As Jason discusses here and I’ve mentioned before, he was kind enough to have us out to Redmond last week for a set of conversations on topics relating to open source. Contrary to what a lot of people might believe, the thinking within Microsoft on open source is both sophisticated and thoughtful. I don’t always agree with it, but I respect it.
One area where there’s a bit of disconnect is on the implications of the Innovator’s Dilemma. Jason characterizes the crux of the software argument by saying, “The assertion, in regard to software, is that once a basic workload has been commoditized, there’s no point in trying to sell a proprietary offering for that workload.” In other words, flee before open source. In answer to the virtual chicken littles who might make such a contention, Jason offers a response of “Innovation as a Cure to the Dilemma.” This is interesting, not just because it tacitly acknowledges the reality that innovators do stop innovating (and I do think IW is guilty in some respects here, tablets, pens and so on notwithstanding), but because it implies that open source can be a good thing for Microsoft. A personal trainer, as my colleague once put it.
If we’re speaking in general terms, this is a good answer. Constant innovation is in my opinion the only way for software firms to stay ahead of the rising open source tide. And that, by the way, applies to firms like IBM, Novell and Sun with investments in open source, as well as more proprietary firms like Microsoft. We should not, however, deceive ourselves into thinking this is new or the result of the growth of open source: phrases like “the only sustainable competitive advantage is innovation” have been dotting enterprise mission statements since time immemorial.
So yes, innovation’s important. But what’s more important is not reducing the impact of open source and software to a single, genericized response, which in turn can be treated with the innovation cure. As has been demonstrated in a variety of markets, open source can (note the can) have a relentlessly corrosize effect on commercial suppliers, by continually commoditizing lower level functions (which, incidentally, tends to benefit customers and users tremendously). As has been equally well demonstrated, however, this impact is not universal to every open source project that enters a new market. There are a great many variables to consider when evaluating the opportunities for open source with the particular market; migration costs, open or closed standards, integration difficulty, security concerns, etc.
This means that, unfortunately, the impact that open source will have on any given market is not directly related to any other market and is therefore difficult to predict. In some markets, I believe Jason’s right – Microsoft by virtue of further innovation (and, it must be said, dominant marketshare) will likely be able to keep up or ahead. But I do believe that there are other markets which, through a unique set of circumstances involving low barriers to entry and truly open standards, might actually be worth strategically conceding and seeding with open sourced Microsoft products. So to Microsoft I’d say, by all means focus on innovation as a competitive differentiator. Just don’t expect it to work every time.
