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Two views on FOSS and peer-production.
First, Braden Cox, Policy and Research Counsel at the Association for Competitive Technology, writes of fuzzy math in the recent EC FOSS study. I guess FOSS really is re-shaping economics! Or, perhaps, many arguments for FOSS simply boil down to moral rather than economic ones. The basic claim of [chapter] 7.3 is that FLOSS-contributing firms perform better than firms that aren’t FLOSS contributors.
They base these claims on two key findings, based on the firms who contributed code to Debian 3.1, a popular FLOSS distribution. First, they find that FLOSS contributors have more revenue than their industry peers. Second, they find that these firms generate greater revenue per employee than the industry average.
…Now comes the great leap of FLOSS faith. The authors count all of the revenue for each FLOSS contributing firm when comparing their performance to industry averages. That means all the revenue of giant manufacturers like Nokia, and Siemens are counted as revenue for “FLOSS Contributors”, even if their revenue had no reliance on...FLOSS... I have had many doubts about FOSS and peer-production. I've grown more accepting of them over the years- mostly from reading about the decision making of the talented Louis Gerstner rather than various FOSS advocates in academia. However, as Braden shows us, many FOSS arguments really reduce to very little. FOSS supporters should stop considering themselves the next revolution and speak in more stable terms. Glossing over the details with FOSS propoganda simply wastes time that could be spent on serious arguments.
Speaking of Gerstner, his IBM Linux strategy is the stuff for MBA schools.
Second, an article on peer-production by Tim Lee, a Policy Editor at the Show Me Institute, who seems hitched on to a peer-produced star of his own. Lee makes some points, but does not address the fact that IBM adopted its FOSS strategies as a way to commoditize proprietary markets to tap services revenue, and that IBM is the top patenter of software inventions in the US. In both models, IBM is interested in profit. Without profit, IBM wouldn't care about FOSS, peer-production nor patents. Why would a company spend hundreds of millions of dollars on software that’s given away for free? The strategy benefits IBM in two principal ways. First, contributing to Linux is the best way for their programmers to become experts on the system, which in turn makes them better at offering support services. Second, their contributions have created considerable goodwill in the broader Linux developer community…
This informal open-ended collaboration has served both IBM and the broader Linux community, creating value that couldn’t be captured by proprietary business deals grounded in exclusive contracts, patents, and copyrights. As unnerving as that strategy might seem to the typical MBA, it paid off handsomely for IBM… As far as I see, IBM views FOSS and patents as methods of collaboration. Each model is leveraged in circumstances where they can draw IBM revenue. With FOSS and peer-production, IBM will need to coax volunteers into its PR mind-field. While IBM’s FOSS and patent businesses are not entirely distinct, they do gear towards different kinds of revenue streams and markets. IBM did not transform into a FOSS company for others' benefit as much as it added another channel of business.
I'm sure none of this is new to you MBAs.
posted by Noel Le @ 11:39 PM | Free Culture Movement
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