Source:
http://www.joelonsoftware.com/articles/StrategyLetterV.html (danger, very
long article)
Every product in the marketplace has substitutes and complements.
...
A complement is a product that you usually buy together with another product.
Computer hardware is a classic complement of computer operating systems. ...
In a small town, when the local five star restaurant has a two-for-one
Valentine's day special, the local babysitters double their rates.
All else being equal, demand for a product increases when the prices of its
complements decrease.
Let me repeat that because you might have dozed off, and it's important.
Demand for a product increases when the prices of its complements decrease.
For example, if flights to Miami become cheaper, demand for hotel rooms in
Miami goes up -- because more people are flying to Miami and need a room.
When computers become cheaper, more people buy them, and they all need
operating systems, so demand for operating systems goes up, which means the
price of operating systems can go up.
At this point, it's pretty common for people to try to confuse things by
saying, "aha! But Linux is FREE!" OK. First of all, when an economist
considers price, they consider the total price, including some intangible
things like the time it takes to set up, reeducate everyone, and convert
existing processes. All the things that we like to call "total cost of
ownership." ...
Open source is not exempt from the laws of gravity or economics. We saw this
with Eazel, ArsDigita, The Company Formerly Known as VA Linux and a lot of
other attempts. But something is still going on which very few people in the
open source world really understand: a lot of very large public companies,
with responsibilities to maximize shareholder value, are investing a lot of
money in supporting open source software, usually by paying large teams of
programmers to work on it. And that's what the principle of complements
explains.
Once again: demand for a product increases when the price of its complements
decreases. In general, a company's strategic interest is going to be to get
the price of their complements as low as possible. The lowest theoretically
sustainable price would be the "commodity
price" -- the price that arises when you have a bunch of competitors
offering indistinguishable goods. ... If you can do this, demand for your
product will increase and you will be able to charge more and make more.
...
Headline: Transmeta Hires Linus, Pays Him To Hack on Linux.
Myth: They just did it to get publicity. Would you have heard of Transmeta
otherwise?
Reality: Transmeta is a CPU company. The natural complement of a CPU is an
operating system. Transmeta wants OSs to be a commodity.
------------------------------------
I just wonder, what is the best source of support for the Open Hardware
movement from this point of view? Maybe a proprietary software company alike
Microsoft?
