Subject: Re: Thoughts on GPL
From: "Jonathan S. Shapiro" <jsshapiro@earthlink.net>
Date: Tue, 24 Feb 1998 18:12:03 -0500

   > Many corporations already have
   > good marketing and support organizations, so one takes your
   > work, put their label and marketing/support behind it, and
   > they're going to make the money, not you....

   If this was true, then there would be a lot of marketing and sales
   companies in the free software market (as subsidized "free riders"),
   and few programmers (as exploited workhorses).  But in fact we have
   the exact opposite: thousands of programmers, and a half a dozen small
   CDROM companies.

On reflection, I've concluded that both Keith and John have some
embedded misunderstandings on this topic.

A large body of available free software does not lead to marketing and
sales organizations that support them.  For startup companies,
marketing and sales is almost never a sustainable competative
advantage, so building a company in the way you propose is *very* hard
to finance.  For established companies, switch models to using free
software is quite difficult for a variety of reasons involving
financial structure, vested interests, and loss of competative
advantage.  Only a market-dominating player can afford to switch.

The reason there are no marketing and sales companies in free software
is that there is no competative differentiator to be had.  The cost of
entry is low enough that stiff competition would appear the minute
anyone turned successful.  If somebody were able to build brand
identity fast enough, they could pull it off.  Marketers of that
calibre are one a century, and the 20th has already had ours: David
Ogilvey.

RedHat is not a counterexample.  RedHat is a value-added integrator,
and that is where their differentiator lies.



In fact, I'll go a step further.  In my opinion the reason that
progress has stagnated in the compiler industry is precisely *because*
of the fact that GCC eliminates the sustainable competative advantage
in that market.  It not economically justifiable to invest in
competing compilers, nor is it economically supportable to build a
marketing and sales organization to sell GCC in large numbers.
Microsoft is still able to sell because the GPL community largely
ignores Windows and because Microsoft has monopoly control on the
API's and alters them with high frequency.

Some people will point to Cygnus as a success story.  I'm not
convinced it is.  If you look at their net revenue prior to building
proprietary products, and you count for the value of the sweat equity
correctly for purposes of computing the initial investment, their ROI
hasn't been very large.  I exclude the investment made by the
government in the form of various grants, because that money is hard
to allocate correctly between Cygnus and others.  A point in their
favor: Cygnus did a *brilliant* job of funding from contracts.

Meanwhile, Cygnus *has* succeeded in making the compiler industry very
difficult to make money in.  Meanwhile, the rate of evolution on GCC
has dropped in recent years.

So who won?  Nobody.  The customers, in the end, have also lost due to
lack of competition.



shap