Subject: Re: FOSS Saves Corps Millions (if not billions)
From: DV Henkel-Wallace <gumby@henkel-wallace.org>
Date: Sat, 6 Mar 2004 18:04:57 -0800

On 06 Mar, 2004, at 12:08, ken_i_m@elegantinnovations.net wrote:

> I mentioned the case where FOSS is saving corps $$$.  From where I sit
> it seems that so many corporations get so caught up in the "maximize
> shareholder value" that it reduces to the always cheat strategy from
> game theory.  Then to diminish the penalties for this stratey they
> lobby the govenment towards that end.  Whereas I am trying to make
> the case that by cooperating with a small group of others with the
> same need they can reduce their upfront costs and reap savings in the
> long run.

It's never unreasonable for companies to spend the least amount 
possible to get the job done.  It's not "cheating" not to pay[*].

All you've really identified is that some FOSS doesn't work _in the 
current sales model_.  This is often the situation for new products 
whether FOSS-based or not.  The trick for FOSS companies is finding out 
where in the value chain the money is.  Here are three examples:

- Compiler writers are funded by the chip companies, not end users, to 
make their chips more popular via gcc support.  Cygnus pioneered this 
model; now several companies compete for this business.  Either way, 
GCC benefits.

- Hardware vendors want Linux to work well with their hardware and show 
off said hardware's particular advantages.  Sometimes they do this 
in-house (e.g. IBM, some graphics chip vendors) sometimes they 
outsource it (e.g. to Red Hat or SuSE).  Either way, Linux benefits.

- A hypothetical example: a company selling a VPN accelerator or 
"S/WAN-in-a-box" could fund the free product (a sort of free "client") 
to speed the adoption of their product.

-g

[*]One of the roles of government is to make some externalities 
visible, e.g. cost of building roads or requiring companies not to pour 
toxic sludge into the river.  The latter isn't reasonable!