The commoditising of software

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Like that of many companies, Sun's investigation of open-source is purely practical. Even before open-source products grew in popularity, companies had been trying new tactics, as the traditional software licensing business suffered rampant price competition.

"Given the way that the cost of goods sold on one unit is essentially zero, it tends to drive the prices down to zero, anyway, whether it's open source or not," said Gosling, who is active in Sun's NetBeans open-source tools initiative. "The average software developer spends more on lattes than they do on tools."

Despite the business conflicts open source poses, commercial stalwarts such as IBM and Novell insist that they benefit from it. In addition to its value as a hedge against Microsoft, some say open source clarifies where software companies should focus their energies.

Marten Mickos, chief executive of MySQL, argues that open-source software benefits all technology companies by creating more demand. As with other products in other industries, open-source offerings can fill the role of commodity goods and leave opportunities for companies to supply high-end products or services.

"Ten years from now," Mickos said, "we will look back and say, 'what did we do before open source?'"

Novell, which is in the throes of a huge internal transition, doesn't have the leisure of looking back just yet. It's not even totally clear that its dual approach of balancing open-source with proprietary software sales is more profitable than the traditional licensing model. But at least some of its executives believe that Novell can make it work, if the company is clever enough.

"The challenge is to stay ahead of the line, where software is commoditised," Nugent said. "You don't want to find yourself on the wrong side of that line."

Talkback

In 15 years there will be no such thing as "software" -- just like today you can't see, and don't care about the wires that carry your broadband connection home, in the future software will be pervasive. Open-source will disapear just as Commodore and Spectrum hobyists did in the 90's, and the Oracle's and Microsoft's of today will have won the day by transforming themselves to deliver the new technology model.

via Facebook 14 February, 2004 00:02
Reply

It really doesn’t matter at what point in the process a company takes its profits: hardware; operating system, application software; or professional services. It’s the old joke of giving away the whisky for free, but charging an awful lot for the bottle cap. Call it a “system”, a “service”, an “application” or a “business process”— it’s still a bottle of booze.


Open source software will mostly have disappeared within a couple of years as the advantages to the individual contributor dwindle: increasing one’s visibility in a highly-paid field and the self-righteous feeling of providing a rebellious alternative to big-company greed.

via Facebook 14 February, 2004 15:06
Reply

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