Open Source Liked, but Too Good to be True

Open Source Software (OSS) is a very popular concept, but its economics are a subject of hot debate.

Even professional developers, whose incomes are linked to the value of the software they deliver, have warm feelings about OSS -- where source code is made publicly available and can be freely modified. A new survey of 400 developers, released by Evans Marketing Services (, finds that more than half, 53 percent, favor the proliferation and use of OSS. Another 22 percent said they thought it was a good idea that would never work. Only a handful of developers, 5 percent, completely opposed the idea of open source software.

"Many of the developers we interviewed were not only favorable, but very enthusiastic," says Janel Garvin, director of research for Evans Marketing Services. "They really like the idea of being able to get down to the source and make changes, add features or otherwise modify programs that are integral to their development efforts." But, Garvin says, "There's also a feeling among some developers that this approach is too good to be true, and that it just won't work in today's marketplace."

There's a perception that there's no way to make money from OSS, and that the market for software sales couldn't exist under an open model, says Garvin. "There would definitely need to be a change from the industry's current software licensing model for OSS to work economically. Viable marketing models need to be proposed and fully explained and understood before this type of objection will disappear."

Proponents of OSS say there are plenty of ways to make the open software economic model work, pointing to the successes of companies such as Red Hat Software (, Cygnus Solutions Inc. ( and Caldera Systems (, which offer commercialized versions of open source software. Freely available programs such as Linux, Apache, Perl, and Mozilla make up the core of many commercial applications.

Testimonials on the Web site ( counter the so-called "Open Source Doomsday" scenario -- in which the value of software will drop to zero and the software market will collapse if OSS proliferates. "People who worry about 'Open Source Doomsday' have lost sight of one fundamental fact: If having a program written is a net economic gain for a customer over not having it written, a programmer will get paid whether or not the program is going to be free after it's done," according to a statement posted at

Microsoft Corp. appears to view OSS as a competitive threat to its revenue model, as demonstrated in its internal "Halloween Memo" that came out last fall. Since then Microsoft president Steve Ballmer has admitted that Microsoft is considering plans to "start publishing more of the Windows NT source code." The attraction of OSS is not the price, but "the notion that people can get at the source code that would be helpful for them to get at, whether it's to do modifications to be smarter about the way they create their applications," Ballmer notes. But as far as giving away all 40 million lines of source code, "I don't think that's going to delight anybody," he says.

Open Source Software Doomsday Scenarios

  • "Programming will collapse if software has no market value." About 75 percent to 85 percent of all code is written in-house, so at most, 25 percent of the programming profession is exposed.
  • "Open-source software has no market value." Look at the success of Red Hat Software.
  • "Outsourcing open-source development means a loss of in-house jobs." When did you last see a software development group that didn't have more than enough work waiting for it?
  • "Can corporations earn good returns on selling open-source?" Such a model speeds development, lowers overhead, and promotes closeness to the customer.