Subject: Re: A few thoughts.
From: shap@eros.cis.upenn.edu
Date: Fri, 14 Aug 1998 15:24:01 -0300

>  | The advantage is leverage and ability to
>  | experiment with the product in a way that is visible to the market.
> 
> I really don't see the advantage here!  Microsoft certainly has been able
> to experiment with their free preview releases for many of their products.

Sorry. I wasn't clear enough.  I meant to say that the advantage is
that your *customers* can do the experiments that they vitally need,
and you can actually integrate based on customer input if you take the
time to build good customer relations.

>  | One risk I see to Linux is that changing the balance of power in the
>  | market involves going through a phase of market instability as the new
>  | technology is approaching parity with the old.  At this point, you
>  | might think that the market is in a bimodal choice mode, but it's
>  | actually in an open evaluation mode.  At such junctures, a third
>  | offering can come along and significantly alter the market.
> 
> I would not say that the market is in a bimodal choice mode!  Only a
> small fraction of Wintel systems are running Linux.

We're not yet at parity.  People sometimes make the mistake of
thinking that as the new product market share comes to approximate
that of the old the market is driven into making a choice between the
two contenders.  My point was that this is often mistaken.  We'll have
to see what happens when Linux and Windows are moving the same number
of units per month.

> 
>  | If I end up deciding to commercialize EROS somehow, it's in my
>  | interests to support Linux actively in order to cause such a change
>  | point in the market to come into existence.  Come to think of it,
>  | that's an argument for free software I haven't heard anybody advance
>  | here, and it's an approach that will appeal to Fortune 500 marketing
>  | folks....
> 
> I'm not understanding what's the ``argument'' that you are referring to.
> I appreciate if you would elaborate on that.  Thanks!

The argument, roughly, is that it's not in the interests of various
companies to allow Microsoft to completely control the desktop.
Investing in Linux development for the sole reason of destabilizing
the market is in some cases a useful long-term strategy, especially if
it can be done cheaply.

If the same $500k you might spend advertising, say, OS/2 would let you
pay for some app that deployed 3M new Linux seats, this would be a
worthwhile tradeoff.  Taken in larger doses, this would ultimately
*increase* the number of available applications for OS/2, because
software vendors make platform decisions based on market share.  Up to
a point, anything that increases the *relative* market share of your
product is therefore good.

>  | I'm not convinced about this.  If you look at the cost of the BOM
>  | (bill of materials) in a shrink-wrap product, it's about $7 including
>  | the manual.  The biggest variance comes from the cost of printing
>  | manuals, which is mainly about length and quantity.
> 
> But, like you've said:
> 
>     ...  In our particular case
>     there is one potential competitor who has the technical know-how and
>     marketing inclination to scoop us if we don't ship before we open up.
> 
> If your shrink-wrapped software is open-source (and before you become
> brand name), anyone can scoop you if they can ship the box for $6.

Once we're first on the shelves we own the turf and the mindshare
battle is over unless we screw up.  At that point it's not the source
base that holds your customers.


shap