The impact of open source on market structures

You might wonder what impact open source will have on the software market. Will a proprietary giant like Microsoft be replaced by a open source one. There is a number of reasons for suggesting that the ‘developer culture’ will avoid that, though I think the extent to which it does will depend on the extent to which they avoid the traditional folly of not attending to their developer needs.

The reality is I believe that open source will with time cease to be open source. Instead there will be a core element of code that will be ‘free’ or remain open source, which will attract developers, but there will be periphery systems, ‘plug ins’ or ‘add-ons’ which will be proprietary solutions which users will need to pay for. Clearly there is some self righteous ‘virtuosity’ to software development, but I think such idealism will disappear as open source migrates towards the ‘user needs’. Userability will finally equate with profitability. The sustainability of open source will not rest on profitability but the desire of programmers to work with a ‘free system’, or free at its core.

I therefore believe the evolution of open source and the software market is going to evolve like this:

1. Development of functionality: Firstly the platform must meet the needs of developers. The platform gains acceptance when it secures a critical mass, which is only likely where there is a dire need for the solution to justify the support.
2. Development of useability: The broader market acceptance of the language depends on the developer’s willingness to customise the language for the useability of non-programmers. The current leading open source platforms have yet to do that. The migration to broader marketability will be at odds with the ‘ideologue’ who was previously a supporter of time and money for open source.
3. Commercial sustainability: The migration towards a commercial basis will means developers will make money from the peripheral solutions they create, where the core language will remain free ‘open source’. The free use of the core language will be the basis for remaining the loyalty of programmers.
4. Growth model: The platform that wins will be the platform that offers developers free code. I suggest therefore that the language which succeeds will be the one which requires developers to surrender their proprietary rights after a certain number of years. This will have two impacts: It will encourage more programmers to join their platform, which means it will have greater functionality, and thus more users. Developers will be competing with each other for solutions, so add-ons need not be expensive.
5. Succession model: At some point in time the free core language becomes limiting so a new platform is developed on the same basis.

So where does this leave commercial software developers? I think it leaves companies like Microsoft struggling to remain relevant. You only need to look at the take-over of Yahoo. They are paying full price for a business that is in decline rather than paying nominal amounts for businesses of the future like Google does. Thus I suggest proprietary developers are like to live off the coat-tails of the open source solutions. The Google model serves as an interesting model, which works because it has elements of the Open Source solution. It has a closed but flexible work culture, but it takes smart people, but by necessity safe people or young people who want to learn. It is the comfort that keeps them at Google and the practicalities of life, like the desire of people to debt fund their house rather than giving that all away to 'play the idealist' with OS.

Proprietary solutions will differ in their capacity to deliver technical people benefits upfront, so its a safety vs value decision of workers. Can you guess which type of people makes the best programmers?

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Andrew Sheldon www.sheldonthinks.com