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The Inversion of the Open Source - Big Corporation Divide?

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mouser:
I try to avoid thinking about corporations and business models as much as possible, but this morning i had a thought about something that's been troubling me for a while and i thought i would try to post about it.

It has to do with what seems to me like a particularly ironic change that's happening regarding who is benefiting from Open Sourcing their software.

Note that I'm not talking about who benefits from *using* Open Source software -- I'm talking about which developers benefit from releasing their software as Open Source.


It seems to me that not too many years ago, large companies focused on profit were loathe to release their software products as open source.  Intellectual Property was their competitive advantage, and having the unique product to offer was key.  And small independent developers focused mainly on the creation of some useful tool could release their software open source fairly certain that, while they might not be making any money from their work, it was at least very unlikely that anyone else would be making money from it either.


But it seems to me that with the shift to web-based services, we are starting to see a troubling inversion of this pattern, where the bigger and more powerful the corporation, the easier it is for them to benefit from releasing code as Open Source, while for small developers, releasing software as Open Source seems increasingly likely to result in it being used by an independent corporation to make money.

I think the reason for this shift is that with the move to web services -- it's no longer the intellectual property that is valuable -- it's a combination of computational resources needed to host a large and busy web service, and the resources and money available to market and support it.

A giant corporation like google can afford to open source most of its software because it's not the software that's valuable any more -- it's the company infrastructure that enables them to serve so many users, and the cross-marketing resources they can throw at the userbase any time it looks like they might be losing market share.  Open sourcing their software is merely a way to get more free publicity and free bug fixing for their code.

For web services, making the intellectual property of the source code available freely no longer does harm to these big corporations because it's not the important thing any more -- having the money to pay for the marketing to maintain a large user base and maintain a farm of fast servers to keep the service fast is what matters, and those are things that small upstart competitors rarely can compete with.

Meanwhile with the focus on online web services, for a indie coders without the money to compete with a large corporation, the paths forward are daunting.  If you create something new and innovative, unlike the case with desktop software, you have to know that you won't be able to scale up the service to handle a large volume of users.  This means that your likely best chance of surviving is to sell out to a large corporation who can.  And perhaps it's only by preserving the exclusive rights to the software they've developed and the intellectual ideas for it that they have a chance of going down this path.


So i'm not sure these ideas are fully fleshed out, i'm just thinking aloud here -- but i'm troubled by how much more difficult i see things getting for small independent developers in this new world where online web services are king.

One sliver of hope may be the in small developers giving up some control and accepting a 50/50 partnership with these large corporate web service back-ends and cloud application services; it may mean the end of purely-independent small developers, but it may blunt the worst of my fears, and mean that small indie developers can operate on almost equal footing with large corporate infrastructures, as long as they are willing to split revenue, which isn't a terrible thing.

Eóin:
This is just the nature of opensource to my mind, and it the very reason I never understood the GPL. I just don't get the logic behind "Go ahead use my software for building monopolies or managing your dictatorship, but if you link my library against your freeware app I'll come down on you like a tonne of bricks".

You need money to make money, it's always been that way. What we'll see is the further growth of middle men, people who run 'farms or rent' on which you can host your web applications, that way indie developers can get a foot in the door.

jaden:
Meanwhile with the focus on online web services, for a indie coders without the money to compete with a large corporation, the paths forward are daunting.  If you create something new and innovative, unlike the case with desktop software, you have to know that you won't be able to scale up the service to handle a large volume of users.
--- End quote ---

The indie developer can leverage those web services (Amazon Web Services, Google Code) to compete head to head with large companies.  I see the move to web services as leveling the playing field, allowing a single guy in a basement to compete directly with some of the largest companies in the world, and scale to meet the demand.

barney:
I tend to agree with Eóin about the rental farms, albeit perhaps from a different perspective.  One infuriation over the last couple of decades has been finding a great app that won't run on the OS of choice.

With the tendency - trend? - to create Web apps, OS specificity will become less and less, so a developer will no longer have to pay as much attention to the user's platform of choice.  Assuming that as a given - it ain't yet, but we're moving in that direction - small developers will have a much larger audience.  If the server rental farm concept - already in process, methinks - comes to pass, the indie developers' product(s) can see a much larger audience than they currently might enjoy.

The downside could be renting the farm space, but tech-savvy angel investors will appear to alleviate that aspect, methinks.  They show up everywhere else  ;D.

app103:
The downside could be renting the farm space, but tech-savvy angel investors will appear to alleviate that aspect, methinks.  They show up everywhere else  ;D.
-barney (July 29, 2010, 06:55 PM)
--- End quote ---

Yes, but most angel investors don't actually want a chunk of a small company that plans to be in it for the long haul. They want a chunk of the cash when it's sold to a big corporation, which they will push to make happen.

Nobody wants to risk their money and time investing in what could be the next Google, when it's easier to make the company sell to Google and they get a big cut.

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