Subject: Re: My ears are red
From: "Stephen J. Turnbull" <turnbull@sk.tsukuba.ac.jp>
Date: Tue, 8 Jun 1999 14:59:08 +0900 (JST)

>>>>> "Paul" == Paul Rohr <paul@abisource.com> writes:

    Paul> At 09:44 AM 6/3/99 +0900, Stephen J. Turnbull wrote:
    >> Given a different definition of "win" (one that I bet is
    >> plausible to you and your colleagues), I'll say you're the
    >> odds-on favorite ;-)

    Paul> You're quite right -- our definitions (plural) of winning
    Paul> are all very different from what you propose, and I'm glad
    Paul> to hear we're your odds-on favorite for winning at least one
    Paul> of them.  Thanks.

No, it's not true that everybody differs from my definition.  At least
one person here (Brock Lynn) has consistently advocated the view that
GPL-licensed software will within a few years dominate the whole
market for software.  In another venue, Karsten Self argued a less
aggressive definition of "win" than Brock's; but when he started, I
got the impression he would have signed on to my definition, although
now he'd be a lot more conservative, I believe.  Karsten?  Finally,
the position Russ has been advocating ("the market will demand open
source") is not inconsistent with my very ambitious definition of
"win", at least until he quantifies it.

As to why I choose such ambitious goals: (a) it's been done (by free
software) and (b) as an upper limit, anything much less really isn't
of much interest; free software is then just another hokum business
model (albeit our hearts are far purer than those of people who follow
hokum business models because they expect to make money with minimal
effort), a variation on the charity business.

I'm not saying that any _given_ market (eg, wordprocessors) might not
repay handsomely with a much lower goal.  But if you can't see the
model generating a few really big wins, how is free software different
from the "Japanese ramen shop" business?  (For those who don't know
it, ramen is a pasta-like noodle eaten in a broth.)  Japanese ramen
shops are typically run by people who have saved up enough to open a
shop, and do it because that's what they've always wanted to do.  Many
do so until their stake runs out, making for rather tough competition
for non-chain shops without economies of scale.

If the "ramen shop" model is appropriate, then most economists will
just cut and run right there.  Uneconomic businesses (which means that
they make less profit than a business with a similar product but a
different model) are inherently self-limiting; they can't gather the
necessary investment resources to have large impact.  I personally
believe in sustainable economic activity (a la E. F. "Small Is
Beautiful" Schumacher).  FSBs would be an interesting model for such,
and worth study.  But it's just one among many; I know that many FS
developers have greater ambitions than that.

And greater ambition is economically plausible (despite what a cursory
reading of an intro micro text might suggest), because of the leverage
that non-rival consumption, asymptotically constant marginal costs,
and network externalities, both consumption- and production-side, give.

    Paul> As for your definition of winning in the following markets:

    Paul>   - Windows only (>=1% share)
    Paul>   - Linux/Windows dual-boot (>=50% share)

I appreciate your analysis of these two; I would have guessed getting
a dominant share of the dual boot market as easier.

    Paul> NOTE: I don't think you've defined how we get to "win" on
    Paul> your terms.  I can envision very uneconomic ways to achieve
    Paul> 1% share on Windows, if I don't have to pay back every
    Paul> investment dollar through software sales.

As long as you are paying back the investment dollars through the
business, I don't care.  For one thing, "software sales" taken
literally means you (personally) can't do it; I don't see much
evidence of AbiSource attempting to sell software (looks more like
you're competing with DKNY on T-shirts ;-).

I think it would be harder than you think, too.  (Actually, I'm sure
you know that, I'm responding to your phrasing.)  "Horribly
uneconomic" == paying people to use the product, for example.

Aside: you will find that economists are not very good at defining how
to get to "win"; we generally try to describe what you'll see when you 
reach the mountaintop rather than provide a map to the top.

-- 
University of Tsukuba                Tennodai 1-1-1 Tsukuba 305-8573 JAPAN
Institute of Policy and Planning Sciences       Tel/fax: +81 (298) 53-5091
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What are those two straight lines for?  "Free software rules."