Subject: Re: Market Forces and Free Software
From: "L. Peter Deutsch" <ghost@aladdin.com>
Date: Sat, 21 Sep 96 20:57 PDT

> Simply not the case, lack of serious competition. If you examine 
> the papers filed by Caldera and the Justice Department you'll 
> discover that the price of MS-DOS rose dramatically for OEM customers
> within weeks of Novell announcing that they were discontinuing DR-DOS.

For interchangeable, substitutable software, I agree.  But Linux (or any
Unix for that matter) is not a useful functional substitute for MS Windows,
for the reasons -- not by any means all technical -- that I listed in my
original message.  If Linux disappeared from the face of the earth, the
price of MS Windows wouldn't change.  If *Unix* disappeared, the price of
Windows NT Server might go up, but desktop Windows probably wouldn't.

> At this stage, Microsoft earns over 50% of their revenue from 
> Microsoft Office (PC Week 9/16/96). 

I made this point before as well (that no matter how good a job Caldera
does, they won't take significant business away from Microsoft because the
revenue now is in the applications).

> But by and large the freeware community doesn't understand the 
> traditional software channel, the dynamics of the VAR channel or
> the means of marketing and getting the message out.

I agree.  But your message doesn't help educate us.  What are the key
properties of these channels?  How can freeware vendors use them more
successfully?  I'd like to see more sharing of information that can help
make us successful, instead of a lot of disparagement.

> Freeware OS features and discussions of DLLs and the like
> are interesting to the technicians of the world but ultimately
> abuyers are interested in solutions not technical features nor
> politics.

I agree.  I brought up DLLs as an example of the Unix world's apparent
inability to move beyond POSIX and X Windows in terms of software substrate,
but that was a secondary issue.

> Unfortunately, UNIX and the freeware community is 
> appears to be made up of software engineers and technicians who are
> opinionated "know-it-alls"

The pot calls the kettle black....

> who don't understand -- marketing.

I'm happy to share my own experience in building a small (<$1M/year) but
successful (>$.5M/year) company that sells semi-freeware.  The product,
Ghostscript, is an OEM package that is free under a GNU-like license for
downloading, use, modification, and non-commercial redistribution, but
requires a paid license for distribution in or with a commercial product.  I
did all my marketing by word-of-mouth through Internet newsgroups for the
first 4-5 years (while I was working full-time for others), building up a
reputation for quality and responsiveness to problem reports as the software
climbed its way up the quality ladder to a commercially acceptable level.
The first commercial customers told their friends; the free availability of
the software meant that engineers could download it and "try before they
bought" (including reading the source code) with no investment other than
their time.  After 2 years of a rapidly growing business, I hired a sales
and marketing person who then took about a year to learn how to use trade
shows (primarily Seybold DTP) and trade press to find the right companies to
call.  Aside from a booth at Seybold the last 2 years, I've never done any
traditional advertising: there's a simply note in the free version that says
where to call for commercial licensing.  I did have a stroke of good fortune
this past June, when, as a result of completing the first clone of H-P's PCL
XL less than 3 months after the specs became available, I was able to get
the ear of the editor of the Hard Copy Observer (a widely-read printing
industry publication) and benefited from a 2-page article in the next issue;
I suppose that falls under marketing, broadly construed.

My business model is that I sell to technically knowledgeable OEMs for whom
the quality of the product (measured in terms of reliability, performance,
feature coverage, and fit to their needs in these areas) and the service
(upgrades, support, and the availability of fast, high-quality enhancements
on a contract basis when needed) are the determining factors, and who
understand that as a tradeoff for these benefits, they get a product that
may not be as close to a finished solution as they would like.  And if an
OEM doesn't allow their engineers to be a primary input for their
decision-making, I'm not interested in dealing with them, because I know
from experience that it will be very difficult to have a rational discussion
with them that is grounded in technical reality.  (I'm not saying that
technology is everything, only that whether or not something actually works
or can be made to work is an issue that has to be put up near the top of any
discussion.)

There are plenty of other models for successful businesses based around free
software: I'd be interested in hearing some of them, particularly with
respect to the marketing and channel issues that your message raised.  I'd
also be happy to answer any other questions about my own experience.  I have
no marketing background per se, so I'm sure the way I've described my
experience doesn't quite use the usual vocabulary for discussing such
things.

-- 

L. Peter Deutsch         |       Aladdin Enterprises :::: ghost@aladdin.com
203 Santa Margarita Ave. | tel. +1-415-322-0103 (AM only); fax +1-415-322-1734
Menlo Park, CA 94025     |        http://www.cs.wisc.edu/~ghost/index.html
          "Implementation is the sincerest form of flattery."