Wednesday, January 02, 2002

Commoditizing Complementary Good Dave Winer seems to have settled an ongoing feud against Open Source saying that it's sometimes OK to give away code. Sometimes, it's very OK to give away code--here's my response:

Hey Dave:

Nice email. I know Userland has been upset about Open Source, but it really shouldn't be.

> Simply stated, here's my rule. Where you want
> competition, give away the technology. Where you
> want to be competitive, keep it to yourself.

Also known as "commoditize away the complementary good" (Shapiro and Varian write about this a lot in "Information Rules.") Microsoft did this with hardware, reducing Intel-PC components to their average variable cost. When you do this for silicon, the price falls to pennies, but when you do it for software, the price falls to zero.

Hardware vendors should like Open Source--it makes their products cheaper and more profitable. You should expect hardware vendors (from TiVo to IBM) to continue offering Open Source software, because they want code to be commoditized and earn margin on hardware. And remember, Open Source embraces interoperability in a way closed source software (free or otherwise) often doesn't.

Also, Open Source does not have a great track record when it comes to user friendly applications, because ease-of-use may not be interesting to most developers. But this is where companies like Userland, who care greatly about ease-of-use, can find valuable markets. And if Userland can't come up with better, easier-to-use applications than a bunch of coders tapping away in their free-time, does it really deserve to exist? But I have faith in you guys, I'm sure you'll turn out great stuff worth the money.

Open Source is as much a reaction against lock-in and broken interoperability as anything else. Most users are not like ESR and would welcome quality closed-source applications (even on Open Source platforms) that are materially better than Open Source equivalents to justify their cost. Especially if they are innovative, don't lock customers in, and play nicely with other programs. Sounds like a good place for independent software developers to live.

Apple's BSD kernel is exactly this thinking in action. Aqua, for all it's problems, provides a richer GUI and application environment than GNOME or KDE. I'm glad Apple stepped in to fill that void and bring Unix plus GUI to market (now if only it's GUI acted more like Unix). Mac OS X offers more stuff than OS 9, including a rich development environment, the entire universe of POSIX code (almost), and an Apache server. Contrast this with XP, which offers less functionality than previous versions of Windows (product activation, hardware binding, draconian licenses).


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