Originally Published: Thursday, 25 May 2000 Author: Aaron Fransen
Published to: featured_articles/Featured Articles Page: 1/1 - [Printable]

The Value of Open Source

It's already a safe bet that the open-source movement isn't going to slow down for the same reasons that it's succeeded in its present form more or less for 20 years (some would say much longer). There are some people who love to code, and don't do it for money or power, but for a little satisfaction of the ego, and there's nothing wrong with that.

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Let's start by saying one thing: Value is relative. What's priceless to me is worthless to you (and vice versa), so it really changes the question of value to one of relevance, not actual worth. Does a car have value? Sure, if you have gas. Without, it's just a heavy, cramped room. Without, you'd trade it for a hamburger.

In the software biz, there have always been two sides to the coin. On one side you've got the big guys, the ones who have hired squadrons of programmers to create their XYZ software system. Understandably, they tend to be very protective of their investment, and aren't anxious to give it away. There are some very basic economics at work here (and I'm sure that's no surprise to any of you): Spend money on R&D to give you a competitive advantage, to increase your market share and toss some money back at the investors. Giving away the software would upset a lot of shareholders.

On the other side we've always had the guys who love to code, and better yet, love the recognition they get when they give the code away. Probably the first geek-mainstream conflict between these two worlds was the infamous "open-letter" from Bill Gates to the developer community regarding the use of the Microsoft BASIC shell. If you don't remember this, it arose because Microsoft's BASIC language was so easy to use (compared to what came before) that development on the various implementations flourished. People were giving their programs away, trading them at computer shows, and so on. The problem was that because you had to buy Microsoft BASIC, a lot of the guys writing code would "lend" a copy to their friends. Bill didn't like that, and I understand why: It cost him money to develop it, and being a rather astute businessman, wanted to make a lot of money selling it.

Back then, Microsoft BASIC could be said to have had value to the development community, but unfortunately a lot of the developers back then were kids (I would have been in my early teens about the time this all happened). So yeah, the software had value, but the biggest demand came from a segment of the market that couldn't afford it!

For about the last 20 years or so, we've perceived expensive software as being the most valuable, although the actual price of the software had little to do with it's worth. Take Lotus 123, arguably the "killer app" that launched the PC industry. Sure, it worked great, but damn if it wasn't expensive! There was a reason that businesses were the ones buying it; individuals couldn't afford it. Now here's the interesting part: There were lots of Lotus 123 workalike clones, many of them shareware that could be had for about $20. They did all the important things 123 did, but at a 20th of the price. But what happened to them? They disappeared.

Microsoft understood this intimately. Hence with the introduction of Windows 3.0, when they released Microsoft Word 2.0 and Excel (here I can't remember the version...someone remind me, was it 1.0?) the software was expensive, so the perceived value was greater than if they had introduced either application at $50 a pop.

So we've spent the last 16 years (in the PC industry anyway) paying for expensive software who's actual value was not always in line with it's perceived value. There's an argument here that if the software had been cheaper, they would have sold a lot more, and piracy would be a non-issue. It's a good argument, but the software shops would rather sell fewer copies of really expensive software and throw a bone to some lobbyists in Washington.

In fact, I would suggest that had Microsoft taken this approach, selling more software at a substantially lesser price, two things would have happened: 1. They would never have been perceived as being the ruthless business denizens they are today. 2. Linux would never be where it is today. For this to have worked for Microsoft, however, they would have had to introduce the software at the higher price, taken over the market, then dropped the price. No greedy capitalist would ever agree to that. Heck, they'd say, we own the market? Raise the price! What they fail to understand is that at the higher price point, there's always someone who wants a piece of that market. But at $20 or $50, nobody could even be bothered trying to compete. They'd own it forever.

Even the value of skills is changing. Take MCSE certification. Two or three years ago being an MCSE meant something, and that something usually had a fairly high dollar value attached to it. Here in Canada, and I'm sure it's much the same elsewhere, you can pay your money, attend a 2-week MCSE boot camp, and be guaranteed certification. Does anyone else care if they've never stepped foot in the real world? The result is that MCSE certification means squat now, even for the guys who actually know what they're doing. Novell went through this a few years ago, with the same results.

Instead, now we have a dichotomy. Perceived value has begun to swing the opposite way of actual value, and it's at the expense (no pun intended) of closed-source based packages. Linux and OpenBSD are my faves in this arena; the actual value of them is phenomenal, and it's only getting better with each new release. The perceived value of the products has been almost nothing, however, at least beyond the confines of the tech community.

Thanks to the likes of IBM, Sun and SGI, that's changing. There's a reason that Sun throws the odd piece of hardware at the OpenBSD guys: They get to take the rock-solid code that Theo and the boys punch out and apply it to Solaris. And you can be certain IBM isn't supporting Red Hat for altruistic reasons, but that may not matter. Their involvement is still having the effect of raising the perceived value of OpenBSD and Linux, respectively.

Therefore the question would be: What is the perceived value going to be in the future for closed-source software packages?

It's already a safe bet that the open-source movement isn't going to slow down for the same reasons that it's succeeded in it's present form more or less for 20 years (some would say much longer). There are some people who love to code, and don't do it for money or power, but for a little satisfaction of the ego, and there's nothing wrong with that. Hey, we all still need day jobs, but while I sit here at night writing this article, others are doing their bit and writing patches, new programs, fixes, and so on.

This isn't limited to Microsoft either. IBM would love to sell you an AS/400 or MVS mainframe, each with their proprietary, and extremely expensive, operating systems. Did anyone else notice recently when IBM announced they can run Linux on their top-of-the-line mainframe? It's academic at this point; nobody in their right mind is going to shell out $5,000,000 for a monster computer just to run some software on it they downloaded from an FTP site. I should say, not yet.

Closed-source software will always have a place, but I suggest here that the vast majority is going to be in vertical markets where customization is the order of the day. Warehouse management is a good example; why develop an open-source warehouse management application for a market that is probably far less than 1/1000th that of Linux? It's a question of demand and resources. SAP, Baan, Peoplesoft...these guys will never be replaced by open-source, but they may fold due to their own missteps.

And as products like Linux and the BSDs, Apache, and SaMBa gain presence in the business and personal marketplaces, their value can only continue to rise. Now if Sun would only GPL that StarOffice thing...

Aaron Fransen is a consultant working in Calgary, Alberta who's had the (mis)fortune of working with just about everything that ever contained an integrated circuit. He can be reached for response to this column by e-mailing him at: aaron.fransen@consultant.com

This article is provided under the OpenContent License, and was first shown at osOpinion.

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