On Tue, 22 Jul 2008 20:05:44 +0000, Roy Schestowitz wrote:
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> Blog: SaaS and Open Source are Good for Customers ... Unfortunately
>
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> | There's an (unintentionally) funny article in BusinessWeek online,
> bewailing | the tough business circumstances that SaaS (and open source)
> face. From the | opening paragraph:
> |
> | "The Internet revolutionized the distribution of software-perhaps a
> bit too | much. The Web brought a new, cheaper method for getting
> software into the | hands of users, but in doing so may have killed one
> of the best models in | Silicon Valley history."
> |
> | The piece goes on to say that OnDemand companies have problems because
> their | margins are lower and they have to work so hard to get
> customers. |
> | [...]
> |
> | Summed up, her point is that software companies *loved* the old
> perpetual | license business offering, because they got all their money
> up front, could | charge separate yearly maintenance fees, and got an
> extra-special present in | the form of an upgrade fee every few years as
> well `----
>
> http://www.cio.com.au/index.php/id;1265992326
>
> "Open source is an intellectual-property destroyer [...] I can't imagine
> something that could be worse than this for the software business and
> the intellectual-property business. I'm an American; I believe in the
> American way, I worry if the government encourages open source, and I
> don't think we've done enough education of policymakers to understand
> the threat."
>
> --Jim Allchin, Microsoft
>
> Is "exploiting the customers" really the 'American way'? Or just
> Microsoft's (and BillyPress) interpretation?
Many, perhaps most, things have an expiration date. Automobiles, kitchen
appliances, electronics, all those wonderful modern conveniences, all
must be replaced at some point, sometimes at considerable cost. This
also applies to software, but prior to the advent of open source,
software replacement came with an ugly additional cost not associated
with consumer goods - lack of competition. Not that there were not/are
not multiple vendors providing similar solutions, but that one cannot
replace, say, SQL Server with Oracle the way one can substitute a Volvo
for a Yugo.
The fact that proprietary software (software in general) does not support
such drop-in replacements allows vendors to charge arbitrarily high
prices for upgrades and support, because in order to switch one must
incur the conversion cost (usually prohibitive) in addition to the
initial purchase cost, and the vendor will at some point drop support for
old product versions, making upgrades mandatory. By and large, it is
businesses who have been the direct targets of what amounts to legalized
blackmail; indirectly, consumers ultimately pay for this, since
businesses merely pass along the costs. Larry Ellison didn't print money
to buy all his toys, you and I paid for them.
Open source combined with a support-based business model offers, finally,
an alternative to this merry-go-round. Acquisition cost for software can
be as low as $0, and multiple vendors can compete to supply support.
Start-ups can achieve major cost savings by utilizing open source
wherever possible. Adoption by established businesses is more difficult
- conversion costs won't disappear - but this is already happening,
slowly but surely.
All of this may be bad for the proprietary software houses, but the
larger business community will be a huge beneficiary, and this will
ultimately benefit the consumer. I'll shed no tears for the poor
software companies.
>
>
> Related:
>
> Source of the revolution
>
> ,----[ Quote ]
> | According to Ghosh, the notional value of Europe's investment in |
> free/libre or open source software (FLOSS) today is e22bn, |
> representing 20.5pc of the region's total software investment. |
> Spending on OSS stands at e36bn and accounts for 20pc of software |
> expenditure in the US.
> `----
>
> http://www.siliconrepublic.com/news/news.nv?storyid=single8105
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