Subject: Re: [ppc-mobo] Re: GPL-like hardware design license?
From: "Stephen J. Turnbull" <turnbull@sk.tsukuba.ac.jp>
Date: Thu, 7 Oct 1999 15:03:36 +0900 (JST)

Ah.  Something interesting, after all.

>>>>> "Brian" == Brian J Fox <bfox@ua.com> writes:

    Brian> If your modifications create product development that you
    Brian> don't have to pay for, but that satifies your
    Brian> additional/alternate business needs, then you will directly
    Brian> benefit from the competition between those companies
    Brian> developing the products.

    Brian> Doesn't this carry monetary value?

Probably not.  Assuming that my business and its competitors have
similar needs and opportunities, cost reductions for a business due to
decreased input prices will be matched by similar reductions for the
competitors.  If my rivals compete on price, the cost reductions will
simply disappear at the bottom line due to "pass-through" reductions
in price.

It is unlikely that a single business can increase its profit by using
a free license.  The only circumstance I can think of is when the
customers care about the "free" label (eg, as some people care about
"Made in USA" labels).[1] This is plausible for certain kinds of
software (eg, targeted at Linux users), but not for embedded systems,
and probably not for PCs.

However, a sufficiently large group of businesses might very well be
able to profit (financially) if the whole group agrees to use free
licenses.  This would occur when the value of the whole industry
increases fast enough (due to increased demand based on improved
reliability (eg) and faster new product roll-out due to coordinated
development[2]) to compensate for individual firms' loss of monopoly
profits from proprietary ideas.  This is apparently what is happening
with GNU/Linux.

The GNU GPL, of course, is precisely a device to bind the members of
the group to continue using the free license; there would be strong
financial incentive for opportunists to take their product proprietary
and earn large monopoly rents _now_, while sacrificing a small share
of future industry growth.


Footnotes: 
[1]  There is another case in which the single firm is a niche
monopolist, and improves profit because users contribute back enough
development to increase the firm's market demand.  Ie, the extreme
case where "sufficiently large" == 1.  Seems unlikely in hardware
since the users competent to contribute are likely to be few and
potential rivals in any case, but would be possible: think about
downstream businesses in a rather different line of business.

In software there is a fair amount of anecdotal evidence that such
downstream firms do not have strong disincentive (on average; some
firms do resist the idea strongly) to contribute (eg, device drivers
for Linux).  I don't know whether hardware-hardware relations would be
analogous.

It is also true that a GNU GPL-style license would remove most of the
incentive for a potential rival to introduce a competing product
(consider, they must release their improvements, and you are already
well-positioned to counterattack from your existing customer base---
they would have to seize leadership in a rather dramatic fashion), and
thus would protect the niche monopoly.

[2]  Development would be distributed, and there would be some
overlapping development.  But the requirement of the GNU GPL to
publish source with the introduction of the product in the market
would implicitly coordinate development.

-- 
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."