Wow, what a load of the blarney from the Irish Times on July 10. A rambling article that claims Microsoft (MSFT) aims to price itself into the “open source market” misleads at almost every level.
First, what’s fair got to do with it? Pricing to profit as in the author’s bread example is just one of many techniques, none of which has anything to do with the Queensbury rules.
Second, the demand for software is very quantifiable. We know almost all the variables beginning with a rough approximation of the population of the world, and companies and government survey incessantly to fill in the blanks. I can’t imagine which economists the author is talking to that would say otherwise.
I suspect the author or his or her source is mixing up the effect of software license pricing and overall price with various commercial vs. non-commercial demand scenarios. The price of software was traditionally bundled into something else such as a service contract, the price of a device or in the internal expense of running an information technology (IT) department. Market dynamics trended away from that approach for a few decades (1980s and 1990s) and then started trending back. But even at its peak, the trend of paying a separate license fee for software only accounted for a few percent of a person's or enterprise's annual investment in IT.
The two commercial open source success stories most closely aligned with the Irish Times author’s FLOSS philosophy nirvana—Linux and the Apache web server—basically displaced other pseudo-open-source efforts, UNIX BSD and the Netscape give-away-the-client-to-sell-the-(proprietary)-server marketing plan. Many other earlier efforts were not pure FLOSS but only because, although releasing source code freely was pretty common decades ago, it didn’t buy anyone much since all the underlying platforms required to run the code were proprietary. All that aside, it didn’t really affect Microsoft unless you want to argue, as Steve Ballmer probably does with his staff, that Microsoft could and should have 100% of the software market.
All other meaningful open source projects (the author mentioned Sun's (JAVA) MySQL but there are about 100) involve companies, not anonymous volunteers working away for the love of FLOSS in their attics. These companies cripple their “products” in the same way as the Microsoft examples offered by the author. Sometimes they do it literally by offering community and enterprise editions with different functionality and other times they do it via not servicing community editions the same way or at the same time that they service “QC’d” versions. That's not a criticism; that's business.
And although there are a few people that will buy only open source just as there are people that will only wear Italian shoes or drink French wine, most IT users mix open source and other—mostly Microsoft—software based on what they need done in their businesses or personal lives. Functionality rules. Very few people even consider the terms and conditions. They just click “I agree.”
Most important, take your pick: open source is either a culture (see http://www.ebizq.net/topics/open_source/features/10321.html?rss) or a set of terms and conditions (see http://www.ebizq.net/topics/open_source/features/9709.html), or both.
But it is not a market.
-- Dennis Byron
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