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Programming Software The Almighty Buck Linux IT Technology

Free Open Source Software Is Costing Vendors $60 Billion? 384

conan1989 writes to tell us that a recent report from the Standish Group is claiming that open source is costing the traditional software market somewhere in the neighborhood of $60 billion per year in revenue. "MySQL Marten Mickos has often spoken of 'taking a $10 billion market and making it a $3 billion market.' If you consider that open source has taken out $60 billion of traditional software revenues there will be a bloodletting in the proprietary world soon enough. It's a great time to be an open source company."
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Free Open Source Software Is Costing Vendors $60 Billion?

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  • by eldavojohn ( 898314 ) * <eldavojohn AT gmail DOT com> on Monday April 21, 2008 @11:44AM (#23144990) Journal
    I pointed this study out yesterday [] during the "Is Open Source the Answer To Giving? []" discussion and was promptly modded up, down, up, down, ad infinitum (probably because I was trying to merely provide the unpopular side/view of the issue but I digress).

    More importantly, you should pay attention to the several insightful and interesting comments that followed which point out French Economist Bastiat's Parable of the Broken Window [].

    Whether you hate it or not, it does no good to ignore this contempt that so much of corporate America holds for open source! Take the time to inform your boss or coworker who claims losses directly to open source efforts.
    • by someone1234 ( 830754 ) on Monday April 21, 2008 @11:52AM (#23145202)
      What is a loss for proprietary software providers is a win for former proprietary software users.
      And to be honest, the latter are a bigger group, since the former is soon to be only M$.
    • gratis or libre?
    • by camperdave ( 969942 ) on Monday April 21, 2008 @12:26PM (#23145978) Journal
      I don't think the broken window scenario applies to this situation. Nothing is being destroyed, so the question isn't one of having to buy something vs not having to buy it. The question is buying expensive vs buying inexpensive, which is simple supply/demand economics. I'd go even further, and suggest that the "loss" is fictitious. It is really an overestimate of the sales on the proprietary software vendor's part.

      If there is a loss anywhere, it's that only a fraction of the $60 billion is winding up in the pockets of open source developers. Granted, they're in it for the satisfaction of writing well written code, and the peer recognition that comes from that, but it wouldn't hurt for them to see some green from it as well.
      • by unlametheweak ( 1102159 ) on Monday April 21, 2008 @12:40PM (#23146324)
        There is no actual loss, but at the most a theoretical loss. One cannot lose something that one does not have. So yes one could say such losses are fictional because they never really occurred. One could say I lost money during the tech bubble because I never invested in etc when these stocks were rising quite quickly, but in reality I still have what I had before; which is basically no money.
        • by Shotgun ( 30919 ) on Monday April 21, 2008 @12:59PM (#23146730)
          If Windows 3.1 gets thrown away because Windows 95 is on the scene, and you have to spend another $100 for the same functionality, something was most definitely lost.

          Code is lost all the time in a proprietary world. Lost long before its usefulness is fulfilled. The end can come in the form of a large corporation buying out the upstart competition, a large corporation trying to keep you on an upgrade treadmill, or a small vendor letting a subpar product with some superb features dying off of natural causes. Regardless of the reason, in a world with open code, the community has the ability to retain good code. The closed world has an incentive to make sure your Windows all get broken on a periodic basis.

          • Re: (Score:3, Interesting)

            If Windows 3.1 gets thrown away because Windows 95 is on the scene, and you have to spend another $100 for the same functionality, something was most definitely lost.

            I think you are confusing amortization with actual economic loss. Of course anybody can always choose to destroy property (or even burn money), but this is a tangent to the overall argument. If you buy a faulty product then this may, overall, lead to loss but this is not inherently a 'loss' (you are gaining a faulty product after all. Deal with it.)

            I do sympathize with your arguments.

            Best regards,


        • by mr_mischief ( 456295 ) on Monday April 21, 2008 @01:01PM (#23146780) Journal
          Truthfully, the Open Source and Free Software probably hasn't cost proprietary vendors much at all. The people who want to pay for support contracts and warranties still do so.

          The biggest economic difference is that thousands or tens of thousands of businesses that never would have had a chance to start or that would have started deep in debt are now running software they didn't have to borrow to buy. People are running businesses on software in which they've made little or no investment above the cost of the hardware on which to run it.

          These people are loosening the labor market since they're not working for someone else any longer. They pay rents for office space, they need accountants either on staff or on a consulting basis, they need business insurance and legal advice, and they advertise. These are expenses they never had while they were employed elsewhere, and those companies that get paid for rent or for legal, marketing, accounting, or insurance services make more money.

          What's better in the long run? Is it better for a few dozen big and a few hundred small software vendors to make the money and grow bigger, or is it better for the money to be spread out among tens of thousands of businesses in thousands of communities?
          • by hasdikarlsam ( 414514 ) on Monday April 21, 2008 @02:26PM (#23148284)
            What's better in the long run? Is it better for a few dozen big and a few hundred small software vendors to make the money and grow bigger, or is it better for the money to be spread out among tens of thousands of businesses in thousands of communities?

            I don't know which is better economically, and I don't care. What I do know is that the latter scenario describes a more interesting world that I'd be happier about living in - that means more to me than any reasonable amount of money.
          • by ACMENEWSLLC ( 940904 ) on Monday April 21, 2008 @02:30PM (#23148348) Homepage
            >>Truthfully, the Open Source and Free Software probably hasn't cost proprietary vendors much at all. The people who want to pay for support contracts and warranties still do so.

            Are you kidding? Before Ethereal/Wireshark I paid $5000 for a packet capture package. This was about 12 years ago. We paid for software updates yearly. We had to have this type of software. Now I use Wireshark. That is a loss of revenue to that vendor. In fact, I'm almost certain they are out of business.

            I paid for DNS/DHCP software for Windows from Checkpoint for a few years (they were ports of BIND with GUI interfaces) until I became comfortable enough with *nix to go that route. That's about $10,000 of software and thousands in support. Checkpoint no longer owns META/IP..

            I paid for a proxy server from IBM. Now I use Squid. I don't want to tell you how much a Midrange (not PC) Proxy server costs.

            The point is, I am spending less in software. Thank god & finally. DOS use to be $60. Now Windows Ultimate is $500. IBM PC's were $2000+ in the early 80's. and now I can find them for $199 on the low end. I can buy a PC for less than the OS.

          • Re: (Score:3, Informative)

            Clearly, the more the merrier. It should be obvious at this point in time that 'Trickle-down economics' is a huge darkside lie that only damages an economy and enriches a few.
            • by mr_mischief ( 456295 ) on Monday April 21, 2008 @05:28PM (#23151124) Journal
              Trickle down economics works in some situations, but not all. Some company like Southwest Airlines or Intel employs a lot of people and makes their goods and services much less expensive than small companies ever could. It's good for the people needing the jobs, it's good for the people wanting the goods or services who couldn't afford them otherwise, and it's much more efficient to attack problems of scale with scale.

              OTOH, we have companies like Starbucks and Yum! Brands that give us monotonous flavor from sea to shining sea in lots of little locations. Markets like that would probably be better served by locally owned restaurants, but most Americans seem to like predictability.
              • Re: (Score:3, Interesting)

                by petermgreen ( 876956 )
                I can go into any mcdonalds and be pretty damn sure I can get something that

                1: tastes reasonable, not the worlds nicest but perfectly acceptable.
                2: will fill me up
                3: comes at an acceptable price.
                4: won't give me food poisoning.

                Sure a local place may be better than mcdonalds, equally it may be terrible. When you are already tired and worn out and in an unfamiliar place do you really want to risk having to eat a horrible meal or spend yet more time and money going somewhere else?
      • by B'Trey ( 111263 ) on Monday April 21, 2008 @12:50PM (#23146560)
        The question is buying expensive vs buying inexpensive, which is simple supply/demand economics. I'd go even further, and suggest that the "loss" is fictitious. It is really an overestimate of the sales on the proprietary software vendor's part.

        I agree. The question, in many cases, isn't buying expensive vs buying inexpensive, it's buying vs not buying. This seems to be using the same flawed reasoning that the BSA and RIAA use in estimating their losses due to piracy - that every instance of piracy translates directly into a lost sale. In this case, they seem to be assuming that every use of OSS translates to a lost sale of proprietary software. That simply isn't the case. How many businesses would make do with, say, Microsoft Access (which they likely already have) if they couldn't install MySQL or Postgresql rather than pay the thousands of dollars to buy Sql Server or Oracle?
      • Re: (Score:3, Insightful)

        this just progress. Much how somebody invented Robots to do repetitious welding tasks all day instead of Union workers that get tired and hurt. I'm sure the Robot makers don't get paid for the robot nearly what the 5 workers + OT + benifits + insurances the company would be spending. That's called Productivity in normal circles. Closed source is not as productive as open source. Look at it another way, MySQL is generating $10B in VALUE for $3B in COSTS... see it sounds way better that way!
      • Re: (Score:3, Insightful)

        by Vellmont ( 569020 )

        Nothing is being destroyed, so the question isn't one of having to buy something vs not having to buy it.

        The broken window fallacy isn't about breaking things, it's about not taking into account hidden costs. It's perfectly applicable to the situation, as the money NOT going into buying non-OSS software goes into something else (that produces more value).

        The question is buying expensive vs buying inexpensive, which is simple supply/demand economics. I'd go even further, and suggest that the "loss" is ficti
      • I think it applies the opposite way -- the fallacy of the broken window is that the shopkeeper is forced to spend money he otherwise doesn't have to. He spends money on the glazier, instead of the baker -- the glazier could then spend money on the baker.

        In this story, the proprietary vendors are the glaziers. The glazier may indeed lose business, but it is no cost to the economy as a whole, and it is a benefit to the shopkeeper, who can now spend money on things other than software.
    • by msauve ( 701917 ) on Monday April 21, 2008 @12:27PM (#23146006)
      If, instead of saying "open source has taken out $60 billion of traditional software revenues," the article said "open source has saved businesses over $60 billion in expense compared to traditional software," don't you think people might view it differently?
      • by bill_kress ( 99356 ) on Monday April 21, 2008 @12:47PM (#23146486)
        Exactly! It's actually fairly inflammatory and unnatural to say that it costs the software industry $60b, you pretty much have to go out of your way NOT to say that it is "Saving businesses $60b a year which, of course, is passed on to consumers".

        Not only that, but it is creating some fantastic zero-cost startups. How many small companies start with no investment at all on a few copies of eclipse, mySQL and a few other free products when their alternative is to either steal or pay licensing fees they can't afford?

        It must be hard coming up for excuses for your stupid stagnant products when free Open Source products are beating them in every way.

        I guess the only alternative is to start spreading some kind of FUD and try to get Open Source declared un-american or something. Maybe you could start out by buying a few articles in tech mags and somehow trying come up with some twisted view of it that might make it sound bad...
        • Re: (Score:3, Insightful)

          Perhaps Bastiat's "Candlemaker's Petition" would be more apposite, it deals with candlemakers protesting that the sun is cheap competition.
      • by ADRA ( 37398 ) on Monday April 21, 2008 @01:37PM (#23147484)
        The way I read the article, "taking a $10 billion market and making it a $3 billion market" means that the conglomeration and altruism of open source development models is 3.3 times more effective than traditional software development and excess revenues.

        Who can argue with that. Maybe that remaining 7 billion can be spent on curing cancer, or building a working fusion reactor instead of wastefully tossing it into an industry that apparently can't compete with 'inferior' offerings by open source purveyors.
      • by epine ( 68316 ) on Monday April 21, 2008 @02:09PM (#23147976)
        If that $60b were more evening distributed within the software industry, there would have been a much larger uproar about the impacts of open source on the economy.

        The wealthiest participants were determined to break the natural function of a marketplace to protect their own interests, and managed through their success to drive most of the talent into the "white market" of non-purchase goods, where at least some shelter exists from strong-arm market manipulation.

        I tend to refer to this kind of financial post hoc as an "entitlement benchmark".

        "If things had continued to go as we rigged them to go, maximizing our own benefit with no foresight or consideration for unintended effects, and the peons we squashed had remained powerless to get uppity about this state of affairs, we would have enjoyed another $60b/year in revenues by now."

        Well, good for you. Aren't you the same geniuses who collapsed the Grand Banks fisheries, and pumped the Ogallala aquifer dry? []

        Maybe its a good think that markets don't travel in the straight lines these projections presume.

        If there hadn't been any alternatives, the Edsel would have been one of the best sellers of all time. What would that prove? Only that you can paint a goose red, white, and blue, and capitalists among us will still wring its neck to upgrade from wealth into shameful excess.
    • by unlametheweak ( 1102159 ) on Monday April 21, 2008 @12:29PM (#23146046)
      The Broken Window fallacy is not directly comparable because it assumes "open source" is a negative. Open source software does not directly damage anything; it is however a competitor to other software, and more directly to closed source software. There is however no economic loss occuring (there is no broken window per se). The Broken Window Fallacy states that their are positive unintended outcomes (like the redistribution of wealth from repairing the window, etc) but in this case their is an overall economic loss (the loss of a window that is).

      With open source software there is no overall economic loss, but instead there are economic gains (assuming this open source software is in fact free of financial restrictions). The economic gains are seen (at the least) from the adoption and use of this software from people that could not or would not otherwise use such software; and so the standard of living (and quality of living) goes up overall throughout the population. The only downsides are that closed source software has competition (and competition is never a bad thing).

      Open source software (as with all things that are added to the 'market') creates wealth; the difference being that with closed source proprietary software this wealth is more concentrated (within the company that creates the software and the customers who successfully exploit this software for their own ends), whereas with FLOSS this wealth is (or at least has the capability of being) distributed more broadly throughout the population. Of course I'm not talking about 'wealth' from a purely monetary perspective, but from the economic perspective as wealth being a 'good' or a 'service'.
      • by Cedric Tsui ( 890887 ) on Monday April 21, 2008 @12:44PM (#23146394)
        You're absolutely right!
        The standard example I've seen in economics classes is that if you pay for a tow company to come boost your car, you gain benefit from it, and this is reflected in the GDP (a monetary index of the quality of life... sorta). If instead, you get a boost from your neighbour, you also benefit, but the GDP does not increase.

        This doesn't mean that paying for a service improves the national quality of life more than getting it for free. It simply means that money is a poor means by which to measure the quality of life.
      • by Znork ( 31774 ) on Monday April 21, 2008 @12:55PM (#23146652)
        The Broken Window fallacy is not directly comparable

        The fallacy in this case compares to this; copyright in combination with proprietary software forces people to pay for something they otherwise would not have to (breaks the window) (note that this applies to the current discussion when we're actually talking about OSS replacing proprietary software, but it is also appropriate when considering forced upgrades (but less when we're talking of proprietary software without replacements)). This creates a revenue stream, measured economic activity, for some vendors (window makers). When one engages in this fallacy one disregards that the cost came from somewhere; the people paying for the software when they were _satisfied with the previous version (free) or free version (also free)_.

        When they pay to replace something they were happy with they lack the funds to pay for more pots or pans, meaning someone else is losing the economic activity elsewhere, activity that would have created _new_ wealth.

        goes up overall throughout the population.

        That effect is more appropriately compared to the deadweight loss of monopoly pricing tho (revenue is maximized at a price level where some consumers are deliberately priced out of the market, but due to lack of competition, far, far above competetive price per unit).

        Combine the broken window fallacy and monopoly pricing and you can come up with fairly huge theoretical numbers that intellectual monopolies cost society. One could easily come up with calculations supporting indications that a quite significant percentage of GDP is lost.
    • DANGER! CAR ANALOGY! (Score:4, Interesting)

      by iainl ( 136759 ) on Monday April 21, 2008 @12:39PM (#23146278)
      Suggesting I didn't buy an enterprise Oracle license because I installed MySQL isn't just a Broken Window Fallacy. For the tiny purpose I needed it for, it's more like suggesting that because nobody has written my Peugeot off, Ferrari are out of pocket the price of a 612 Scaglietti.
  • by QuoteMstr ( 55051 ) <> on Monday April 21, 2008 @11:47AM (#23145062)
    This idea is an instance of the broken window fallacy []. If the money had to have been spent on proprietary software, it wouldn't have been used for other things. In the end, FOSS software is a win for us all.
    • Re: (Score:2, Interesting)

      by russotto ( 537200 )
      It's not quite a broken-window fallacy. Yes, if the money had to be spent on proprietary software, it wouldn't have been spent on other things, but that's still good for the software companies. A spate of broken windows doesn't help the economy as a whole, but it may help the glazier who repairs them.
      • Re: (Score:3, Interesting)

        by eldepeche ( 854916 )
        ...which would be the entire point of the broken window fallacy: Looking at the benefits to the party getting paid without realizing the opportunity cost to those who do the paying.
      • Re: (Score:3, Insightful)

        by WNight ( 23683 )
        That sounds just like the fallacy.

        Because the glazier makes out well, people assume the economy is healthy.

        However, their customers would have spent the money elsewhere if their windows were intact, spreading the wealth further and encouraging more creation.

        Because Microsoft makes money, people assume the economy is healthy.

        Microsoft, like the glazier, fixes the apparent problem (lack of w/Windows) but because it's a tax on computer usage, tends to slow down adoption and thus the economy.

        FOSS really is more
        • by TheRaven64 ( 641858 ) on Monday April 21, 2008 @02:31PM (#23148368) Journal

          Sometimes you want Atlas rockets, or Lamborghini, and the rarity of your solution means a commercial vendor is the best choice in the area
          And this does not discount Free Software either. If you go to a Free Software vendor then they will start from building blocks that already exist, saving the total development costs, and you will end up with the rights to do whatever you want with the final product. One of these rights is (implicitly) the right to go to competitive tender for maintenance costs, which is likely to save you even more.

          Free Software is just a reflection of the economic reality that creating ideas is more valuable than duplicating them.

    • Creation of Wealth (Score:5, Insightful)

      by Brain-Fu ( 1274756 ) on Monday April 21, 2008 @12:02PM (#23145440) Homepage Journal
      In theory, money exists merely to facilitate the barter system by providing an abstract representation of wealth. We tend to associate a high dollar velocity with wealth creation, though the two are not really the same thing.

      Open Source software is, by any reasonable definition, valuable. The individual programs are useful products that people want. Their existence makes the community (in this case, the whole planet) more wealthy. Therefore, open source is not the value-sink that its competitors would dress it up as being.
    • by tgatliff ( 311583 ) on Monday April 21, 2008 @12:13PM (#23145688)
      Exactly.. Modern day business does not see newer and efficient designs are better... They see it as a threat to their business..

      OSS from my experience only works in mature marketplaces. Meaning, you do not see OSS products going after fast moving software products such as Solidworks, etc... You only see it in mature slow moving companies... Meaning, OSS is just capitalism at work. :)
    • The Fallacy Fallacy (Score:5, Interesting)

      by fm6 ( 162816 ) on Monday April 21, 2008 @12:20PM (#23145848) Homepage Journal
      I think both you and the Standish Group are making a mistake I call the RIAA fallacy. That's the assumption that every time somebody gets something for free (or very cheaply) it subtracts one from sales of a more expensive equivalent.

      The truth is that cost often determines whether something gets purchased at all. If new cars are too expensive, people will make their existing cars last a year or two longer. (Or not replace their horse-and-buggy with a car, an insight that made Henry Ford rich.) People didn't even see the need for a personal computer until they became cheap enough for everybody to afford one. And if upgrading its IT is too expensive, a company will very likely make do with its existing IT.
  • Stupid. (Score:5, Insightful)

    by SatanicPuppy ( 611928 ) * <> on Monday April 21, 2008 @11:49AM (#23145098) Journal
    This kind of "Look how much money we're not making" is stupid regardless of who is espousing it. They're trying to prove a negative, and monetize a handful of nothing, and the sick part about it is that they honestly think that they're not completely crazy.

    This is just like the RIAA trying to put a dollar figure on money lost to filesharing, or the press trying to put a dollar figure on "productivity loss" based on this or that sports event. They just need to get a freaking life, and start trying to measure things that exist.
    • by JonTurner ( 178845 ) on Monday April 21, 2008 @11:56AM (#23145292) Journal

      It's not costing anything. It's competing. Very effectively, I might add.

      In the same frame of mind, I'd be curious to know if this group also considers IT a "liability."
    • Re:Stupid. (Score:5, Funny)

      by Karem Lore ( 649920 ) on Monday April 21, 2008 @12:02PM (#23145452)
      ME TOO! I have lost $94 million dollars last Friday ,and countless billions over the last few years, due to some other euromillions lottery players...
    • And just how much money have buggy whip manufacturers lost due to the automobile?
    • by MrNaz ( 730548 ) *
      Don't be ridiculous. Of course its true. It's just like the evil purveyors of that monstrosity that they call the "car" has put many a good, hard-working farrier out of business. Please, someone think of the farriers!
    • a $60,000,000,000 hole in public company's bottom lines is definitely a something, not a nothing.
    • Re:Stupid. (Score:5, Funny)

      by jollyreaper ( 513215 ) on Monday April 21, 2008 @02:26PM (#23148266)

      This kind of "Look how much money we're not making" is stupid regardless of who is espousing it. They're trying to prove a negative, and monetize a handful of nothing, and the sick part about it is that they honestly think that they're not completely crazy.

      This is just like the RIAA trying to put a dollar figure on money lost to filesharing, or the press trying to put a dollar figure on "productivity loss" based on this or that sports event. They just need to get a freaking life, and start trying to measure things that exist.
      Actually, it sounds an awful lot like the pimp smacking his ho saying "Look at all them people walkin' by with mah money in they pockets! Bitch, get out there and get me mah money!" Note that the pimp makes the assumption of ownership before any business has even transacted, he already knows the money is his and is furious that these "bitch-ass niggas" are still in possession of it.

      So to rephrase it: "Bitch, lookit them open source punks givin' it away fo' free! That's mah market segment, nigga! Damn, it's hard out there for a closed-source proprietary software company."
  • "Revenue" (Score:5, Interesting)

    by ookabooka ( 731013 ) on Monday April 21, 2008 @11:49AM (#23145118)
    I wonder how this revenue is calculated. Is it done the same way that RIAA calculates lost revenue? If I install Open Office on my laptop, that doesn't mean that I would have bought proprietary software and put that on there if there were no Open Source options. Plus, is this factoring in the lower cost to develop software by using open source utilities?
    • Re: (Score:3, Interesting)

      by immcintosh ( 1089551 )

      If I install Open Office on my laptop, that doesn't mean that I would have bought proprietary software and put that on there if there were no Open Source options.

      To be fair, I think that's a much safer assumption in this case than it is for music. Music is a luxury good, while word processors (and most other open source software) aren't.

      That said, all this latest round of petty bitching really amounts to is, "People are spending money on other goods and resources, when they clearly should be spending

  • In the long run, it has balance out somewhere. Money doesn't disappear. It's the old overused notion of squeezing a balloon again... we have to figure out where the bulge is.
  • pathetic (Score:4, Interesting)

    by Anonymous Coward on Monday April 21, 2008 @11:50AM (#23145144)
    Will they NEVER stop whining.

    It's pathetic.

    Oh, my God, we need more Microsoft programmers.

    Oh, my God, we need more h1b visa workers.

    Oh, my God, the programmers we displaced are competing with us and winning.

    • by mikael ( 484 )
      Every so often, there's a corporate interview in the business section of the newspapers, where the journalist talks to CEO or HR manager about the company. In the past, they would be boastful about how they would get 25 qualified engineers applying for each position and that they would only hire one or two. At least until the interviewer asked what happened to the other twenty or so. Do they disappear or don't they end up working for your competitors instead?
  • by toppavak ( 943659 ) on Monday April 21, 2008 @11:51AM (#23145152)
    that open source is saving those vendors' customers $60 billion.
    • Economics should be viewed in a dynamic way. People and companies saved money and used that money to either save, build an addition to their house, buy an iPod, hire new employees, etc., etc.
    • Re: (Score:3, Funny)

      by icydog ( 923695 )
      while true; do

      muahaha... my brilliant plan should be killing MS any minute now...
  • by Dan East ( 318230 ) on Monday April 21, 2008 @11:53AM (#23145218) Journal
    The wheelchair industry would be a $10 trillion dollar a year industry if people didn't have legs. But since people are indeed born with legs, it is a moot point.
    • by Sciros ( 986030 ) on Monday April 21, 2008 @12:24PM (#23145936) Journal
      Oh man you gave me an idea for a NEW JAMES BOND MOVIE PLOT! A villain who secretly owns controlling stock in big wheelchair manufacture/sale companies engineers a virus that keeps fetuses from fully developing legs. This way he would have at least an entire generation that would buy his wheelchairs, and he'd make a BAZILLION dollars! Also he would have a wheelchair-bound henchwoman who is really hot and at the end it turns out she can actually walk (and fight using mad karate skills) but James Bond knew this all along because he slept with her twice already.

      Genius plot.
  • by xxxJonBoyxxx ( 565205 ) on Monday April 21, 2008 @11:53AM (#23145224)
    Partial dup? Wasn't the $60B debunked yesterday? Anyway, as a software vendor that depends on MySQL, I think this "open source is cool" story was just put out there by Sun's PR team to deflect attention away from their accidental "even more of MySQL will be pay-to-play" in the future announcement. Hey MySQL, thanks for the help getting my product to market, but now it's time for some vendor independence; buh-bye.
    • Re: (Score:3, Informative)

      Good job not doing any research at all. Despite the sensational headline a few days ago, Nothing that is Open source in MySql will be close sourced in the future. They will introduce a few add on backup products that will not be open, none of which exist today. So if you are happy with the current MySql, nothing is going to change. You'll still have full access to the course code you have today and any and all improvements that come in the future.
  • New Math (Score:5, Insightful)

    by Dunbal ( 464142 ) on Monday April 21, 2008 @11:55AM (#23145268)
    That would be "costing other software vendors" in the same sense that the RIAA and the MPAA are "losing money from piracy". It makes the HUGE assumption that everyone who uses open source software is someone who would otherwise have purchased the "traditional" software. This is simply not true. However human beings are very good at pulling numbers out of their asses, and since politicians are used to talking shit, they readily believe these numbers.

          Wow, let's make a law that outlaws open source software, to "protect" the "traditional" software industry. At the same time it will fight terrorism (because terrorists use open source software) and help the children (because open source is BAD). Yes you sarcasm impaired mods, learn to spot it when you see it.
    • Re:New Math (Score:5, Interesting)

      by erroneus ( 253617 ) on Monday April 21, 2008 @12:09PM (#23145608) Homepage
      You beat me to it. The presumptions made by the statement are staggering.

      One of the presumptions I find most distasteful is the presumption that proprietary/commercial software vendors are somehow entitled to income from sales. I have issues with such business models in the first place. I don't believe they are entitled any more than I am entitled to a paycheck simply because I offer my services to the highest bidder as an employee. I get paid when I do work.

      F/OSS doesn't "cost" other business money and doesn't cause losses any more than natural competition between commercial competitors causes loss or "costs" a business its 'entitled income.'

      The slant of the statement is against F/OSS, but it's making a terrible argument against it.

      Among the things I like about F/OSS is that 'providers' of such are offering service and assistance to support the use of software they do not control. The user is in control which means there's no vendor lock-in and less incentive for the vendor to abuse the customer. This creates a business model where the vendor will actually have to WORK or offer something of value to the customer. In the case of commercial software vendors, the incentive is to do as little as possible and to guarantee NOTHING (read a EULA).

      What F/OSS does is cause competition that is hard for proprietary/commercial vendors to beat. That's "competition" and not a "cost" or a "loss."
  • by loafula ( 1080631 ) on Monday April 21, 2008 @11:56AM (#23145306)
    The title should read "Free Open Source Software is SAVING CONSUMERS $60 Billion" It is not costing vendors a dime.
  • Bullshit (Score:5, Insightful)

    by sm62704 ( 957197 ) on Monday April 21, 2008 @11:57AM (#23145318) Journal
    A lost sale is not a cost. You could just as easily say that Microsoft is costing Red Hat money by selling server OSes. That would be as ludicrous.

    I imagine that the local bands selling their CDs for five bucks apiece is costing the RIAA labels tons of money too. Know ahet? I consider it a GOOD thing.

    I also consider it a GOOD thing that free software "costs" Microsoft money. Because, you know, I hate their software, I hate their business methods, and frankly I don't care too much for Gates and Ballmer.

    Your bad is my good. Costing you? Well GOOD! Well done, FOSS! Here's to you kind sirs!
  • by WibbleOnMars ( 1129233 ) on Monday April 21, 2008 @11:57AM (#23145320)
    You can say anything with statistics, particularly when you're trying to show how much something costs.

    I can take that exact same stat, and say that it's given businesses a $60 billion saving. Just think how much more competitive our businesses are now that they're saving all that money!

    So you see, it's a double-edged sword: a cost to one person is a saving to another.

    The fact is that when you start talking about that sort of money, it's never actually as clear-cut as a single statistic can make it sound. Anyone who does try to boil it down to a simplistic headline like that is almost certainly trying to put their own spin on it. (and yes, that includes me)
  • by mikesd81 ( 518581 ) <> on Monday April 21, 2008 @11:57AM (#23145324) Homepage
    Okay first off, a better article than link in summary: Marketwire article []

    Now as for seeing the actual study: The Standish Group's "The Trends in Open Source" report is available free of charge to Standish Group subscribers. Non-subscribers may obtain copies directly from The Standish Group at: [] for $1,000 per copy.
  • The cost is a fallacy. But even assuming that was true, how many industries does Open Source allow?

    ebay? Amazon? Google? Redhat? IBM? Many other shops gain efficiency from using Opensource (certainly in finance and healthcare).

    Or to make a bad car analogy: How many billions in buggy whip manufacturers or buggy makers were lost to the automobile? hmmm? Or is the efficiency of the car a net gain on the horse drawn carriage?
    • Well, there is less horse crap in the streets. That's a big net positive. Nothing like fecal matter in the streets and poor sanitation to reduce life spans.
  • e.g. debian (here with sarge so the numbers are not completely up to date): 230 MLOC = about 9 GigaDollar

    when the report says that this costs the vendors about 60GigaDollar/year it just shows how extremly inefficient comercial production in the capitalist system is.


  • by KC7GR ( 473279 ) on Monday April 21, 2008 @12:02PM (#23145434) Homepage Journal
    Specifically, the closed-source software vendors.

    Consider: No matter how much marketing you have, it is ultimately up to the end user of a product to decide if they've gotten the value they expected to get. If said user finds that the closed-source product they paid (possibly) big bucks for isn't worth the media it was recorded on, they're going to cut their losses and try something else.

    Alternatively, there are many small businesses that simply can't afford the kinds of prices that closed-source vendors often charge. I know this for a fact, because I'm one of those tiny businesses! If not for FreeBSD, [] Apache, [] and Postfix, [] to say nothing of the surplus hardware market, I would never have been able to get my Internet presence [] off the ground.

    It's not just Freeware, either. How many of us have found low-cost Shareware products to be incredibly useful for the stuff we do, when comparable commercial products would have nearly required a second mortgage? Hex Workshop [] is, I think, a great example.

    If that $60 billion figure is accurate, the commercial software vendors have no one but themselves to blame. Oh, there are some good values Out There, yes, but I think they've been largely drowned out by the flood of questionable products that are turned out with far more marketing than quality engineering.

    Happy tweaking.
  • by yet-another-lobbyist ( 1276848 ) on Monday April 21, 2008 @12:02PM (#23145436)
    We just completed a study for a company selling bottled oxygen: the free availability of air on the planet causes them losses in the neighborhood of $866 billions in revenue -- annually!
  • And how much...? (Score:4, Interesting)

    by OpenSourced ( 323149 ) on Monday April 21, 2008 @12:04PM (#23145500) Journal
    Has anybody done an study on how much is generating for the users. Of course we have those same 60 billions saved. But I mean not only by direct savings in licenses, but by novel uses in places where licensed software would be uneconomical, new business that could not have been created otherwise, etc.
  • Another Fallacy (Score:5, Interesting)

    by w3woody ( 44457 ) on Monday April 21, 2008 @12:06PM (#23145546) Homepage
    Another fallacy that is often used in reports like this or reports on software piracy is the idea that every copy that is floating out there for free would have been paid for if the software was somehow not available for free--either legitimately through FOSS or illegitimately through piracy.

    That's simply not true.

    For example, I can download Apache Derby for free and have a SQL engine for my various projects. Had Derby and MySQL and the like not been available, I wouldn't go out and buy a SQL product--chances are, I'd home grow my own custom database. For many of my projects SQL is overkill, but because its free, I may as well use SQL than a couple of fixed-width flat files--even though fixed-width flat files would probably work just fine.

    Back in the 80's I knew a fellow who collected pirated software. He never used the software--he just collected it because he thought it was cool. Realistically, had it been impossible for him to collect software he would have never bothered. So realistically speaking while he had thousands of dollars of pirated software on his computer, because he never used it or had any need for the software he copied (it was just a weird hobby of his), he would never buy the software even if it was impossible for him to otherwise obtain copies. So he never represented a sale to the software makers whose wares he was copying.

    One also has to wonder what economic benefit has arisen from FOSS. While its true that, for example, I'd hate to go into the database business--it's a complicated business and there is no money to be made because of MySQL and Derby and other free database engines out there--end-user applications seem to be thriving. "Infrastructure" software--stuff like databases and web servers and the like have become free, and going into a business to sell a $10k software solution to compete against Apache Tomcat would be silly. But on the other hand, how much value has been built on top of that infrastructure that simply wouldn't exist if that infrastructure was expensive and the barrier to entry high?
    • Had Derby and MySQL and the like not been available,

      Somebody would have written a free-ish SQL had not the likes of MySQL been available. FOSS developers aren't really good innovators(*) but they are darned good engineers and implementors and somewhere out there, somebody will be making what starts as a free clone of some sort of a popular RDBMS, and then evolves its own philosophy.

      (*) By that, I mean, FOSS people aren't going to come up with some literary vision of computing, but, once they have a spec, t
      • Re: (Score:3, Insightful)

        by jedidiah ( 1196 )
        People in general aren't great innovators. Most "best of breed" products are just
        rehashes of someone else's idea. They're cloned or bought from others who may or
        may not have had any part in "innovation" either.

        Innovation is just a buzzword used to sell pointless upgrades and justify
        uncivilized business practices.
  • Whether to adoopt FOSS is a choice that organisations have - no-one forces them to use it, or to purchase non-free tools.

    The main point is that it provides an alternative. So far as industry goes, the lifetime cost has nothing to do with the purchase price, it's embedded in the need for support, the cost of making changes, training (whether explicit, or implicit) and the platforms needed to run it over the software's life.

    For these reasons the choice to go with software they can download for free, as oppo

  • by Starky ( 236203 ) on Monday April 21, 2008 @12:15PM (#23145724)
    Of course, that means the open source vendors are providing over $60 billion of additional value to customers, who are able to divert whatever would be spent on proprietary software to more productive use.

    In other words, it is making the overall market more efficient. That's just Economics 101.

    For those who try to spin this as some sort of problem, can you imagine if a single company owned a patent granting them exclusive rights to produce what Apache provides for free? The gains to said company would pale in comparison to the astronomical loss to the overall marketplace.
  • They claim a 60 billion dollar loss - but I would pose this question: how can you lose something that you never had?

    It is, after all a free market. Consumers are free to judge the competing products on their merits and those consumers are selecting open source products more and more. This is what competition is all about, right? So if those traditional software companies would like to remain competitive they'd better get busy and develop products that suit the market's desire.

    Those traditional software co

  • Disruptive technology (OK in this case a biz model) is always a motivator for innovation.

    I'd rather the big boys were competing with $0 than within 10% of "what we choose to charge".

    I love my OSX but I want Ubuntu etc. breathing down the necks of Mac and Win. I'll either switch at some point or get a better functionality or value in an OS out of one of those.

  • In other news ... (Score:3, Insightful)

    by Rhabarber ( 1020311 ) on Monday April 21, 2008 @12:25PM (#23145962)
    - Non-Smoking is Costing Toback Industry $1200 Billion.
    - Healthy Food is Costing McDonalds $4.2 Trillion.
    - Singing is Costing RIAA $5.4 Quadrillion.
    - Islam is Costing Jack Daniels $43 Billion.
    - You not Giving Me You Money is Costing Me $120.000.

    You name it ... (f*&k cnet btw.)
  • In related news, the Sheriff of Nottingham has announced that poverty has increased 600% since Robin Hood arrived. "The lack of money in the King's treasure vault is more than enough proof that poverty has invaded our glorious country", he said.
  • by psbrogna ( 611644 ) on Monday April 21, 2008 @01:59PM (#23147804)
    As other's have pointed out in several ways, losing revenue to competition is not a cost. Putting that aside for the moment, I do think the soft cost of some of my proprietary sw choices over the years is a true cost. Let's say an IT staff spends 15% of the year dealing with the short comings of proprietary sw... if we tally that across the industry, I bet it's not that small a cost (even relative to imaginary $60 B loss). How much time has been spent dealing with mal-ware due to a particular OS (or its associated email clients) being insecure? I suspect that time represents a HUGE cost.
  • Costing == Saving (Score:3, Insightful)

    by Bert64 ( 520050 ) <bert AT slashdot DOT firenzee DOT com> on Monday April 21, 2008 @02:02PM (#23147856) Homepage
    It may be costing the "traditional" software market 60 billion a year in revenue...
    But consider therefore, that it's saving customers 60 billion and possibly a lot more (less costly for customers to maintain license compliance etc).
  • Thats silly (Score:3, Insightful)

    by Shados ( 741919 ) on Monday April 21, 2008 @02:26PM (#23148288)
    Disclaimer: I'm far from an open source zealot, and while I've been 100% free software based for years, I'm currently 90% commercial software, both at home (which I personally paid for every single bit, not a single pirated software) and at work.

    Seriously... thats silly. Open Source just diversify the market. Instead of SQL Server and Oracle saturating the market with a poorly suited solution, you have PostgreSQL and MySQL (and more) catering to a segment of the market which doesn't require SQL Server and Oracle, and let the big names (I use those 2, there's more) commercial ones fill up the rest of the market, or force them to add more value (for example, ETL, Datawarehouseing, etc) by making basic feature a commodity (if all you need is flat tables to run SQL on, you don't need Oracle).

    So really, Free Software isn't taking money from anyone... they just force market expension. If free databases didn't exist, the commercial databases would have less features than now, and going after a smaller niche, to sell probably exactly the same amount of licenses as they are selling now.
  • In other news... (Score:3, Insightful)

    by J.R. Random ( 801334 ) on Monday April 21, 2008 @02:39PM (#23148528)
    The development of the automobile is costing the traditional blacksmith industry an estimated $3 billion a year.
  • by bestinshow ( 985111 ) on Monday April 21, 2008 @02:42PM (#23148566)
    I guess you could say that the $10b database market didn't grow to that amount because of open source, but only if you're counting a loss of revenue per website hosted on MySQL (or each MySQL installation). However those websites wouldn't have existed if they had to pay for MySQL, or they would have used plain text databases, or some other technology.

    A company moving from Oracle to MySQL should have its head examined.

    On the other hand without MySQL, PostgreSQL, etc, Oracle and MSSQLServer could have far higher licensing costs that aren't actually a fair reflection of their value to the market. Oracle is still a stupidly high price, but there is OracleXE now.

    It's survival of the fittest. Database costs were so high in the past, people felt it necessary to write alternatives, and over time those alternatives improved to be competitive because there was such a demand. This means that the market was never $10b in value, only in price for a short time until the unsustainable price created competition that brought the market down to its true value.

    Oh, i'm wittering here now and someone who's studied finance and business will shoot me down anyway.
  • by walterbyrd ( 182728 ) on Monday April 21, 2008 @03:36PM (#23149412)
    One the one hand, proprietary companies scoff at F/OSS, claiming that F/OSS market share is insignificant. On the other hand, proprietary companies claim F/OSS is killing their revenue stream.

    Which is it?
  • Hubris (Score:3, Insightful)

    by bitspotter ( 455598 ) on Monday April 21, 2008 @04:42PM (#23150442) Journal
    Only aspiring monopolists count their competitors' revenues, and their customers' savings, as "losses".

  • by StormReaver ( 59959 ) on Monday April 21, 2008 @05:24PM (#23151054)
    The alternative title which says the same thing is: "Free Open Source Software Is Saving Companies $60 Billion A Year".
  • by camomilk ( 1038262 ) on Monday April 21, 2008 @06:24PM (#23151808)
    Do you know how much money home cooked meals are costing the restaurant industry?

I am more bored than you could ever possibly be. Go back to work.