU anyway. Any serious computing would be done via 3270 terminal emulation to a "real" computer elsewhere.
At thsi point, all software races downward approaching a price of zero. It's only a matter of time.
Competing with free is a losing proposition. So don't do it. Unfortunately, management has fallen in love with offshore outsourcing. As a result, the quality of commercial software has no way to avoid the open source juggernaut. It IS possible to out-invest the open source community and still make a buck. That involves real investment and real risk. As long as management stays focused on cost at the expense of innovation, quality and customer satisfaction, the open sourcers are in the driver's seat.
Consider the simple concept of tech support. Blog posting vs. a vendor's offshore call center. Which one responds first? With a workable solution? Resulting in a self-service workaround and a patch for all users? Why do we pay a PREMIUM for "supported" products that are supported by morons? We all know which vendors I am referring to.
I think Apple does a great job of exploiting open source on one hand, while avoiding price erosion in its own products that depend on it. We can't all do what Apple does, but they are onto something.
The IT industry has become an awful place to work. This created a large community of under-utilized, frustrated people who are very anxious to deliver software as it should be. For free, if necessary. Look closely at the key contributors of any major open source project and you will find people with spectacular credentials -- the type of folks you couldn't dream of hiring to work in your company. Competing with these people (at any price, especially zero) is a waste of time and money. The more we dumb down the commercial development business model, the more we feed the process.
Understanding the trend is the first step towards figuring out what to do about it. I think the trick is to plan ahead for the likelihood of commoditization, and maintain a pipeline of new products and ideas that runs ahead of it.
Although I do not have the answers, I am absolutely sure that swimming against the tide is a loser's game.
But it will filter down, people want their home computers to run the same as they have at work, so the more OSS takes off in large businesses the more it will filter down to home users.
Of course in an OSS world the corporate desktop software can be used as a base for the consumer desktop, and the rest of the cost can be rolled in with the price of hardware, this model seems to work for Apple.
http://spamdecoy.net - free throwaway anonymous email - avoid spam!
If you think of the programmer as a creative artist (actually, in many ways there's more truth to this than seeing them as engineers) then this is fully justified. If you are a person who pimps^Wcontrols a rock musician, then the government will try to guarantee you an income even when your product is becoming completely outdated (like 70 years!). If you have a bunch of keyboard monkey slaves, you are expected to live in a competitive market. Nobody goes around changing the law to guarantee you money.
I think almost anybody reasonable can see how that is unfair. What we need is a PIAA which arranges guaranteed incomes for people who have once employed a programmer (as long as they don't actually program or do anything useful themselves). The BSA are a bunch of useless wimps.
=~ s,(.*),<sarcasm>$1</sarcasm>,g if any_point_you_wish();
There's no future in being a commercial developer because someone else will do the same thing, for free. Now, I can understand the positive side of this, and I will say that software now is 'better' than it ever has been.
But it has destroyed a lot of job opportunities. Someone with my level of skills could, 20 years ago, work on the next big OS or database or something, and make a living at it. Now I'm relegated to making web apps. Why? Because all of the big jobs have already been done, and there's no incentive to compete when the net value of the market is zero. The older Linux and BSD programmers made out pretty well since they got into the game early, but there's no way for a programmer to started in these areas anymore. The amount of work that goes into getting started on, say, Linux kernel development, is beyond what can be done in your spare time.
Am I lamenting the fall of proprietary software? Only indirectly. I'm more upset that there's not as many opportunities to do __interesting__ work because of open source.
The DotBust made a lot of businesses wary about Sales.
Wary about sales? Sales is the MOST IMPORTANT part of a s/w business...of ANY business. If you are wary about sales, then make sure you work for someone who isn't.
But the companies that survived the DotBust weren't those who had good ideas. They were the ones who had ideas that couldn't sell, or who had poor business plans.
Those that had a proper business approach might have found sales pipelines slowed or dried up, but they were paid for the work they did (including profits). So at worst they walked away from a dead market with a small amount of dough (profits!) in their pockets.
I'm guessing you'd want to go from proof-of-concept to a venture investor to develop the deep work just to be sure you won't get hosed by some unbelieveable glitch like the one that damn near took down Microsoft when they had to Reboot their codebase for LongHornedVista.
Let'set something clear here: in the history of Microsoft, at no point did they find themselves deep in a hole. They have always had the funds and/or signed contracts for the work that they went off a did. Sometimes they did work on a new product that they funded themselves, but that was well after they had massive cash-positive flows to easily handle the expenditure (cash-negative) for that new development.
They did not go out and develop MS-DOS 1.0, then go looking for a customer. The reason that IBM and others have an intertwined history with MS is that they funded MS's early development efforts.
Don't let hysteria and hyperbole ("DotBust") make you write off an entire industry. The IT world went through a pain of hurt because they (and their investors) took their eyes off business and economic FUNDAMENTALS. Those who understand business didn't get caught up in all that (well, I know that some very savvy business folks took advantage of the situation...but they also realized that it was to be a sort lived situation before a full collapse would occur).
Then with some core tech that can be finalized in a few variant ways, then go dig up your customer and tell him "X software is only 7 months out. Sign here."
That still involves doing at least some preliminary work before getting paid. That is usually how a new product comes to market: initial investors (the coders themselves, or the idea people, or the company developing the new product) develops a prototype and begins pitching that. Only when initial early adopters show a sincere interest (e.g. sign a contract) does the hard investment in the product development happen.
It's a simple matter of complex programming.
I heard Stallman address this topic and I though he was very realistic about it. Someone from the audience asked him something like "How can I develop Free Software and have a house?" and his response was something like that it was not always easy to do the right thing and that you have to make choices.
I found his response quite sobering. You can agree or disagree with this stance, but I don't think you can say that he's trying to sell anyone a bill of goods.
"Not an actor, but he plays one on TV."
"Second, I don't see the point of FOSS helping to move labor overseas. The reason labor moves overseas is because it is cheaper. Period. Not because the product is based on FOSS."
Good software takes time, effort, and skill. If good developers give out all of their work in open source form for free, companies won't need to hire the intelligent engineers. They will only need to find people that are good enough to create addons or additions (and pay them significantly less). Open source developers are putting themselves out of a job.
"Also, it's terribly hard to imagine that contributing to FOSS will affect my job 20-30 years in the future. "
Even right now I can see open source effecting my job. The last two companies could have hired more developers, but didn't because we used open source instead. in 10 years, this will be the case in more situations. Not to mention that younger business owners will be more tech savvy.
"What software are you aware of that was developed in 1978 that is still in heavy demand today?"
In 1978, the open source community was not strong and thriving. We also didn't have the Internet. If you look at any linux distro, most of the core utilities derived from software written in the 1970s. (X-windows started in 1987 http://en.wikipedia.org/wiki/X_Window_System)
"The whole hardware/software industry is constantly moving forward, perhaps faster now than it would have without FOSS. You'll have to explain how FOSS is eroding future jobs."
FOSS in itself, keeps us using the same software. VNC is a good example. 99% of all remote-control software on the internet for sale is based on VNC. Most developers figure it is easier to use a free, existing solution than spend 6 months+ creating a new protocol.
I can say this is the model that directly affects us. I work for a large US corporate who sells enterprise software to governments and similar. We've been beaten in bids by our #1 competitor for a while, it turns out they are offering the software for free, as long as the buyer takes on a services contract (think outsourced IT type thing) that would support the software and hardware required to run it.
We sell the software and let the buyer decide how to get support for hardware and other IT systems (we provide serious support for our software only, not stuff like Windows and email etc). So far, we've lost every bid. Unfortunately, our US overlords won't let us change our terms.
So looking at this from a FOSS POV, it is a model that can work - give your software away for free, and then go and sell your consultancy and support services to corporates who buy it off you. You should be providing them with support services to get it installed and configured, not just "if it breaks we'll look at it for you" and "bugfix" support.
Yeah, that means you have to work all the time, you can't just make something then lie back and see the money rolling in, but that old 'make loads of easy money without having to work" is a paradigm that died last year.
You're right, but people picked you apart as your first line was too broad. Try this instead:
There is no sustainable market for selling a commodity with a zero marginal cost of production.
When the marginal (ie. incremental) cost per unit is zero, this directly implies that no proprietary resources or secret sauce were required in its production, which in turn implies that effectively anyone can produce the commodity. Thus, while there is always a market initially for something new, there can be no sustainable market for an item with a zero marginal cost since it will eventually spread into public production. The answer for producers isn't to panic, but just to keep designing new items.
The same will apply to physical goods one day when they can be assembled with atomic precision from the elements around us.
"The question of whether machines can think is no more interesting than [] whether submarines can swim" - Dijkstra
An infinite singularity in fact!
It's the value you create making the technology work for someone. It's called "consulting" or "packaging" a "product" for sale. A "gizmo" economy where the "computer" is bundled with the "software" in custom configurations.
It's starting to happen now. Look at Apple. Almost everything they sell is a hardware product with software to enhance it! They could have taken over when Microsoft humped the bump with Vista by selling a software only version of MacOSX for generic X86-64 boxes. Instead they keep making custom hardware. Heck they are even making their own chips now! Yum, chips...
Hey, it could get worse than zero by having to pay people to use your software!!!
Every product or service is in a race towards the minimum price at which it can be physically produced and delivered (price including any available manpower and start-up capital needed).
Every stand-alone software product only has value until its function and value can be reproduced or supplanted (by patent expiration, stolen trade secrets, the time it takes to reinvent or develop from scratch, the time it takes to equal the original products reputation, the time it takes competitors to make/build/package your open source, etc.) To have a non-zero revenue window, you need to make sure the time you offer something unique is non-zero.
Of course, humans are stupid, and this allows you to use their lack of information to create some additional value. If potential customers think your brand name implies something better than the identical bits under some other name (e.g. Coke vs. generic cola), then you might be able to maintain a non-zero pricing.
IMHO. YMMV.
There is nothing wrong "...a Race to Zero..." This is just the "nature of the beast" for open source software. I feel the money is not in the software, it is in the service. Just look at Red Hat.
You are using a wrong business model. You either have to close source it completely and fight against others competitors (including opensource) or make it totally open and make money on service, support or something else, like Sun Solaris/Java, Asterisks and many others. Opensource project asks community to contribute by default. Make use of this big power instead of fighting against it.
A while back some guys derided open source because it was killing their product. Actually, it wasn't killing their product it was just changing the business market.
What the bozo at that company couldn't understand was that the problem lay with them, not with open source.
They had a product where open source competed directly. They felt that the open source version was so close to theirs that it was taking away their revenues because people were opting for the open source instead of their product.
What this means is that they weren't adjusting fast enough to create products that were worth choosing the paid version. This is the same thing. These guys won't adjust fast enough and produce fast enough to actually keep ahead of what open source is able to do.
What does this really mean? It means that unless commercial product developers get off their lazy asses and build faster and better tools their competition is going to catch up. This is the same for everyone everywhere, not just them, and certainly not just the company related in this story.
It means that commercial and open source products will gain parity sooner or later, hopefully sooner and we'll see that the level head prevails. The level head is the one that chooses the best product for the price. That means that open source (once parity is attained) will be the better choice.
It also means that we will be able to get rid of the likes of predatory companies such as Microsoft, sooner or later. The sooner the better. On top of getting rid of Microsoft we'll have better products than they can produce.
I hope Microsoft is paying attention here. Open source will overcome them sooner or later. If it takes another 20 years then so be it. But it will happen.
Microsoft, get rid of the draconian DRM from the heart of your OS, stop accusing everyone of being a thief, cooperate with open standards and stop trying to usurp them with your closed standards in order to lock your customers into different products. Then, maybe you'll have a chance in the long run.
Business case studies have shown that no company has held top spot for 2 consecutive decades running. Microsoft has. Microsoft is trying for a third. It won't hold. This is the start of the decline. As we understand that their "added" complexity (unnecessarily added) is reduced to easy reproduction through open source (concepts they intentional made far excessive in complexity is sifted through and made easier for the average person) we will be able to overcome their lock in models and that will send Microsoft on a slide. They'll always be there, just as IBM is there but they'll never again be able to hold everyone in a choke hold forcing them to use their product.
You can lead a man with reason but you can't make him think.
I'm not in software, but I am operating a small publishing company, and I'm about to undertake a project that leads into similar issues to what you're facing.
In order to increase my revenue streams, I'm about to start a line of public domain reprints of mostly-out of print books. Now, this leads to a similar question to what you're looking at - if this book is available on Project Gutenberg (P.G.) for free (and it is - that's my source for the texts), then why should any customer in his/her right mind drop down $20-30 for my product?
And that's where added value comes in.
If you just do the basics, then yes, it is a "race to zero." If all I do is reproduce the text from P.G., then a customer has no reason whatsoever to choose my version over the P.G. version.
However, I do things that add value. I commission a new introduction to the book, for example. I redo the typesetting so that it looks really nice, I give it a nice cover. That way, when the customer is making up his/her mind, they're not just getting the text for their $20-30 - they're getting a nice, easy-to-read volume for their library with extra stuff that you can't get online.
It seems to me that the same solution applies to just about any product in any business where there is competition...do something with your product that adds value that a competitor doesn't offer.
Robert B. Marks
Author, Demonsbane in Diablo Archive
There have been many interesting points of view raised here. The concensus seems to be that FOSS is a race to Zero, and I agree. I also think that this is a good thing. I recall some years ago there was a piece of commercial software around called "Notepad Plus", and more recently another one which did source highliting and all kinds of nice stuff. I can't remember the name of that one, but it had a frog for it's icon. Now, there's SciTE, which is absolutely fantastic. Since discovering SciTE I haven't looked back. This is an example of the 'race to zero' you're talking about. I'm a software developer, and more recently I've become a bit of a FOSS zealot - I've contributed a couple of things to FOSS projects, but not much yet. The way I look at it, when you contribute to an OSS project you're giving something back, but if you use OSS then your contribution is very likely to be a very small percentage of the total amount of work you benefit from. and Free software works for everybody's benefit, except perhaps the developer. Alot of people seem to think that you have to shift from doing software development to doing development and support if you want to stay solvent in the coming world where all software is FOSS. but I disagree. There are people (like me!) who despise doing support, and would much prefer to write documentation and simply deal with very high level "This has been confirmed as a bug" type stuff rather than providing support, so not everybody is going to find this shift in emphasis away from development to be attractive. Secondly, A position like mine will never go away. I work in a non-IT office, writing and supporting code which is very specific to the office I'm working in - this stuff will pretty much never be replaced by FOSS, regardless of what innovative software somebody comes up with. I'll still be needed to do all the stuff which is very specific to my office, even if commercial software has gone the way of the dodo. Thirdly, there will still be a requirement for innovation and development, even after all software hits $0, there will still be companies who need things done. For example, IBM might want a capability added to a filesystem or a database, and the best way to achieve that will be to hire a bunch of people to do it. So perhaps software will be driven by what business wants rather than what some marketing team thinks the consumer wants, but I really don't think that the job of the software developer is going to go away any time soon.
The short answer: Yes. It is a "race to 0" if you will.
The longer version is that there has always been something suspect in property rights, at least as implemented in modern society. Yes, yes, bloody communism, I know; let's get past that one, OK? I'm not saying that we shouldn't be able to own our own houses or cars or whatever, or benefit from our own efforts - that is and has always been the pipe dreams of people with too much time on their hands. Communism, in the essence, has always been about finding a fair balance between the amount of work you put in and the benefit you get out. If you would care to check it, it is all there, even in Marx' works - he talks about the means of production, in a context where a tiny upper class of people who had mostly inherited their wealth, lived as parasites on the ever more extreme exploitation of a working class. Who knows what he would have come up with in this day and age? But he would probably have approved of the open source idea.
The brilliance of OSS stems from the fact that it builds on the same principles as scientific research and publication: the free exchange of ideas amongst peers, which allows everybody to make improvements. The only criterium for success is whether it is received well and gets used by the community. The absurdity of property rights is never more obvious than when it comes to the concept of intellectual property; we have seen over and over how new ideas come, not from one unique person, but from many sources at once. Take the theory of evolution - Darwin got his name on it because he managed to publish it first in the place where it mattered at the time, but he wasn't the only one who has that idea; it had been bubbling in the scientific community for years - if he or Wallace hadn't come up with it, somebody else would soon after.
Software is just another example of ideas written down - you can of course refuse to let others see how you did it and treat it as your property, but as OSS shows, it is never that difficult to come up with that very same idea - and the cooperation of OSS means that it will eventually become better than the closed source version. So, how to make money from your work? Well, how does any craftsman make money? By making a product and selling it. But once it's been sold he has to make another. When you make a living from your ideas, you are in the same boat as scientists and artists - those that do it only for the money are at best mediocre and most of them only just scrape along, which I think is fair enough. If you do it because you really love doing it, you are either good enough that you can make a living, or you have a day job that gives you enough to finance your real interest.
That's the way it is, and the way it should be. Don't whine about it, or it will be my turn to call you names.
But it will filter down, people want their home computers to run the same as they have at work, so the more OSS takes off in large businesses the more it will filter down to home users..
[citation needed]
Commodore 64, Loading up the dance floor!
The whole crux of your argument boils down to coding = time = money = who's going to pay?
The fatal flaw here is that, YEARS before IBM et al. jumped onboard, the OS machine was already churning out good software, without funding, without help, without any commercial interests. There's no doubt that funding of kernel developers, OS organisations, etc. is extremely helpful and a massive contribution but you appear to be stuck in the mindset that people don't do things unless they are paid.
In the commercial world, this is true. If you want a program to run that $10m company's tax accounts, you're going to have to pay for it. Outside the commercial world, there are a ton of experts (including paid professional coders who do it in their spare time and explicitly state that their OS-work is nothing to do with their employer) who are constantly do things, for free. Education is one good example. Teachers *GIVE AWAY* their lesson plans, resources, worksheets, overheads, even educational programs. Their schools/universities are *PAYING* for those but they are still allowed to give them away. And, even if they don't explicitly license and put these things online, there are many of them who are more than happy to share their resources.
And the beauty of Open Source is that it prevents such mono-culture as you describe because, at the end of the day, I am *legally allowed* to do pretty much what I like with OS software, even if company X has bundled their own version with tons of crap with their new PC's. I can take *their* OS code (which they are legally obliged to provide) and rip all the rubbish out and put my own version online for ANYONE to do what they want with it and there's nothing the company can do. The little guys, who are able to make the one-line changes to the OS code, keep the big-guys in check. "I'll just remove that line that say 'enable_drm_and_check_hardware'".
More importantly, in my point of view, is the fact that critical mass has been hit. We can run OS software of a myraid variations on so much hardware, supporting so many architectures and devices, "emulating" so many common pieces of software that the changes now are small-fry in comparison to the work that's already been done. We can make a PC today that is OS from top to bottom, including the BIOS. Hell, some guys are still churning out OS-from-top-to-bottom gaming devices (GP2X, Pandora) by just taking an off-the-shelf chip, bundling it with some OS software and then selling it. The opposite of what you predict may happen is much more likely to happen - MS will die or at least be crippled, and OS will be in every device whether you know it or not. Before you know it, people will be crying out for OS support for every tiny little device because they can't distribute their 99% OS-based product without it.
It takes *one* man/woman to write a driver that a million people will use and can adapt and change to an infinite variety of hardware and uses. However, in the corporate market, it takes teams of coders, lawyers, testers, etc. to write that same driver which can only be used in Company X machines and will never been seen outside the company. Thus it will take MANY, MANY teams in MANY corporations to get the same "prevelance" of a bit of software that one man can make.
I would actually welcome this return to "one-man, one code" coding... it's the way programming was started in earnest back in the 70's/80's - kids reading books, programming games, getting them published, all on their own. It's how most of the big names back then started, until commercialism jumped in. It's the way software works best. It doesn't make money (that's just a temporary side-benefit) but equally it doesn't COST anything to make more of it. It takes a teenage kid with a few hours spare who wants to do something with the programming language they just learned and all that free code/compilers that they have been given. Sound familiar? It should.
From a software developer point of view, source code is not, and will never be, knowledge (... knowledge is not wisdom). To think that downloading an opensource application give you the 'so called power' of improving it and of having the best application for nothing (because free) is a pure mirage. If someone download your opensource code and clone the commercial plugin you are selling, the final free product has no future, because the knowledge of how the 'core' is working, the ability of debuging/extending/improving/support it is in your hands. The "opensource cloner" will never be able to compete with you, all that he can do is working for free (i.e. loosing money and maybe preventing you to earn the fruit of you work). Opensource applications that can *really* compete with commercial applications are done by companies which code/maintain/understand the complete product. And these companies need to make money to pay their employees. End of the story.
You've never worked in a company... Most company's can run the worst crap ever made and require you to work around all the problems because they don't care and don't want to spend money on things like software, developers etc.
Change is certain; progress is not obligatory.
We can already see this in the case of Operating Systems because everybody uses an OS AND because there is no scarcity of OS related ideas either (OS algorithms are easily available). And therefore, sooner or later, somebody will find utility in doing it for free and bear the oppurtunity costs.
Some companies try to emulate scarcity by introducing DRM, but any such attempt will inevitably face competition from non- DRM substitutes which will inevitably lead us back to the problem of no scarcity. Some other companies try to write bad/incomplete software so that they keep improving and customizing it. But such companies will face competition from better/more complete software.
There are however someways to get around this problem:
Heroes die once, cowards live longer.