As we're taking a look into disruptive technologies, it is also a good time to consider the disruptive nature of open-source software. The subject is due for attention, given the recent comments I've received suggesting that open source is a form of "antibusiness communism."
In actuality, these criticisms reveal confusion between disruptive and destructive changes in the market. The argument for open source as a destructive change often reads like this: "As recently published records indicate, Microsoft Corp. makes all its money from the sale of operating systems (Windows) and office suites (MS Office). The creation of open-source operating systems (Linux, the BSDs) and office suites (OpenOffice.org, KOffice, Gnome Office) must therefore be an effort by hate-filled people bent on destroying the most successful software company on the planet (Microsoft) through un-American communistic means (giving software away for free)."
Unfortunately, this view takes an unnecessarily narrow perspective, yielding a less-than-accurate conclusion. A broader view might read like this: "The task of the software industry is to create the best business solutions. The advent of open source means that the cost of some of the components has dropped, while the control over them increases for the solutions integrator and the IT department. From a market perspective, the major difference is that the point of greatest profit shifts from the software provider to the service provider."
Doc Searls, a panelist with me on The Linux Show weekly Web cast (www.thelinuxshow.com), explained it best when he likened the situation to a housing market in transition. Imagine a housing market in which trees are scarce. In that market, much money is made by the few companies that control the expensive commodity called lumber.
But then imagine that someone discovers a nearby land with bountiful forests ready to supply vast quantities of inexpensive lumber. Suddenly, the once-lucrative lumber trade is no longer the virtual gold mine it once was. Instead, the home builder becomes the chief money maker in the new resource-plentiful housing market.
Has the discovery of cheap resources destroyed the housing market? Not at all. In fact, the new market is likely to flourish because more people will be able to afford new homes at significantly lower cost. Has the market been disrupted by the change? Yes, because those that build the total solution (the house) stand to make more money from higher volumes, while those that provide lumber will only make modest profits on building materials.
Open source does much the same thing to the software industry. It will no longer be possible to charge exorbitant prices for basic software resources. There still will be plenty of room for profit in services, solutions, and even highly specialized closed-source software. But the days of high prices for basic resources will come to a close.
Russell Pavlicek is an independent open-source consultant. Contact him at firstname.lastname@example.org. Log on to his forum at www.infoworld.com/os.