Applied judiciously, jargon and bluff can be used to disguise anything, from the causes of the present financial crisis to the true price of software, argues open-source expert Mark Taylor.
When I heard the now-victorious Barack Obama make his 'lipstick on a pig' remark back in September, it got me thinking about language, and how it can be used to deceive as easily as to explain.
While listening to an elaborate theory full of jargon, have you ever felt it seemed completely out of touch with the real world?
I usually work on the premise that, if something can't be explained in plain English, there's a good chance the person using such language is bluffing, trying to keep you in the dark, or trying to pull a fast one — perhaps even all three.
To my mind, the elaborate economic theories and abstract analysis used to explain the causes of the recent global economic crisis are classic lipstick on a pig.
Banks and other financial institutions have spent the past decade dressing up the 'pig' of bad debt using jargon such as 'structured products'.
So convincing was the illusion, they succeeded in transforming loans that would never be repaid into triple-A-rated financial packages that came to underpin the entire global economy. The transformation was achieved by ignoring reality and building a tower of great-sounding, but non-sensical, theory.
Like the emperor's new clothes, when you strip away all the elaborations, you arrive at the simple truth: bad debt is bad debt, however you dress it up, and believing it has any real value has left us all deep in the proverbial.
Behind the facade
So what can this tell us about the proprietary-software market? Is proprietary software simply a pig skilfully dressed up to make the unwitting think it has intrinsic value?
The answer is 'yes', and here's why.
In any free market, the price of a commodity, over time, falls close to that of its marginal cost of production. A number of things can interfere with this process, the most damaging being the existence of a monopoly, but in the absence of market distortion this rule always holds true.
And what is the marginal cost of production of software? The marginal cost of any product is the cost of making the next copy.
Like the banks, proprietary- software vendors have had to justify the cost of their wares by constructing complex arguments about value
If you stop for a moment and consider it, you'll see the cost of making the next copy of any piece of software is almost zero — with perhaps a vanishingly small amount for electricity.
That phenomenon is precisely the same as the one challenging the business models of the music and film industries. The equilibrium, free-market price of software is nothing.
A matter of survival
Free software acknowledges that truth. Proprietary software does not. Instead, like the banks, proprietary-software vendors have had to justify the cost of their wares by constructing complex arguments about value.
Again, lipstick terms such as 'software patents' and 'intellectual property' have been applied so successfully they have entered the vernacular. Yet even a cursory examination of their real meaning shows them to be spurious. They exist only to perpetuate the dominance of monopolists.
Yes, we are living in a proprietary-software bubble and, like the bursting of the easy-credit bubble, this one is about to burst too — it's a matter of survival.
Until now, most organisations were happy to go along with softly purred phrases such as 'industry standard' and 'best of breed', even if it cost them eye-wateringly large sums for their hubris.
However, with huge cuts in IT budgets on their way and company survival on the line, the time for such pride is over. Proprietary vendors will be protecting their margins and, if you are locked in, you must pay.
By the end of this recession, the companies left standing will be those using a massive amount of free software. The proprietary-software bubble is over.
As chief executive of Sirius Corporation, Mark Taylor has been instrumental in the adoption and rollout of open-source software at some of the largest corporations in Europe, including a growing number of companies running exclusively on free software, end to end, server to desktop. A direct participant in some of the leading enterprise open-source projects, Taylor is also a well-known authority on all aspects of the open-source phenomenon.
Talkback
I think Mark has it about right.
I have been in the Open Source trade for a decade or so and have seen two previous recessions in the UK IT industry. On both those occasions I was more deeply involved in IT training than in the delivery side and I took a pretty cold bath. When the dust settled and I got to the bottom of what happened, the situation was that people were seriously looking at Open Source as a strategy, but they had yet to reach the tipping point; the top of the hill as it were. The downward pressure on those businesses forced them back down the hill. They withdrew from all their Open Source projects for a while.
This time, it seems people are the other side of the tipping point, going down the other side of the hill. This time the downward pressure is pushing them further into their open source projects to try and capture some of the cost savings earlier than plan.
So guess what, this time I have little or nothing to do with the Linux training trade and its doing really well!
Life .. Don't talk to me about life ;-)
I am no proprietory fan myself but I did think this story was slightly biased.
Firstly, companies will probably already have a significant investment in up-to-date proprietory software such as MS Office. This investment will get them through the breakfast cereal sounding 'Credit Crunch'.
Proprietory software does have a cost because you have to dump your existing investment and then implement your new system(s) and then re-train all your staff to use it (up until office 2007, if you had used 1 office toolbar, you could quite easily use them all due to its standardised interface that most people are used to).
Also...there is no mention of supply and demand. Surely if there was no demand for MS Office at its current price then Microsoft would have no choice but to lower it to a level that did create demand. As it happens they haven't been forced to do this and so as prices are stable, I would assume that the supply and demand balance is currently very good.
Lastly, I think that it is important to remember that although for example, Open Office is free and MS Office 2007 pro isn't...look at the vast difference between them in terms of looks etc. Office 2003/2007 look like serious bits of software where as openoffice looks like something that should be free...the interface reminds me of an old version of MS Works.
If you read the comment, I quite clearly say that I have not benefited from the sudden upswing in Linux training as, this time, I'm not doing any myself. This comes from colleagues who are now desperately trying to find qualified trainers because they have been inundated with Linux bookings and that this is in sharp contrast to the last recessions, which killed the Linux training market stone dead. I know that because I was there and felt it along with the rest.
This much is a plain fact and is a fundamental difference to the last ones. Something clearly has changed.
The rest is an aggregation of the comments that go along with the stories from those colleagues. The proprietary software their customers are using is coming up for relicensing, so they are looking to drop it this cycle as opposed to next. They either pay for the retraining or they pay the licensing; this time they have gone with retraining, last time it would have been relicensing. The stories vary but they all sound roughly the same when boiled down.
I am surprised that Mr 315483 (or can I call you 3 for short) still believes that supply and demand sets pricing in markets like these. The price is set at a level such that the market is just beginning to howl with pain. There is no alternative source for Microsoft Word, you have to get it from Bill. Your Ford car will run on ESSO petrol this week and BP next week, there is no porting costs, or retraining involved. The price for proprietary software is a perception based thing with the cost of retraining, the amount of data to be reformated and all the other ancilliaries thrown in on one side and the savings on the other. Conventional supply and demand only works in truly free markets. Dropping the price would show weakness and would actually encourage more people that it's day was over and that they were right to think it was "time for a change"(tm).
As for slagging off OpenOffice based on some subjective comparison of the relative prettiness of the UIs; I'm not sure how much the cute appeal of the document editor used by the company boosts the bottom line. In straightened financial times like these, it is bottom line 1st, 2nd and last.
I notice that 3 (if I might be so bold as to use the familiar) said nothing about the stability, features or interoperability of the OOo suite, just that it didn't look like the MS Office suite, which it seems is a problem for him.
I don't mind people calling me 3 for short! My point about the interfaces differences was not simply that MS Office was prettier than Open Office...in a roundabout way I was talking about how obvious it is that Microsoft just have so much more in the way of resources etc. to throw at a product in order to then not only make it look appealing but also as good as it can be. When I install OO for non-technical people the first thing they mention is the lack of feel to the interface and they are right...it feels years behind office.
In my opinion the look and feel of products is definately important. To break out into the mass market things need to have simple / effective interfaces and this is what Microsoft products seem to be good at. E.g. Microsoft windows can be installed and used by anyone at any level. Linux on the other hand still seems more geared towards techies etc. that want more technical function etc. but don't mind the interface taking a hit as a result.
Another point would be this. If you compare an office suite, you always compare it to MS Office. Why...because this is the defacto standard when it comes to office suites.
You said that there is no other source for MS Word than via Bill. There is an alternative and thats the open source alternative.
My other advice with regards proprietory software such as office would be to just go for the milestone releases and forget things such as software assurance etc. E.g. instead of upgrading from 2003 to 2007 we have simply downloaded the free compatibility pack for 2007 documents.
I would agree that open source is ready for everyone if you could get a novice to buy a laptop and install a 'free' version of linux (more user friendly versions now seem to charge a fee) on that machine making sure that all hardware devices are also installed with the necessary drivers.
The bottom line for me is that the tipping point for me just hasn't been reached yet but its not far off. I am disappointed with MS's new interface in 2007 which potentially means some re-training anyway and I must admit that outside of the business...my new installs do already get open office rather than MS office.
Open Source software can only get better!
Hi 3,
Without wanting to go into detail I really think you need to start looking at the bigger picture.
OpenOffice is different for MS Office but its free - i.e. it doesn't cost anything and you still have your freedom when using it.
That's pretty bloody cool if you ask me.
MS products are deliberately designed to limit your freedom and lock you in. They actually don't work all that well either. Vista is a pile of crap, for example.
However, if your freedom matters less to you than looking at pointless chrome then good luck to you.
Best dogStar.
A fine analysis, great insights. I retired 4 years ago after 34 years in the computer industry and have seen the seismic shifts over the period. Just look at the number of proprietary vendors that poured scorn on Linux and who now are deeply involved with it - they laughed at Linux, then they poured vitriol on it, now they are in the fold. True, such detractors exist in large number, trying to hold back the open source tide, some with a good measure of success so far, but the ground under their feet is shifting.
It was thought by one company I worked for in the 1970's that a locked-in customer had no way to go, but cheaper, even inferior solutions from elsewhere caused their demise. Migration and retraining proved no barrier as the tools available made it easy and anyone willing to learn, can, most did.
We saw an increasing number of shops moving from mainframe solutions to Solaris and Windows, with the available floor space increasingly being filled with those platforms.
That was phase1, the move away from the proprietary phase1 is yet to take solid root, but IMHO it will take place.
Most industry pundits and execs from the proprietary wing have to sound upbeat in the face of what is plainly happening. I have sat in meetings where the slick slide presentations and nonsense was being served up with us mere minions seeing clearly through it all and eventually saw them fail.
I have never spent five minutes studying economics, but it was always clear to me that with the price of everything on a constant rise and wages depressed, was a sure recipe for disaster.
I think a newspaper cartoon in the 1970's which put the Chancellor's remarks in true focus and said it all - one guy telling another "If you believe that you are either an idiot or the Chancellor of the Exchequer".
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Your underlying economic theory starts with the assumption that the good in question is a commodity. Some software is - for example, utilities to zip and unzip and other small, commonly used and easy to reproduce packages. Some much larger things have become near commodities, like Linux, because the demand huge so there's enough motivation for an open source market to develop. Open Office may yet get there.
But you overgeneralize. Certainly there are open source initiatives for virtually any type of software, but many (perhaps most) of them are not effective because there isn't enough critical mass of interest to produce software that matches the capabilities of proprietary software. So at very least the dinosaurs can continue to make money on the "long tail" of highly complex or lesser used software areas.
: Some much larger things have become near
: commodities, like Linux, because the demand
: huge so there's enough motivation for an open
: source market to develop.
You speak of Linux as if it is a single monolithic entity. It explicitly and deliberately isn't. It is a large collection of much smaller projects, designed to interoperate with each other and more often than not, having competing variants of different capabilities. This isn't relevant or even visible to the average end user though; it is the job of the "Distributions" (Red Hat, Ubuntu etc) to hide this complexity from the end user and meld the parts into a consistent whole.
I also find myself wondering if you have looked up recently, when you say that an open source market "might" develop .. future tense. It has developed and it is huge! Blink and you miss another push outwards.
I also wonder in what terms you are using the term "market". I have debated against the conventional use of the term .. to grossly simplify: the number of potential "sales".
If you are using it in a more complex economic theory sort of a way to describe the process of needs and wants and development incentives and such underlying the simple "Want one Gimme", then the richness and energy in this zone would obviously surprise you.
Because of the inclusive nature of the process, open source tends to feed back and amplify, with every project adding something to the whole and in so doing every other project. Even if a project "fails" it doesn't, because it is there for all to see, pinch code out of and critique. I have regularly seen projects burn upwards, falter and die; to be replaced by another similar, but critically different project. Maybe that in turn is itself replaced, but the key fact is that they don't all start from square one. In the proprietary world, they will almost always start in complete ignorance of each other and very often repeat each other's mistakes.
Open Source ratchets, closed source does not.
: Open Office may yet get there.
The last stats I have seen (2007-09) puts the number of downloads for OOo is in the 10s of millions and this completely disregards the fact that it is a standard fitment on most Linux CD/DVD sets. What the figures are these days .. heaven alone knows.
I submit that it's doing ok, ta muchly.
: But you overgeneralize. Certainly there are
: open source initiatives for virtually any type
: of software, but many (perhaps most) of them
: are not effective because there isn't enough
: critical mass of interest to produce software
: that matches the capabilities of proprietary
: software.
I am not alone in being a regular and heavy user of software; and a dizzying array of different kinds at that. I very very rarely have to use anything other than my Linux based laptop to run any of it. Given that in your terms "perhaps most" of the software types do not have capable open source software, perhaps you will care to give us a few examples.
: So at very least the dinosaurs can continue to
: make money on the "long tail" of highly complex
: or lesser used software areas.
There comes a point where the economics of proprietary software production just don't work any more. As more and more people realise that they have been chucking their money away on expensive proprietary titles when there are perfectly satisfactory open source equivalents to be had; more and more momentum will be drawn out of the proprietary "You get what you pay for" mantra and open source will inevitably become the target for the old saw:
"Nobody ever got sacked for choosing XYZ"
XYZ was IBM until it wasn't, then it was Microsoft until it wasn't .. how long before we can cut and paste in the words "Open Source" instead.
One of the big arguments in favour of Open Source is that it is very difficult to make any money at all in the core business of software production. If the development department makes it to the break even point, then they're probably skimping on the test cycle ;-) The big money is made in training, consultancy, literature etc etc. By switching to open source development procedures, the company is simply acknowledging this and concentrating it's resources on the parts of the business likely to repay the shareholders. In these straightened times, expect to see more of this, not less.
Given the ratchet effect described above, open source is quite simply inevitable. In the longer term, the phrases open and closed will be obsolete. They will be contrasting two sides where only one survives. Proprietary software will survive for a bit longer, but in a lot of cases not because of quality or features, but through protectionism, lock-in and (sadly) dodgy back room deals.
Interesting article, althought the author seems to confuse production with distribution. In fact, it takes an enormous bit of time to code new software. Once that's over and the revisions are set -- usually at the end of the 2.0 version -- only bug fixes and incremental improvements are often added. But time is money at the beginning, so producing the code costs someone something, even if it's many "someones" contributing to a FOSS project. Distribution costs only the server space for hosting.
As the author notes, over the long haul open source software is far better equipped to deal with any economy, not to mention other distinct advantages, such as faster bug fixes. Whether its GNU/Linux or OpenOffice or MySQL, the user wins.
Thank the Master Programmer in the Sky that software is NOT distributed like DVD movies or music cuts!*1
Unfortunately the production costs are quantified by accountants using the models created in the age of XYZ dominance of the market. I've read studies that indicate x number of lines of code should be producible per day by a qualified programmer. I've seen the very same accounting mentality exhibited in the US space program. So many paragraphs/hour, so many words/hour by tech writers etc. As far as I know none of these models look at the actual quality of the output or whether the code was useful or just rubbish when "counted". It might be better just to look at the salaries of everybody that works on the project and just add up the man-hours and salary costs. So the reality is that the production costs are only a best guess as to what it really cost to produce the software.
The question of quality or usefulness is the biggest problem with software. Until you install and use it you have no idea whether or not the software is worth a damn or the the greatest thing since sliced bread. If it has problems you are at the mercy of the program supplier, Open Source or commercial. I'll settle for a less than perfect screen appearance if it works. With Open Source, you at least have the hope of being able to either fix it yourself or somebody else irritated by the same deficiency will fix it and release an update. If you want, you more than likely can download another program that might work better. At any rate, you haven't been "stiffed" with an unrecoverable monetary hit. With Microsoft "driving the train" you have to hope that others will complain loud enough to get MS's attention and they will release a fix. I'm tired of yelling and paying for the privilege.
*1 If software was delivered by a movie distributor, it would only work in the Americas or Europe or Asia. You'd have to buy a new version when you changed regions. It would only work on specially branded computers.
If I like obscure Bollywood musicals I have to buy a player, a TV and the DVDs in India and then import the DVDs ILLEGALLY into the United States! If I don't want to buy a player or TV, I can play the DVDs on my computer ILLEGALLY! I can't even have someone buy them for me and send them to me air freight. What freaking idiocy! What unmitigated greed!
50 to 75% of a movie ticket goes straight into the distributors pocket. That's why every movie-producing-corporation owns or operates a film distributor. The distributors pay for or make the film copies shown in the theaters. That is why there are very few digital movie theaters. If you can play the feature back from a computer straight into a theater over a satellite down-link channel, you don't need a distributor, you need a TCP/IP network provider.
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Thanks for the clarification. Many good points I hadn't considered.