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'Creative destruction' and the future of the software industry

By Anthony L. Awtrey, I.D.E.A.L. Technology Corporation on July 23, 2004 (8:00:00 AM)

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The way that software is being produced and acquired is changing rapidly. The availability of high quality software, often for no licensing costs and with very user-friendly license terms, is challenging commercial companies producing products in the same software category. This new type of software is called either Free Software or Open Source Software (it will be referred to in this document as Free/Open Source Software) and is being attacked by the incumbent software product vendors as if it were a threat to the free market itself. The software industry is actually going through a well-known free market process that was first identified by the famed economist Joseph A. Schumpeter in 1942. It is called the process of creative destruction.
“The opening up of new markets and the organizational development from the craft shop and factory to such concerns as US Steel illustrate the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one ... [The process] must be seen in its role in the perennial gale of creative destruction; it cannot be understood on the hypothesis that there is a perennial lull.”

Quote from “The Process of Creative Destruction” by Joseph A. Schumpeter, 1942

Commodification exists in every market, and its tenets are practiced daily by successful businesses. The cliches, “Don't reinvent the wheel,” and, “Time is money,” were born from a drive to reduce tasks to their lowest common denominators; to be fast and efficient; to commodify. Through the process of commodification, old ways of doing things are improved and new innovations are forged upon existing commodity building blocks. This process is healthy for the market and provides consumers with economic security. Software that meets the most needs will have a strong commodity presence that will provide the foundation for future innovations.

Wise companies are positioning themselves to take advantage of the disruption, inevitable market expansion, and opportunity that commodification brings with it.

Commodification and Software

Thomas Edison did not invent the light bulb. He improved the invention and successfully marketed it, along with his electric power distribution model, but the incandescent filament bulb and its predecessor, the arc light, were around for about 50 years prior to Edison's design. The current market for light bulbs is still dominated by the legacy of Edison's old company in the form of General Electric, but many other companies including Sylvania and Philips compete for market share in this commodity market. Free market forces have produced standardized light bulbs and sockets which allow many different bulb and fixture manufacturers to provide a variety of interchangeable lighting products to meet consumer demand.

Producing a software product and bringing it to market is different when compared to doing the same with a typical manufactured good, but the process of commodification in software still has many of the hallmarks of other kinds of products.

One obvious theme carried over to software is the necessity to have agreed-upon standards as enablers. Software development standards can be languages like C++ or Java, frameworks like CORBA or even communications standards like 802.11 and TCP/IP. As with any other commodity, the value is not really the standard itself, but rather the value network it creates when it is widely used. Standards support modularity and fungibility, which allow competition to fuel innovation, improve product quality, and provide price pressure.

A common element of commodification seen in manufacturing is this commodity-driven modularity and fungibility. Manufacturers must continually strive for and improve upon efficiencies in production.

Modularity and fungibility provide a means for manufactures to develop repeatable, well-oiled processes that result in the most-efficient, cost-effective methods to produce the next widget. However, this involves large capital outlays for property, plant, equipment, and people. The next widget off the line always comes at a marginal cost. In contrast, software “manufacturing” does not have the same physical resource constraints to production or delivery. Software can be downloaded from a website thousands of times without any significant resource use. The modularity and fungibility of commodity software, combined with the absence of large upfront investment, enables fast market entry and rapid innovation that is difficult for manufactures of tangible goods to emulate. In addition, manufacturing markets generally only have two primary participants: The manufacturer and the consumer. In the software industry, it is much more common to have varying categories of producers, consumers and, most often, combinations of both. It is this last category, user-developers, that drives Free/Open Source Software development and software commodification.

The Stirring Breeze

When a company such as Microsoft attacks Free/Open Source Software products and methodologies, it is attacking and alienating people who might be valuable customers and partners. When commercial software vendors abuse software, communication, and data standards with proprietary extensions in an attempt to hijack the value network surrounding these standards, they are contributing to and accelerating their own extinction. Many companies and individuals that develop and support Free/Open Source Software do so not only because it is less expensive in the long term, but because it allows them to regain control over the critical software value network that vendors have abused for years.

Commercial software vendors are fighting the commodification force that Free/Open Source Software represents. They are starting to feel the stirring of the breeze that will soon become Joseph Schumpeter's gale. These changes do not necessarily mean that those software vendors will go out of business; like Edison's legacy in General Electric, they will be transformed and tamed by the market in the face of new competition that leverages commodified software tools.

Consumers today are finding that using modular, standards-based Free/Open Source Software is less expensive than investing in a relationship with a software vendor that makes monolithic, proprietary products. Forward-looking technology consumers are not only taking advantage of the availability of general-purpose Free/Open Source Software, but are asking how to accelerate the process of software commodification in more specialized areas of software development.

Free/Open Source Software has demonstrated its value in the market through successful projects including the Free Software Foundation's GNU Project, the Linux operating system, and the Apache Web server. The existence of these products has not immediately destroyed the value of similar commercial products, but it has created a layer of commodity functionality that is available, usually for free. If a software vendor would like to charge $150 for their operating system, they must now offer a significantly better product than the Free/Open Source commodity version.

The Impending Gale

With each iteration of disruptive change that sweeps though a market, old ways of doing things are improved, new products are introduced, and more products in the market become commodities. The computer and software industry has already seen at least two such commodity disruptions. The first obvious disruption came with the invention of the personal computer, which allowed users to interact more directly with their computers. The second happened with the rise of the Internet and the commodification of network protocols, tools and software, which allowed users to communicate and share data no matter what computing platform they used. The current iteration is bringing disruptive changes to the market for application development tools, operating systems, and office productivity tools.

With each cycle of disruptive change, the computer has moved closer to the user and allowed users greater control over their ability to create and manage data essential to their lives. Each cycle has also relied upon the presence of the enabling standardization of hardware, interfaces or networking protocols from previous cycles. Each cycle incrementally creates another set of commodities, which in turn provide the foundation for the next wave of disruptive changes. Ubiquitous personal computers created the market interest for networked communication to share data. Commodity personal computers and networked communication created the opportunity for worldwide, distributed software development, which has enabled the existence and proliferation of the current Free/Open Source community.

From the beginning, Free/Open Source Software has been about solving immediate problems. The idea that someone is dreamily writing code thinking about the good they are doing for humanity is a myth. The reality is much more pragmatic; the people who have the problem are responsible for solving it.

Before the Free/Open Source Software movement, they could purchase software to solve their problem from a vendor or write the solution entirely from scratch. Now, with freely available software development tools and operating systems to run them on, people are busy forming communities to help solve their problems. Companies and people who needed a good web server worked together to build the Apache web server. Companies and people who needed a solid operating system worked with Linus Torvalds to develop the Linux kernel. With the tools to solve problems freely available, and if enough people have the same needs, a Free/Open Source community can be quickly built. If vendors want customers to buy their product instead of investing in the development of a competing Free/Open Source solution, they must offer real value, fair licensing, and honest pricing. Alternatively, the vendors can embrace the philosophy of freedom and start the community themselves.

Developing software using Free/Open Source tools and a collaborative model gives customers more economic security. In one real-world example, the most popular implementation of the X Window system is a project called XFree86. The leader of the XFree86 development team recently made changes to the XFree86 license that would have arguably placed unwelcome burdens on users and distributors of the software. People who disagreed with the decision took code from before the license change and started a new development effort. This new development effort, called XOrg and hosted by FreeDesktop.org, is already in full production and is attracting support from most popular GNU/Linux distributions. This is an economic version of “natural selection."

As the market continues to embrace this model of development, the software that meets the most needs will have strong commodity presence. Free/Open Source Projects like OpenOffice.org and the K Desktop Environment are gaining more recognition every day. They are sponsored in part by commercial companies looking to satisfy their own needs and, as a result, are producing software to satisfy the immediate needs of many, many people. The fact that these Free/Open Source products exist separately from any specific vendor means that customers can get competitive bids for support, offer requests for proposals to have features added or even specifically hire staff to work on leveraging and customizing these products.

The most exciting part of the commodification process is that each cycle of disruptive change is usually accompanied with a tremendous market expansion. This expansion was seen when the VCR was introduced and spawned several billion-dollar industries. It happened again when three senior managers left Texas Instruments in 1982 to form Compaq Computer Corporation and helped ignite the personal computer revolution. It happened again with the commodification of networked communications and the Internet.

In the current software revolution, savvy companies are squaring their sails to capture the anticipated gale brought by Free/Open Source Software. Unlike the dot com boom, this expansion will be real, with well understood economics at work creating value -- and shifting the rules of the software market in favor of the consumer.

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on 'Creative destruction' and the future of the software industry

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Article completely misses the point.

Posted by: Anonymous Coward on July 23, 2004 06:03 PM
Changes regarding jobs and source of revenue in the past has never meant that people are unpaid, just that the businesses change.

There really is nothing to compare with in this case, it's unique.

Open source means that the people making software is unpaid, not that they are paid in another way. For most software there exists no support or service businessmodel. Most open source authors work for free. It's the free labour itself that makes it free for the end user.

Sure, there are specialized service&support companies like IBM but they don't pay for the development anyway. It's a different line of business, it doesn't have anything to do with development.

It doesn't matter if you make proprietary or open source software: You are not going to be paid, in any way, no matter wich.

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 23, 2004 06:56 PM
IBM (and others like Novell) do have developers on their payroll working on open source software. Even without holding the copyright and being able to sell the software as their own, there is still significant value to the business in being able to market solutions based around high quality open source software.

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Re:Article completely misses the point. NOT

Posted by: David Turnbulll on July 23, 2004 08:06 PM
Actually it is you who missed not only the point, but the boat as well.

It is known that the bulk of OSS development is funded by companies now a days. IBM, SUN, HP, Novell, Red Hat, Linspire, Xandros, Mandrake, etc. All are paying developers to work on and give away software int the OSS community as their full time job.

You are correct as their really is no basis to compare as this is a unique change, Then again Software is a unique concept. The selling of software is also unique. it takes time and effort to create, yet it can be reproduced trillions of times for nothing.

So if it costs a million dollars to develop some piece of software, and you sell a million copies of it, do you charge $199 a copy, or $2 a copy and double your money. hardware, has been commidtized, Software has been kept high due to artifical support by monopolies.

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 23, 2004 08:56 PM
Sounds like a little astro-turfing to me. Either that or you're an idiot who doesn't really get economic theory and doesn't know how the OSS community is working right now. Software may be unique in some ways, but its not as unique as you're assuming.

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 23, 2004 09:23 PM
As others have said, it is you who misses the point (if not the boat). You seem to have fallen for the "free as in beer" argument over F/OSS. I suggest you read RMS's very cogent explanation of one business model that can (and does) work for F/OSS. And makes very clear that it's "free as in speech, not beer". Just ponder this. When it comes to support, installation and enhancement, who is likely to be best-placed to bid competitively for such work ???

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 23, 2004 09:46 PM
HE does not miss the boat. YOU (and RMS) miss the boat. Who would/should take economics lessons from somebody who lives/lived in their taxpayer-subsidized MIT office? This is just like believing the politics of either Barbra Streisand or Charlton Heston.

There is "creative destruction" (ala Schumpeter) and "destructive destruction" (dumping, cost-shifting, etc.). "Free" software is just like what MS did with IE (cost-shifting from Windows/Office to IE to suck all the money out of the browser market). The free software cure to the MS monopoly, which the government should've fixed, is worse than the disease.

If you think you're going to compete on support with a First World cost structure with others who have a Second or Third World cost structure, you are smoking crack.

In case you think I don't know anything about computers, I have an MIT CS degree (Course Six still sucks, btw). In case you think you know more about business, I founded a cash-positive, multi-million dollar software product company. If you haven't done these things, you are an armchair quarterback. If you haven't had to worry about people's jobs, health care, and payroll, you are deluding yourself into thinking you understand the micro and macro economic issues.

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 23, 2004 10:32 PM
I founded a cash-positive, multi-million dollar software product company. If you haven't done these things

You wouldn't be just a tad bit biased and dare I say defensive yourself would you? I know you'd dearly like to charge 20 billion more times for problems that were solved 30 years. THAT drives FOSS too. Once a problem has been solved once in software, the price to solve it again thereafter is limited to porting the solution forward.

FOSS isn't going away. Even lawyers aren't going to make it go away. I write something out of my own time and sweat and Mr. MultiMillions is going to tell me what I can do with (switching to language you can understand here) MY Intellectual Property? For the moment, stamping out CDs is damn near printing money. That is no end of fun I'm sure but do you REALLY think that can last short of extreme lawyering and corruption calesthenics?

This one is a hoot:


If you think you're going to compete on support with a First World cost structure with others who have a Second or Third World cost structure, you are smoking crack.


The proprietary vendors are falling all over themselves to send both development and support to places like India. What makes FOSS so damn special in this regard? Well there is that irrating realization that FOSS frees you from sending your money to foreign vendors and trusting all your data to them. NSAKEY anyone?

the free software cure to the MS monopoly, which the government should've fixed, is worse than the disease.

Given standardized data/comm protocols and commodity hardware, FOSS is inevitable. MS behaving like a raging bull in a china shop only accellerated it. You could 'outlaw' FOSS but there is nagging little detail called 'Free Speech' that a lot of people don't want to give up. Remember MY Intellectual Property?


  I know you're all defensive and sore about this but you aren't entitled to the way things are staying the way you are. You're like an oxygen manufacturer getting all pissed off that people don't want to pay to breathe the free stuff.

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 23, 2004 10:55 PM
Ah, yes. Another armchair quarterback.

I never said FOSS is "going away." I said it is self-destructive to those in the software industry. Foregoing a competitive advantage (location for a restaurant, IP for a software company) is economic suicide. Go read "The Discipline of Market Leaders." Foregoing "product leadership" (where you can both capitalize upon your IP and leverage it into service work if desired), and releasing source code so that you must compete upon the basis of "operational efficiency" and enabling competitors by giving them your source code starts a race to the bottom.

Software costs are substantial in terms of "porting the solution forward" -- go read Manny Lehman's work on software complexity, and marginal effort to produce marginal progress.

With regard to sending development and support to India, we do not do that, and we are only able to avoid trying to compete upon operational efficiency BECAUSE we retain our IP. When we do foreign jobs, it is kind of counter-intuitive, but we have great success selling product, and limited success selling labor due to order-of-magnitude differences in cost structures. If our products were open source, then we would incur costs for developing them, and never realize revenue for so doing.

FOSS may be inevitable only because of the market's reaction to a monopoly ("the enemy of my enemy is my friend" -- but sometime's it's not true -- Stalin vs Hitler, Stallman vs Ballmer/Gates). I do not advocate "outlawing" FOSS except in the case of taxpayer-supported efforts covered by anti-commercial (aka "polluting") licenses such as the GPL. Taxpayer supported work should be either public domain, or MIT/BSD licensed.

With respect to "standardized data/comm protocols," go read "Computer Wars."

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 24, 2004 04:33 AM
well, as I can see this is a fundamental difference between you, Gates, and others worrying about Multimilion Profits for themselves and others trying to create economic value in productive and working software. It just also happens that 'we' don't really like you to use our labor for completely free and ask for contribution, not competition (as MIT/BSD licenses do).

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 24, 2004 04:38 AM
"I do not advocate "outlawing" FOSS except in the case of taxpayer-supported efforts covered by anti-commercial (aka "polluting") licenses such as the GPL. Taxpayer supported work should be either public domain, or MIT/BSD licensed.
"

And why are you worrying about taxpayers' money, you're not the one who pays most taxes anyway.

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 24, 2004 11:09 AM
I do not advocate "outlawing" FOSS except in the case of taxpayer-supported efforts covered by anti-commercial (aka "polluting") licenses such as the GPL.

Then why is it that when a business wants to open something up for strategic reasons they use the GPL? Sun could have put OpenOffice under the BSD license but that would have given their competitors a free-for-all. What you call "polluting", we call "anti-leeching". MS has said more than once that they approve of the BSD license. The reason why is obvious. MS can leech off it and give nothing back. Could it be you don't like the GPL because it lets me share without doing YOUR work for free?

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 26, 2004 04:53 AM
If those methods are so self destructive, then why did they work so well for the Japanese auto makers when they started selling their wares in the USA? Why did the US automakers have to learn to play the same game or go out of business? All but 3 went out of business, and one of those has now been sold to a German company that could make the system work. What's more, now your more likely to get a car made in the USA if you buy from the Japanese car maker Honda, than if you buy from General Motors or Ford.

What does all this have to do with Free/Open Source software? Just this -- Japan, and their auto making companies cooperated on the engeneering and development of auto technologies, and then competed on packaging. Each US automaker was doing it's own complete engeenering work for itself, and they couldn't compete.

Free/Open source software is doing this same thing all over again. Give away the research and development, and then compete on packaging(service or whatever else it is that distinguishes you from the crowd)

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 23, 2004 10:32 PM
"I founded a cash-positive, multi-million dollar software product company. If you haven't done these things, you are an armchair quarterback"

And the article's author appears to run a successful consulting company that only works with Open Source software. So what?

Having success in business does not always require following the same paths that everyone else has taken. I won't hold the fact that you can't seem to understand what so many really smart people intuitively grasp about Open Source against your school MIT.

Software development in the Open Source space may not be directly monitized (i.e. proprietry commercial software, per seat licenses, etc.), but does NOT mean that the customer is not still paying for the value they recieve. In fact, like the article pointed out, most people who are looking to solve a problem are sharing costs to develop the solution *instead* of paying a vendor.

You are certainly a good troll. Microsoft and SCO must be getting more concerned to pay an astro-turfer like you to get out here where the grass roots are.

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 23, 2004 11:04 PM
Given their client list, I suspect they are largely defense driven...

http://www.idealcorp.com/About/OurClients/

DoD contracting is a peculiar little sub-economy in which is largely cost-insensitive. They are used to buying labor and not product.

DoD contractors often play the "open source" card so they can justify CPFF (cost plus fixed fee) contracts in the face of COTS (commercial off the shelf) competition. Open Source (in DoD circles) is a trendy marketing buzzword unsupported by cost-saving arguments (typical deployments of DoD software are usually too small to justify NOT amortizing development costs over a larger customer base, and a COTS company seeks to do so in ways a CPFF shop does not).

With respect to being a good troll, have you run a successful software business? If not, who is the troll?

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Re:Article completely misses the point.

Posted by: jdearl on July 24, 2004 12:23 AM
One of the major benefits of Free Software is that it allows you to take an existing product, customize it for a client, and deliver a customized solution for the same cost as a generic COTS application. DoD contractors would be stupid to pass up an opportunity to use Free Software to successfully compete against corporations many times their size.

Another funny thing about Free Software is that once you pay to have the software written you can use that software however you want. With COTS software if your project goes well, and you want to expand it to other departments you have to cough up a fat pile of money for licensing fees. With Free Software you just hand out CDs to the interested parties. That basically guarantees that successful Free Software projects spread like wildfire.

Open Source is currently a "trendy marketing buzzword," but tomorrow it could very well be the status quo. Free Software is already a huge factor in the software world, and the growth curves don't show any signs of flattening out. It's not just the DoD that is using Free Software either.

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So when did MIT issue a degree to Mr. A. Reader??

Posted by: fmcgowan on July 24, 2004 05:12 AM
Was that "summa cum laude?"

I suppose I should ask "uh, Mr. Dude, sir, are you the *REAL* Anonymous Reader or just an Anonymous Imposter??" Please do not claim credentials and then sign as "Anonymous Reader."

I've read this entire thread and most of "your" (just how many of *you* are there, anyway?) arguments make a deal of sense.

However, your citation of your qualifications is rendered *entirely* useless by falling back on the "Anonymous Reader" dodge. It also makes me wonder about the validity of the arguments that look good, as well.

The point is that I don't *know* anything about you or your qualifications beyond what your posts relate and I don't *really* know that, either; ya could be woofin'...

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Re:So when did MIT issue a degree to Mr. A. Reader

Posted by: Anonymous Coward on July 24, 2004 05:35 AM
MIT does not offer "cum laude" degrees.

I am both gratified and (frankly) a little surprised that you are open-minded (open source usually equals closed mind) enough to consider potential conclusions that run counter to intellectual fashion. I am particularly glad that you did not resort to ad hominem attacks (see the other "Mr. Multimillionaire" messages -- as if making jobs for other programmers and paying their health care, etc., was somehow a dishonorable thing).

As to how many of "you" there are, I believe I am more or less alone in replying.

Unfortunately, my desire for anonymity is twofold. First, if you read the other messages here, you can imagine the kinds of nasty, personal attacks one receives if one is to challenge prevailing orthodoxy. Imagine if these other posters had some information they could turn into my home phone number. Secondly, it is not prudent to speak so frankly and with attribution outside of normal external communications channels (e.g., the marketing communications folk). There is too much at stake.

The reason I stated my technical qualifications in advance is that in the open source community, if you have business qualifications, then you must be a "suit," and therefore know nothing about computers (which is obviously a non sequitur). The reason I stated my business qualifications is so that anybody reading these comments who had any sort of business experience whatsover would know this is experience, not theory talking. In the immortal words of Yogi Berra, "in theory, there is no difference between theory and practice -- in practice, there is."

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Re:So when did MIT issue a degree to Mr. A. Reader

Posted by: rawbytes on July 24, 2004 05:49 AM
Well, Dude!
I agree with the previous post, if you want to make a difference back up you creds and information. I know this is not a courtroom, but most people state plain facts that can be found in the news all over and not resorting to 'I'm such and such because I've graduated from MIT and now make millions' as a main credential, which in addition to all you didn't even bother to back up.

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Re:So when did MIT issue a degree to Mr. A. Reader

Posted by: fmcgowan on July 24, 2004 06:04 AM
Open-mindedness *should* be a requirement in an industry where the practitioners are paid to *think*; the herd-like behaviour of my fellow practitioners (two main PC herds: Windows and *NOT* Windows) leads me to believe that, rather than a requirement, it is something of a rarity. A pity.

Though I understand the both the desire (need ?) for a degree of anonymity in these discussion forums ("fori", "fora"?? Did the Romans *have* a word for multiple instances of the singular "Forum"? My Latin is more than 30 years old, almost never used and never *that* good...) AND the need to state qualifications to buttress one's arguments, I don't see how you can reasonably have both.

I *still* have no real knowledge of you or your qualifications. That still leaves me with the actual arguments presented, so I need to evaluate them carefully.

Keep talkin'; I'll keep listenin...

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 26, 2004 04:44 AM
Have you ever been to the third world, and seen these cost savings In India etc. first hand? Nope? Thought not. The people who have these jobs in places like India want to be able to afford consumer goods - they want a western way of life. They can't, not on the salaries they have. I've seen it - first hand. The quality of life in call centres and software houses over there is shite. As soon as they want a better quality of life, salaries will go up and there will be absolutely no point in moving to those countries at all. They also don't have the economic infrastructure to support all of that.

Take you MIT degree and your business, shove them up your ass and do some thinking. The notion that people won't get paid is just stupid. Does the money that would be spent on things like licenses just magically disappear. Well it might if you're Enron, but no. There is still lots of money t be made out there, it hasn't grown legs and walked off. It is just somewhere else.

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 26, 2004 07:35 AM
http://www.crmbuyer.com/story/35176.html

"US research firm Gartner Ine is predicting that the outsourcing segment will continue to outperform the western European IT services market overall, growing by 3.1 percent in 2004, then rising steadily during the next three years to an annual increase of 8 percent in 2007. Moreover, as a result of global outsourcing trends, Gartner predicts that up to 25 percent of traditional IT jobs in many developed countries today will be situated in emerging markets by 2010. "

Somebody should do some thinking, and I don't think it's me. The notion that people would not get paid in the dot-com market was manifestly not stupid.

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 24, 2004 06:24 AM
I think you are a bit overreacting here. The world is not about going to end. There will always be important commercial projects to do. However, the commoditization of the OS and productivity tools will happen.

But there is nothing to be afraid of. There are tons of things to be accomplished and whole new avenues of research to do. Before the OSS crowd will close on your flagship product (IF it is mainstream enough), and that is 2-3 years, you better be working on a new one. History has shown OSS to produce mostly clones of existing stuff. If you have the brains (which you should have, with your credentials), I am sure you will find a few ideas to implement that are of no interest to OSS developers yet.

And, there is always the business of building customised solutions.

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 26, 2004 06:42 AM
I believe Edison's power distribution plan, using DC current, lost to George Westinghouse's plan, using AC current, which we still use. Correct me if I'm wrong.

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Re:Article completely misses the point.

Posted by: Anonymous Coward on July 26, 2004 09:29 PM
You are correct. However, Edison's company did finally enter the AC market (despite showcasing how 'dangerous' AC was by promoting the use of the electric chair as a method of execution...) and modified its products to use AC. It still ended up part of General Electric and its legacy continues today.

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Commodification?

Posted by: Anonymous Coward on July 23, 2004 06:14 PM
Commodification means that the overhead costs for a type of product (Inital marketing, R&D etc) have been paid back in revenue and the cost for the product closes in to the value of production for each item sold.

For most open source, the R&D costs are not paid for.

You can't really say that it's a commodification that people just download software without paying the producers.

The fact that it's lost it's value is true but not that there has been a commodification.

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Commoditization? Only for a few.

Posted by: Anonymous Coward on July 23, 2004 10:23 PM
W.R.T. Economic theory: Microsoft, Sun and a few others see their software business model "going commodity". For the rest of us, the actual developers who produce this stuff every day, software development has essentially always been a service. The developer writes software, gets a salary, the company uses the software. A small fraction of the software development in this economy is done to produce a software product.

IBM, DEC, DG, HP, Unisys, Burroughs, Interdata, SGI, Cray, Microdata, Xerox, AT&T and many many other companies all wrote their own operating systems from scratch. Some, like IBM, saw the writing on the wall and simply embraced the new approach. (I remember when IBM was the big bad monopolist, with their mainframes and lock-in O.S. and system services and extremely threatening marketing. I believe they saw a competent O.S. that allowed them to concentrate on other ways of making money, and jumped on it.) Lots of application developers are still building lots of applications, using slick new technologies, just as they always have. But the concept of a manufacturer of systems (both hardware and softare) was an anachronism 10 years ago, and the idea of software-as-product (read proprietary) is becoming an anachronism now, simply following a well-established tradition. The arrival of inexpensive hardware to serve as a development environment has accelerated the trend.

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To hell with software industry

Posted by: Anonymous Coward on July 24, 2004 02:27 AM
About a month ago I have written about this topic. There are different kinds of software developers.

Some are in-company developers, some are developing custom made software for particular customer, and some are developing software that is sold in the stores.

Only the last cathegory could be harmed by Open Source or Free Software. But they are trying to convince the rest of us that we are on he same ship, which is not true. If their ship sinks, the rest of us will keep on sailing.

Since I develop custom made software, I coludn't care less for the future of software industry, since they are my competition, in the same way as clothes industry is competition to a taylor shop.

As far as I am concerned, to hell with software industry, sooner they go down, the better.

Custom software developers can benefit a lot from Open Source and Free Software, since there are "building bricks" that can be used. The same thing goes for in-company development.

Neither, custom made software developers, nor in-company developers don't have to publish their work to public ftp server or something, if they don't want to. They do not have to be afraid that their customers are going to publish their source code, since they would make available to their competition something they payed for.

However it is good idea to publish some general and common parts to the comunity, so that those parts could be improved and refined, without the effort from original developers side, and then used in future projects.

DG

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Re:To hell with software industry

Posted by: Anonymous Coward on July 24, 2004 03:11 AM
I rest my case.

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Re:To hell with software industry

Posted by: Anonymous Coward on July 24, 2004 08:08 AM
The implicit assumption here is that you think the software industry represents unadultered good and that there is no better way to do things. You remind me of horse-buggy manufacturer looking on with resentment at Model-Ts. And no, there is no "commie apocalypse" here. Current licensing models have been turning software into continuous and even unpredictable cost. The price of FOSS isn't really driving adoption here. Munich is transistioning to FOSS and they're paying 20 mil more than the MS quote to do it. They will spend far less in the long run and more importantly have more control over their upgrade cycles both hardware and software. Your customers don't owe you a living. FOSS is nothing more than your customers taking matters into their own hands. It 's just that so many people doing it at the same time and comparing notes makes this practical. Incidentally, I have customers too. FOSS enables me to serve them better for the same money. I've written a few things too. Doing that only enhances my ability to make money. Give up the frigging buggy whips already.

If FOSS is such scorched earth then why does it move from competency to compentency? Why does it continue to gain users,developers, and mindshare? If all the economic pundits were right then it should have fizzled years ago. If there is anything I'm not inclined to take seriously, it is economic punditry surrounding FOSS.

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Re:To hell with software industry

Posted by: Anonymous Coward on July 24, 2004 08:28 AM
You remind me of the dot-commers. That this new way of doing things will bury the old way. Turned out not to be true, and it did a lot of collateral damage (people lost tons of money because they forgot fundamentals like revenue and profit).

Nothing is as simple as it seems -- even your example. One reason open source is so popular is precisely because of the MS monopoly ("anything but microsoft"). Because the DOJ didn't fix that problem, and because of MS' predatory business tactics (witness what they did to Netscape), the only possible competitor that will survive must not depend upon revenue. Hence, open source.

Nowhere did I say it isn't gaining. What I did say was that contributing to it is economic suicide for professional programmers.

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Re:To hell with software industry

Posted by: Anonymous Coward on July 24, 2004 10:57 AM
What I did say was that contributing to it is economic suicide for professional programmers.

This is only true if they are suicidally locked into the business of boxed software. Here's a hint: two pieces of software I wrote were to help me on the job. I had no good reason to pay somebody for what I 'm capable of producing myself (EXACTLY what was needed and nothing more BTW). I had every reason to share it with others. I benefitted from their work when I made mine. Since my work isn't boxed software, it was no threat to it whatsoever.

A vendor isn't entitled to my money. The vendor gets my dollars only if he can solve my problem cheaper than others. If the vendor uses sleazy tactics (which seems to be most proprietary vendors these days) he doesn't get it at all. The dot-com reference is nothing more than a cheap shot. FOSS was here before the dot-com era and it is producing and enabling profit long after the end of it. It is producing discomfort for some, profits for others, and it definitely makes my job MUCH easier. My Dad has an ephitet for situations like this and you would do well to heed it: "You can't stop progress." Quit yer bitching and think of a way to adapt. We aren't going to suddenly have an epiphany and say "that anonymous guy on Newsforge was right all along". We'll still be around making and using FOSS years from now. This debate will be considered long over. Do yourself a favor and make long term plans for your business. We aren't going to stop doing what we're doing for your sake.

If you have to blame somebody, look to your own. MS, Adobe, and others treated their customers like cash cows. They raid our schools and businesses as though their own customers were drug kingpins. They buy and pay for laws that allow even more of this sort of thing to go on. We've been put on upgrade treadmills, licensing nightmares, and have been legally bullied. We put up with malware, clueless tech support, bundling shenanigans, and being taken for granted in general. Now they want to build DRM into the hardware so that only vendor approved software will run on the hardware (big hint - this will only piss us off more). Your industry engineered its own destruction by thinking of its customers as sheep and consumers. Buying proprietary is like saying "Thank you sir! May I have another?!"

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Re:To hell with software industry

Posted by: Anonymous Coward on July 25, 2004 04:20 AM
Your first paragraph contains a couple points: When you (as a potential customer) decide to write something rather than buy a given product (if indeed there's such a product), this is in fact a lost sale ("threat to" boxed software, in so far as lost revenue is bad). In the boxed software business, it is customary to track these "make/buy" events (whenever you are lucky enough to find out about them) and try to determine why the sale was not made. Did we not enough features? Too many? Wrong platform? Too expensive? Simple not-invented-here syndrome? Customer has too much money (perverse, but true especially in the cost-plus-fixed-fee arena -- the customer will actually make a guaranteed profit re-inventing the wheel!)? A lot of these buying decisions, as you can probably gather by reading the comments on this board, are emotional, not rational.

All this is done to address the first sentence of your second paragraph: we know we're not entitled to your money. We would like it, and we need to provide a compelling "value proposition" to you. If we cannot, we know we will lose the sale. We would really like to make the sale. And we would like you to want to buy from us again and again, and be happy about it, and recommend our stuff to your colleagues (we track repeat sales, and they are a substantial fraction of total sales).

With regard to the bad business practices you mention, which I do not like either, we cannot afford to do anything like that to any of our customers, or else they'll tell each other and we are out of business (it is not really wise to extrapolate large monopoly software companies' business practices to everybody -- the exception does not make the rule). I hope I have not given you any reason to think that I either endorse, approve, or practice any of those tactics.

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Re:To hell with software industry

Posted by: Anonymous Coward on July 24, 2004 05:31 AM
Exactly!
FOSS and most of software industry is self sufficient with this type of interactions. Screw those big monopolies with their shitty software.

"About a month ago I have written about this topic."

Where can I read it?

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Re:To hell with software industry

Posted by: Anonymous Coward on July 26, 2004 01:42 AM
It is here.
http://www.osnews.com/comment.php?news_id=7116
Look at the article titled "Some points", there
are some replies, and some clarifications
by me among them.

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A few comments

Posted by: Anonymous Coward on July 24, 2004 03:47 PM
The author here seems to paint OSS with a pretty broad brush. Calling it all, or even a larger percentage "high quality" is a gross exageration.

Sure, there are some really high quality OSS apps, such as Apache, Postfix, or even Linux itself (for the most part), but these apps tend to fall into infrastructure roles, rather than application roles. Infrastructure MUST be high quality, or it dies under the load.

In the application realm, things aren't doing quite so well. Open Office is a decent app, but it's largely on a par with MS Word 2.0 (including slowness and bugginess), rather than any current big name word processor. On top of that, Open Office was largely written by a third party commercial developer, sold to Sun, then "open sourced" as a pretty much complete product (though there has been much improvement since then).

Mozilla is probably one of the exceptions, although it's taken a LONG time for it to become high quality, it's starting to pay off.

Gimp is another exception, but it too lacks a great deal of necessary features, especially for the printing industry. It's well made, it's just not luxurious.

The state of the linux application (not infrastructure) market is on a par with the DOS/Windows market in 1990. There's a lot of room to grow, but it needs to grow, and grow a lot. The tendancy for distro developers to throw every cobbled together app into the mix tends to hurt the impression of Linux as "high quality" as well.

There are some good, high quality apps in Open Source, but you can count them on a typical human's appendages without much effort.

There are a lot of mediocre quality apps, such as mplayer, or cinelerra. And these could move on to be great apps, but they need polishing, and i'm not just talking about jazzy GUI's. In order to be "high quality", they have to be rock solid stable, not require cryptic configuration or recompiling to enable features. And they need actual documentation, not a 3 year old how-to that is woefully out of date, or a cryptic readme file that assumes too much of the user.

OSS is starting to amke inroads with the technically literate, and even the less so literate but pretty smart crowd, but it's a little early to be proclaiming that OSS has won.

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Oh, this is so... off the point

Posted by: Anonymous Coward on July 24, 2004 11:32 PM
... for the lack of the better word

Comodity? Of what? Of TCP/IP? Not even Berkely sockets are standard.

CORBA? What is this? Why do you need a CORBA to write a letter (wordprocessor)?

C/C++ and Java ? Immagine having only one wrench in a toolset for every possible screw? Cheap idea, never worked (despite all saturday morning TV shows and sleazy salesman)

Why do we think that everything can be done like we did in the past? BTW, GE does not live off the bulbs, but off the generators.

Complete waste of server space, bandwidth etc.

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Re:Oh, this is so... off the point

Posted by: Anonymous Coward on July 25, 2004 06:38 AM
those are all just examples to be compared with software as a commodity. It makes perfect sense to compare but regardless of that software is still unique in that regard.

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Comodity Utilization: Nothing new.

Posted by: Anonymous Coward on July 26, 2004 05:34 AM
No one or one company, nor corporation has developed in a vacuum. Knowledge obtained in school, Colleges and Universities has been the comodity, the utilization of that information has ended within closed (proprietary) doors in the form of (so called) IP.

Proprietary do take the work of others, offered in books, papers ect, then make complete use and profit from those works, in developed forms; this is the same thing as those same proprietary claim OSS is doing now. Somehow they believe, or wish for others to, that is, if it is closed, then the comodity utilization of others work (with no credit) is legal developed IP.

The limited mindset over paid development or jobs, has never been at the center of what opensource has been about. You create a work, others work on it and give back that work. No money, no investors, no business models to screw up things as we see these problems being realized in opensource now. The investors, business models and paid development is just what has locked up software and locked in the users. These old ideas did not work; why reuse them ?.

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