Free Can Mean Big Money - The Open Source Economy 494
Gentu writes "People are always accusing Open Source proponents of being communists, but an editorial by the OSNews publisher, ex-Red Hat employee David Adams, takes a critical look at whether Free and Open Source Software is really anti-capitalistic or is, in fact, only a product of the free market at work. Does wide availability of high quality, low cost software harm or help the world's economy?"
Re:huh? (Score:3, Interesting)
Those bright lights you see illuminating the night sky over Las Vegas are powered by the spinning of Adam Smith's body in his grave at the mere suggestion that we protect a market from competition.
The anti-capitalists are those who have never read Smith's tirades against corporate interests who use the government to protect their markets.
More [slashdot.org] stuff Slashdot didn't publish.
Think ! (Score:4, Interesting)
International Business
I have recently heard they are strongly connected to OSS. Somehow, they still do what they once advertised.
So at least, one can infer that OSS is good for IBM.
CC.
Software didn't alway cost money (Score:5, Interesting)
There are several companies that have embraced FOSS and are making good money. Not by charging money for the software, but by providing services. We always think of Red Hat and the like, but now think of IBM and they way they have embraced the FOSS world yet still make mega bucks providing their services. Linux, for instance, is not the basis of IBM's offerings, but merely one solution they provide. They don't charge for that software, but they do very well capitalistically speaking. There is no conflict between capitalism and FOSS, it merely shuffles the equation around a little. Instead of charging for the software, you charge for your knowledge in other areas. Then you 3. Profit!
Closed-source software houses that screech about their lost profits and how important it is to America to maintain their stranglehold on this part of the economy sounds just like the RIAA. "Save our artificial business model!" Well, it's articifical, and as a business model its time is drawing to an end, or at least being marginalized. Time to make the choice, do you want to be like the buggy-whip manufacturers and the RIAA? Or do you want to be like IBM and make profits from embracing FOSS.
Re:And this is bad why...? (Score:3, Interesting)
Some may argue that the USSR, etc., wasn't "real Communism" but then the question remains: why wasn't it? Do traits of human nature (especially of those inclined to seek power) make such ideals unachievable.
In any case, I think an economic argument in support of free software would carry more weight coming from someone other than "OSNews publisher, ex-Red Hat employee David Adams."
Services are the future (Score:5, Interesting)
It would be my belief that you would see wide adoption of Fiber to the Premises in a much quicker manner than currently being shown by SBC and Verizon. Futhermore those companies that have this huge debt cloud that the fiber would never make money can then focus on providing services over those lines. Also they would not be restricted to the areas they are currently in so in essence I could be a Verizon Customer until I get a better deal then switch over to Comcast who would provide services via my fiber connection.
In essence the national telecommunications network would be considered the Linux of our telecommunications backbone. Verizon, SBC, Cable Companies etc would be considered in the same light as Redhat, Novell, Mandrake and others. It's a common platform and the services are being provided.
The only problem with this is that Linux has yet to be standardized in a acceptable manner. Mandrake looks different from Redhat who looks different from Novell. Fix that, standardize what's being done to the kernel and fight for customers with support and product contracts and we can kiss MS goodbye.
Linux service providers (LSP)'s should be going to Corporations and telling them we'll provide you this service that will eliminate this problem or situation. You have to adopt Linux on that platform but for a fee we will make it do what you want and provide training and support for the life of it.
Other companies should be investing in end to end solutions built on Linux that are standards based and drum up companies to adopt this. We see it in many places today but adoption is slow but picking up very quickly.
Other companies who are standing on the sidelines wondering about this SCO business need to realize all the money they are throwing away and finally need to give the finger to SCO and get on with the conversion. Service disruptions to a Microsoft based virus over the last 2 years have far outshined any royalty payment you would ever have to pay SCO if hell froze over and they won their court cases. Go out and find those balls you had when you made these companies so great and use them again for once.
Please. (Score:5, Interesting)
I design a database...What do I use? Hmm Oracle? Can't afford it. MS SQL? Can't afford it. Guess it's MySQL or PostgreSQL, with the added benefit that I can charge a couple grand over the liscensing fees for either of those and make nice profit.
Deploy a firewall file server for some business? Win2003? Yea right. Solaris? Too expensive. Linux? I can charge ten grand and beat all my competitors.
Webserver? Apache. Office? Open Office.
MS Zealots can talk TCO all they want, but these people pay me a few hundred dollars a month to keep an eye on their stuff, and it never really breaks. I can admin three dozen boxes by myself, and I'm laughing all the way to the bank.
The broken windows fallacy (Score:4, Interesting)
Which is bullshit.
1) Many, MANY OSS programmers work for traditional companies, which may or may not be primarily software companies. Really, it's not a case of some unpaid commie hippie stealing an MS programmer's job, it's a case of a well-paid IBM programmer stealing an MS programmer's job. Which is fine by me--the market at work.
2) The OSS development model seems to have lower overall costs associated with it--open-source projects can give you the same functionality and features, but the total cost of developing all that software is much less than the total cost of developing the congruent proprietary product. This is GOOD, because it means that less people are doing more work, which means we're more productive and efficient. MS hurts because they're not able to compete with the more efficient (and therefore cheaper to the consumer) OSS product, and they lose revenue. Again, fine all around.
What this is REALLY about is that OSS is a different management model for building software, and it's a model that's based on a different understanding of how best to profit from your ownership of intellectual property (copyright on software you've written/had written by others). That's why MS has started an internal drive to study the development process used by the kernel coders and others--they want to see if they can take some of the techniques and processes that are OSS and apply them to help MS become more competitive.
Linux makes jobs (Score:5, Interesting)
LINUX MAKES JOBS.
Its very simple, Microsoft's revenue is $36.8B it employs 55000 it has a high revenue per employee of $669k. It has a monopoly so that high revenue/employee is not suprising.
Other companies are not so lucky:
GE revenue is 140 Billion, it employs 305000, thats $459K per employee.
Citigroup $240K per employee
Walmart $183K per employee...
If companies spend less on Microsoft products and invest it in their own business with similar results to their existing business, then they will create more jobs.
So, if Walmart saves 10 million by not buying Microsoft licenses and switching to Linux
and invests it in its own company, it will likely create 55 jobs.
Microsoft will lose $10m (i.e. 15 jobs). A net gain of 40 jobs.
Walmart jobs are low grade, a more realistic example is Citigroup. 10 million saved on Windows licenses is worth 26 extra jobs.
My point is, it isn't just that companies spend the money on themselves, it's that they employ more people for each $ revenue than Microsoft, so every dollar saved creates more jobs than a $ going to Microsoft.
Re:For those who just don't get it (Score:2, Interesting)
I don't see how OSS can push the bleeding edge of software without some real financial motive for the developers.
Oh, sure, my awesome new internet app will be the killer app of tomorrow, and all kinds of consultants will get richer than Jesus supporting it.. But what about me, the poor chump who wrote it?
Know who's making money on OSS? IBM, SCO, Sun, Apple.. Watch MS reinvent itself somewhat as a service provider, and they'll rake in some of those bucks too.
Re:It's important to remember... (Score:5, Interesting)
And so can anyone else. While you, the devloper, have to recoup your devlopment costs. Another group (say Redhat to name a company at random) can undercut the cost of your services with their own since they have zero dollars to recover. Thus the developer gets put out of buinsess and all we have are people working for free and large companies selling services. Not a utopia of software engineering in my opinion.
Historically (Score:1, Interesting)
Lets look at packaging. Milk bottles- you used to buy them and leave them out for the milkman. He would fill them and return them to you with the milk. Now, the bottle is so cheap it is included in the cost of the milk.
Software is now easier to produce so college kids can get together and generate/maintain an OS like linux. It is thrown in with the cost of support when you buy from a company like Red Hat. Economics are just playing out here.
Re:There are no pure capitalist nations. (Score:5, Interesting)
The trouble is that a majority of us look at Capitalism and Communism as polarized one-way roads where there is no middle.
In Canada, although we are qutie capitalist in our business practices, a wealth of programs and services exist for the less fortunate (business and individual) so that the balance of wealth can be equalized.
Linux brings us the ability to benefit Small-Medium Sized Businesses with powerful tools at no direct cost, direct meaning no purchase price -- the time involved in implementing it, however, is a factor dependant on the skill level of the IT Staff. Linux also allows lower income families and individuals the ability to use a low cost computer with up-to-date software at no charge.
Although my own political beliefs tell me that Socialism (a nicer word for Communism) is better for the majority, my human nature to compete asks me to move toward Capitalism in order to better myself financially; this issue will plague us for generations.
license revenue vs. insurance sales (Score:2, Interesting)
The real question is will the world support software insurance sales as a viable business?
Using JBoss as an example, they sell 3 things
1. Cost advantage vs. other guy (note there must be another guy to make this work)
2. Faster Better Cheaper support for problems
3. Indemnification against IP suits.
If we are to assume high quality, don't we also assume low support costs? That delta is the gross margin on professional open source.
So if the model is selling cheap, indemnified response to a "disaster", then how is this different than All State?
The Linux is communism line....... (Score:4, Interesting)
The economic damage argument is also a sign that MS and their schills are grabbing at straws. I imagine that the first use of gunpowder led to cries that arrow makers would be unemployed and the powered loom leds to concerns of unemployed weavers but every time a new business model arises the end result is that people adapt and their bloody good at it. Thousands of Miners, whole communities were made redundant in the UK in the 1980's but the end result is that they just moved on and found other things to do.
If any economic effect will be felt in the event of a major shift to OSS it'll be the free availability of software to businesses of any kind, large or small, rich or poor a startup in Bengal will have access to same CRM, office suite whatever that a major corporation in the US or UK has. Open standards will make the dissemination and exchange of information flawless across the global industrial base and a whole industry will spring up installing and supporting it.
The development of such an industry is almost guaranteed by the fact that just because the software is free doesn't mean that businesses will install and maintain it themselves. If this were the case people would be doing it with Windows and as I spend my working life in a sort of purgatory going from office to office doing such exiting things as showing people how to put the shortcut they deleted back I can't see it happening at any point soon.
Besides, there's always the option of following the dual licence model that MySQL, OpenOffice/StarOffice etc. follow so that businesses can buy in the product and service from the manufacturer if they choose to do so.
Anyhow, The more blatantly stupid lines that MS and Co. come out with the greater the pressure thay must be feeling which is a good thing in my book.
Iterated Prisoner's dilemma (Score:5, Interesting)
Re:And this is bad why...? (Score:4, Interesting)
Capitalism need not involve greedy corporations. Some of the most lassie-fair of people, the founders of the United States, did not believe in corporations being able to run a-muck the way they have today. Corporations were a privilege, and that privilege could be revoked if a corporation did not behave. The representatives of the country were to see to that, but the people fell asleep along time ago and corporate shills run the US Congress. So now we have Mussolini style fascism running around in G W Bush's US pretending to be capitalism, Corpratism is not so very different from communism in practice.
Corporatism: Historically, corporatism or corporativism (Italian corporativismo) is a political system in which legislative representation is given to industries or professional and economic groups. Ostensibly, the entire society is to be run by decisions collectively made by these groups. It is a form of class collaboration put forward as an alternative to class conflict and was first proposed by Pope Leo XIII. In Italy, employers were organized into syndicates known as "corporations" according to their industries, and these groups were given representation in a legislative body known as the Camera dei Fasci e delle Corporazioni. According to various theorists corporatism was an attempt to create a "modern" version of feudalism by merging the "corporate" interests with those of the state
http://encyclopedia.thefreedictionary.com/corpora
Re:Harm the world economy? No, but (Score:2, Interesting)
And here's a question: what's the ethical difference between an individual who uses open souce software but doesn't contribute anything back, and a freeloading corporation?
Re:How does Linux benefit a small-medium business? (Score:3, Interesting)
Wrong. Very very wrong. Buying shink wrapped Redhat costs more than Windows (possibly) but there ARE alternatives that some would say are better. Redhat is not the be-all and end-all of Linux. Did you research properly or did you just get one Redhat house in to quote you?
Windows may appear cheaper on the surface, but maintainging a secure, stable Windows platform takes a lot more work than maintaining a secure and stable Linux platform - which is inherently both those things right out of the "box".
Please also bear in mind that while Linux technical skills can appear more expensive that those for Windows (and I would also argue that point) it is because usually the people who implement and maintain Open Source systems are better at making those systems do exactly what your business wants them to do, rather than what Microsoft tells you you should be doing.
TCO involves initial outlay, maintenance and value for money factors. It's not just limited to the cost of the shiney box.
I'm sick of this argument (Score:3, Interesting)
By freeing up money and making one sector of business more streamlined, by default another will open and the world will advance. It just happens that way. Sure automobiles put most horse and buggy makers out of business. But they created many jobs for producing automobiles. Eventually roads were made that still provides jobs.
Fact: IT departments are by far and wide the biggest money losing departments of businesses. They don't sell anything. They are cost centers. Open source can help alleviate that and allow for that money to be used on something else. In the long run, this will always be good and help new sectors grow. Those that fight this change will go the way of the horse and buggy maker. Those that retool their shops to embrace will reap the rewards.
free market assumptions (Score:4, Interesting)
Read these assumptions and decide for yourself, does free software or propriatory software fit the free market model the closest?
In my opinion many of the industries crying out in the name of free market economics are in fact the industries furthest away from these assumptions.
1. First, markets must be economically
competitive - meaning the numbers of buyers and sellers must be so large
that no single buyer or seller can have any noticeable effect on the
overall market.
2. It must be easy for new sellers to
enter enterprises that are profitable and easy for sellers to get out of
unprofitable enterprises, so that producers are able to respond to market
signals of consumers' wants and needs.
3. Consumers must have clear, informative
and accurate information concerning whether the things they buy will
actually meet their wants and needs.
4. And finally, consumers must be
sovereigns - their tastes and preferences must reflect their basic values
- their tastes and preferences, untainted by persuasive influences.
(source http://www.pl.net/6business/marrul.htm)