Open and closed source software development have dramatically converged over the past couple of years. Microsoft for example is now funding an independent foundation, Codeplex, tasked with helping commercial software firms better understand open source governance, and contribute code accordingly. RedMonk has long argued that open source is just how we do things in the tech business today. Its business as usual. It is now the age of hybrid source, with more use of permissive licenses, and less obsession about “free”.
Or as Stephen puts it:
Basically, you may distill much of the above down to a simple assertion that says that while open source offers massive advantages in several areas such as distribution, its intrinsic economic disadvantages are likely to compel commercial open source organizations to seek complementary – and likely non-open source – software models to avoid an early plateau in their revenue potential. To the surprise of probably no one, I more or less agree with this assertion – with one important caveat. Sure, there will be plenty of non-commercial open source that is pure. And there will be a wealth of projects that cannot be made less than pure due to the applied licensing. But the trend in the commercial open source supplier space is clear, and in the direction of hybrid models.
I noticed a link from linkedin this morning to a post by Stephe Walli, friend of RedMonk and open source maven – Open Source Business Models Redux. I fully agree with Stephe’s conclusions.
Open source software is a key economic driver from an engineering efficiency and software reuse perspective, but it also opens new opportunities and additional tools for product management to engage better with customers and improve both the top line and the bottom line.
However I do take issue with one of Stephe’s basic premises, an oft repeated but basically stupid line from Theodore Levitt of Harvard Business School.
“People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!”
This kind of rubbish needs to be challenged. The idea people actually want to buy holes is kind of like the notion that markets are perfect. File under stuff economists say, without recourse to real life.
Odd then that Levitt clearly understood how irrational we are.
“Every sustained wave of technological progress and economic development everywhere has been fueled by greed, profiteering, special privileges, and megalomania.”
The problem with the assumption is that people, particularly men, like to buy tools. Power tools mostly. We may never even use the tools – but we enjoyed buying them and they are ours dammit. I didn’t choose a mown lawn, I chose a Qualcast Panther 30 Sidewheel Cylinder Lawn mower.
The entire industry analyst business is basically predicated on helping businesses buy tools. Companies around the world call analysts every day for advice on which tool to buy. C level executives, and some line-of-business people, love the language of the “solution”… but the doers and makers (RedMonk’s base) know different. Solutions are something you find in a test tube, not in a product catalog. Practitioners buy tools.
Of course packaging is crucial to business success. Apple and Google have done the best job of packaging the current wave of web and open source technologies, just as Compaq, Dell and Microsoft dominated the LAN technology wave. But do these firms really sell “solutions”? Is Google Search a solution or a tool? I would say the latter.
I don’t disagree with Walli, but Levitt. Any attempt to understand the business of software requires that we understand tools adoption (I won’t say purchase because many excellent tools are now available for free).
RedMonk will continue to view the world through a tools lens because that’s how the world works. We will continue to work with tools vendors, some of them open source. Open source can be a business model, at one end of the hybrid spectrum, but not one with the traditionally high margins we see in the software business.