Subject: Re: Fwd: Wall Street article on a new Cooperative
From: Adam Turoff <ziggy@panix.com>
Date: Tue, 20 Apr 2004 00:13:43 -0400

On Tue, Apr 20, 2004 at 01:28:21AM +0100, Jamie Lokier wrote:
> Adam Turoff wrote:
> > That leaves the ancillary stuff: HR, asset management, contact
> > management, CRM, etc.  Anything these non-tech companies write in house
> > is going to be heavily customized to their business models, and
> > inappropriate for anyone else to use -- even in the same sector.  
> > So the premise of sharing software is bogus from the start.
> 
> On the contrary, software which is heavily customised tends to be full
> of juicy solutions to small problems which can be adapted for use in
> other projects.  Maybe only a few programs familiar with the code
> would know which those juicy bits are, but they usually exist.

For a tech company like Siebel, there's a lot of value to mine.

For non-tech companies, there's very little incentive to pursue those
'juicy solutions'.  Avalanche would be a co-op of non-tech companies
building the software they commonly use.  There's a huge friction force
to overcome before a co-op like this could become a shared IT department
for non-tech companies, something that would exist to pursue these 
'juicy solutions'.

> The trouble is, once they've bought into it, the co-operative as a
> whole has a good incentive not to open that source: it's worth $30k
> per new member to keep it closed.

Yes.

Assume that Avalanche is successful.  What does it look like 10 years
from now?  A company can either pay its $30K annual membership fee, or
it can spend $100K for this app, $50K for that app, and so on down the
line.  Or it could go open source, save money on software, and hire a
few hackers / consultants to write the missing parts.

It's an interesting chapter in the downward pressure on software prices,
and declining value in software in general.  But it's not necessarily a
meaningful one.  Avalanche could easily self destruct, yet pave the way
for more widespread open source adoption in these businesses.  

Z.