Opening this for discussion if you are interested. I've also CC'd Dr. Robert Sauer from the Jerusalem Institute for Market Studies (JIMS) who had recently published an essay titled "Open Question" on globes.co.il, regarding similar issues, mainly OSS's TCO and use in government and other issues which are partialy discussed in this paper as well.
Roberts essay is available here: http://www.globes.co.il/serveen/globes/DocView.asp?did=747399&fid=980 and his reply to some questions asked, attached.
Resources:
Open-Source Software: An Economic Assessment http://mice.uni-muenster.de/mers/mers4-OpenSource_en.pdf
Both papers are available at: http://mice.uni-muenster.de/ (under MERS)
Regards, Uri
Eric S. Raymond wrote:
dittigas <[EMAIL PROTECTED]>:
1. No Market at the Core
Open-Source Development Open-source software is developed outside of
market mechanisms, as the main purpose of making the source code
freely available is to prevent a price-controlled market from
evolving in the first place. As such, the open-source model
(dominated by restrictive licenses such as the GPL) has a nonmarket
core. There are commercial business models based on open-source
software, but they impact OSS development indirectly, if at all. In
any economy based on the division of labor, the market fulfills
important coordination functions. However, when software is
distributed free of consideration, it lacks a key coordination
component the information medium of price and, as a result, suffers
from economic and functional deficits.
This is fundamentally in error. Open source does not abolish the market in developers' time and attention. Supposing the world were *entirely* open source, developers would still respond to bids from customers wanting
software produced for their use. The only thing open source abolishes
is secrecy and what economists call "rent collection".
2. Developer Orientation is Not Customer Orientation
At the nonmarket core, volunteer open-source developers work on
projects that suit their own preferences. Their motivation stems
from an individual interest in solving a problem, the technological
challenge or the hope of establishing a reputation. However,
software supply should be determined by users actual wants. If there
is no market, then there is no mechanism to steer the interests of
developers towards the wants of customers, either.
Customers are free to pay developers to be "customer-oriented", exactly as they do now.
3. Weak Commercial Software Does Not Mean Strong Open-Source Software
The open-source model is poorly suited to be the only alternative form of software development. Open-source software development requires a strong commercial software market. A commercial market acts as a wellspring of resources for jobs, income and product ideas for open-source development.
This is confused and almost backwards. First, in that it identifies "commercial" with "closed source" -- a mistake, as any employee of a Linux distribution company will be happy to explain. Second, the evidence of history is at least as strong that the commercial market requires an open-source community to develop technologies like the Internet and the Web, innovations that commercial developers cannot produce because they don't have an obvious short-term return on investment.
4. Open-Source Software Does Not Aid SMEs in the IT Sector
Far from offering extra business opportunities, open-source software
offers only some of the opportunities already available in the
commercial market. Nor is promoting open source a suitable
local-policy tool for supporting SMEs in the IT sector. If software
is available free of charge, its development does not generate
proceeds, income, jobs or taxes. This inability to add value cannot
be compensated for by using complementary strategies.
This is nonsense, because it ignores the fact that developers can be and are paid for creating open-source software and for adding value to it. This can be a fertile source of jobs, income, and taxes. In fact, economic analysis predicts that as the cost efficiency of software rises, customers will put *more* money into programmers' salaries rather than less, just as the numbers and hourly wages of mechanics rise when the cost of automobiles fall.
5. Promotion of Open Source Not a Competition-Policy Tool
State support and subsidization of competitors in highly
concentrated markets is not a competition-policy tool. Furthermore,
such interventions require a level of information that government
authorities simply cannot have. As an IT demander, the state should
therefore as stipulated in budgetary laws be guided strictly by
economic considerations.
I agree that state subsidies are a poor competitive tool, and that
states should be guided by purely economic considerations. On that
battleground, the lower cost and higher quality of open source is
certain to win.
From [EMAIL PROTECTED] Thu Dec 11 08:10:09 2003Regarding your article: Open question
Dear Open Source Friends,
Please read below my reply to a particular inquiry about my article. I am sending it to you as well since I think it clarifies a few important points that were raised by all who contacted me.
Here is my reply:
Thank you very much for your insightful remarks. I'm glad you found the article interesting and I'm happy you contacted me about it.
I had come across Prof. MacCormack's paper and I also found it very interesting. I agree with him that the state of the art of TCO measurement is not where we would like it to be and that fact adds a lot of uncertainty into the equation. Nonetheless, for public policy purposes, one has to take a position. Given the existing evidence, and given the institutional history of the Israeli government (pays bloated salaries) as well as the unfortunate economic situation in Israel (huge national budget deficit), I believe, as I stated in the conclusion of the article, that it would be pre-mature to switch to open source solutions in the Israeli public sector. There is a greater probability that expenses will increase rather than decrease following such a move. The Israeli government should therefore postpone a switch until more comprehensive studies are conducted and more evidence is collected. The Israeli government has been risking taxpayer money for far too long in almost every sphere of its activities. Note that I am not saying that the switch should never take place. I'm only saying that now is not the right time in Israel.
I agree with you that the forking hypothesis of Lerner and Tirole is quite interesting and perhaps needs further testing. However, there is sound economic logic to their hypothesis. Lerner and Tirole use the examples of Sendmail and the Berkeley project as problematic forks. I read about some more recent examples on slashdot the other day. I bet a paper on the economics of forking will appear soon enough and further enlighten us all. In other words, there is no doubt that further research needs to be done here as well.
I'm sure you are correct in saying that open source is technically preferable in certain environments, while Windows is preferable in others. What concerns me is whether or not the superiority of open source in certain environments will trickle down to the end user in a government office. Will it improve the efficiency of publicly provided services? Or will it hopelessly confuse the clerk?
I understand your concern for shared source. Perhaps its not ideal. But, on the other hand, intellectual property rights must be clearly defined and protected. If they aren't, I bet software innovation will also come to a screeching halt. There's a similar problem in the pharmaceutical industry with parallel importation and lax enforcement of the TRIPS agreement.
In any case, I want to thank you again for your comments and examples and for conveying your professional experiences. Please keep me informed of the fruits of your research. And please feel free to forward this e-mail to anyone else that you think might be interested in the subject and concerned about the conclusions that I reached in my article.
Best Regards,
Rob Sauer
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