Subject: Re: warranties on software
From: Russell Nelson <nelson@crynwr.com>
Date: Sun, 28 Nov 1999 01:20:06 -0500 (EST)

Federico Lucifredi writes:
 > Now, my question is, would it be legal (and worthwhile) for a commercial
 > third party to offer guarantees of some kind (bugfixes within a certain
 > time, warranties, etc) on certain distributions of open/free software they
 > control ? Say, for instance, RH offering some kind of warranty on their
 > Linux distribution ?

I don't believe Redhat is.

The problem is that a warranty essentially works like insurance.  That
gets you into questions of legality, profitability, and reputation.
Do you know why so many US insurance companies are headquartered in
Hartford, CT?  Because there was a big disaster in the late 1800's,
and the only company to pay out all its claims were headquartered in
Hartford, Ct.  When you're making a promise to pay out later (either
in cash or in warranty service), your reputation is your bankroll.

 > enforceability of "open this package and you are bound by this contract"
 > labels. They are simply not enforceable in most of the EU states.

Right.  Some of the exclusions are not enforceable in the US either,
like those related to the implicit warranty of fitness.

 > I don't see any software offering guarantees other than (hopefully)
 > the stuff Rockwell and others certify for real-time use on
 > airplanes - and even that is subject to doubt, considering that
 > Ariane's V first launch blew up the Cluster mission because of
 > faulty guidance software that resulted in structural collapse.

And if it was in the US, they would have been sued for damages.
That's what people hope to do to software vendors.  Maybe it's a
completely vain hope, but that's what they pin their hopes on.

 > Other than the warranties as a subject themselves , I would love to hear
 > about how you would suggest OSS/FS noncommercial organizations can go about
 > offering guarantees - I would like you overturning my argument about
 > affordability of such guarantees, but I think that's a major problem.

The hardest part of selling support like insurance is the same
difficulty you have with any kind of insurance.  It functions like a
bet against disaster.  You spend a little money now in the hopes of
avoiding the disaster, but if you can't, at least you get paid enough
to make up for it.  People tend to self-select.  If they have private
information that says that they're likely to need the insurance, they
buy it.  If they think their risk is less, they refrain.  But that's
exactly what the insurance company doesn't want them to do.  They want
the largest possible pool to spread the risk over.  So the hardest
part with insurance is ensuring that enough people have the
insurance.

Another difficulty is that once the insurance is bought, the purchaser
has less reason to try to avoid the disaster.  This is called "moral
hazard".  The insurance company tries to dispel this by requiring a
deductible -- by not paying off the whole disaster, but only the parts
beyond a prescribed minimum.  In the free software world that would be
"I don't have to RTFM; I have a support contract."

-- 
-russ nelson <sig@russnelson.com>  http://russnelson.com
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