Subject: Re: Support as insurance
From: Russell Nelson <nelson@crynwr.com>
Date: Sun, 28 Nov 1999 18:03:56 -0500 (EST)

Ben Laurie writes:
 > Russell Nelson wrote:
 > > Insurance is a bet.  You're betting that the disaster *is* going to
 > > happen, and the insurance company is betting that it isn't.  The
 > > reason they make money is because they're in a better position to
 > > evaluate the risks than you are.
 > 
 > No, they make money because they amortize the risks across all customers
 > and add markup. Even if I am completely in agreement with their risk
 > analysis I may consider it worth the cost (i.e. insuring increases my
 > expected expenditure, but reduces my maximum expenditure).

Some of both.  The insurance company has better information about its
payouts than you do.  But still, if the industry is allowed to be
competitive, then *other* insurance companies with the same
information will compete that advantage away.  Fortunately, we have
strong consumer protection in New York State which prevents such bad
outcomes (for incumbent insurance companies).

 > I still don't really understand what point you are trying to make
 > (except, perhaps that free software warranties will be more expensive
 > that proprietary ones because most people won't buy them?)?

Or maybe even that most people *will* buy them -- it doesn't matter.
What does matter is that the insurer will have to pay out on most
policies he sells.  Keep that in mind if you try to sell support as
insurance.  If anyone intends to do it, they will have to be subtle
and clever.

At a minimum, I would say that no support claims will be honored for
six months following the purchase of the support policy.  Are you
asking "Well, who would buy it then?"  The answer is: anyone who wants
support as insurance.

You could quite reasonably not provide any support yourself, but
instead buy it from LinuxCare or a similar firm.  You're not selling
the *support*, you're buying the risk for a negative price.

-- 
-russ nelson <sig@russnelson.com>  http://russnelson.com
Crynwr sells support for free software  | PGPok | Government schools are so
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