Subject: Re: Successful FSBs
From: Rich Bodo <rsb@ostel.com>
Date: Wed, 30 Oct 2002 12:15:17 -0800 (PST)


> For that matter, OSS dynamics put competitors in a very strong position as
> well, and competition keeps prices down. (That's another way of saying it
> puts consumers in a strong position.)  You can build a huge business with
> commodity software (viz. Uunet or Earthlink in the ISP market), but it's not
> going to be anywhere near as profitable as a similarly sized proprietary
> software business.

Competitors can use the free software an FSB produces, true.  That's the
main concern with FSB's across the board.  I'm not sure your example
works, though.  I would compare a good ISP to Dell, it's
infrastructure and business model are it's advantages.  An ISP that
uses mostly free software for it's infrastructure need give none of it's
infrastructure away.

>
> I tend to see F/OSS advocates wanting to have their cake and eat it too.
> They imagine being as big and successful as Microsoft or Oracle with a
> business and licensing model that is *designed* to keep companies from being
> as big and financially successful as MS or Oracle.  I actually think that
> F/OSS is as big and successful, if you look at impact, but not if you look
> at dollars extracted from users.  And that is as it should be.

That's not the case in my experience.  Some advocates probably think
that way, but I doubt anyone who is actually running an FSB really
thinks they can become as big and successful as Microsoft or Oracle.
At least none of the ones I know.  Most people have a hard time
running any kind of business.

Most of the people who developed an OSS license probably thought along
the lines of "let's make sure the best version is always the free
version" rather than "let's keep companies who use this from becoming
as big as MS".  I know what you meant, but I think the way you stated
it misrepresents the intent of the authors of OSS licenses.

...
> This means, for disruptive technologies that are also commodities:
>
> * You are probably under the radar, so financing will be hard to come by
> * Once you are no longer under the radar, competitors can easily
> jump in

That's true, but I don't think many people are looking to get 50% of a
market.  A more realistic scenario:

You develop a free software widget that has a 10X functionality
advantage over previously available widgets.  You start selling it at
the same price.  People start using it.  Your products, business
infrastructure, and development community get established, you spend a
lot of time and money putting together the things that go around the
widget and make it as useful as can be, like foobar.  You gain about
.0001 percent of a market the size of Microsofts.

No longer under the radar.  A lot of companies decide to get in on the
action.  They can start with your widget, but that's all they get.
You probably spent a lot more time developing all the things that go
around the widget, which they must still do.  If you are smart, you
will always be better than they are with the widget, and they will
play catch up eternally, if they do catch up.

In this case, I would say that your primary competition will always be
yourself.  If you can stay the best, be more efficient, market a
little better, do the little things that customers like well, then you
will grow nicely.

-Rich

Rich Bodo | rsb@ostel.com | 650-964-4678