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Embedded Systems September 2000 Vol13_10

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I question whether we are going to see much more from [the open source] movement than the limited benefits already seen. code of their product, albeit to paying cu tomers. Modifications of that soft- ware are allowed and sometimes nec- essary to make the RTOS suitable for a specific application. However, a buyer is not typically allowed to give away or sell the resulting code as a new RTOS. Free redistribution is where mem- bers of the open source community believe that they are doing something radical. This is also where they try to turn business madness (giving one's product away) into a business model. But is this I -eally all that new? Let's look at it from a business perspective. Conside r that there are some cus- tomers who are prepared to pay a rea- sonable amount for your software and that there are other potential cus- tomers who are not willing to pay the price. Some products benefit greatly from the network effect,2 which says tl1at tl1e more popular tl1e product, tl1e greater the value of any individual item. This is true for telephones, since it means that I can call a greater num- ber of people on the phone that I pur- chased, and it is true for operating sys- tems, ince their popularity di ctates the number of applications, and the amount of expertise, that are available. It is the network effect that makes it ometimes worthwhile for a business to give its product away for free to every- one, or at least to those who would not otherwi. se purchase it. (Even hardware costs can be subsidised, as is currently done in the cellular phone and satel- lite television markets.) Many compa- nies have taken advantage of this in the shareware marke tplace. It has also worked to commercial software devel- opers' advantage, in a more subtle way, as the result of software piracy. In a sense, free redistribution and unlitigat- ed piracy are one and the same busi- ness model. (It's interesting to tl1ink about how these models are already competing m the operating system market for PCs.) Follow the money Even if the open source model cannot introduce anything new, perhaps it will sti ll be a success. Maybe the com- bination of the three properties described above will work more than any one or two of tl1em individuall y. Success, of course, can be defined in more than one way. Success can be defined as "makes money," but I would prefer to define success in this arena as "results in a better product, or better value, to the user." By the first defini- tion, a number of Linux companies have succeeded in making large amounts of money from their IPOs. After tl1e fas hion of a host of otl1er dot- com start-ups, tl1ey have managed to trade potential for cash. Like many of the dot-com companies, some will fail to live up to their potential. However, with a bit of luck these companies will con- tribute a bunch of free software to the community before they go bankrupt.3 Unfortunately, I am not sure that even this benefit will accrue to tl1e pro- gramming community. It is significant that the mcyor open source compani es are all leveraging already existing open source products, which were originally written with no commercial motivation. I contend that tl1ese companies will fai l to ever tru ly innovate. Innovation requires a level of risk, and the returns will neverjustif)' the risk when the play- ing fie ld has been levelled by an open source philosophy. Even the most suc- cessful open source products that already exist t •nd to be imitations of successful commercial products. In this way open source companies are dodging the two most expensive parts of a product's life. The defi nition of requirements that is necessary to defin e a new market is often the part that requires the most vision and inno- vation. The second, and financially larger, cost is marke ting. Today, demand for Linux would be minimal had commercial Unix not already established tl1e definition of a good operating system and market aware- ness of the problems Unix can solve. Marketing costs are often 10 times development costs, sometimes more. Open source companies claim that they are putting back into the commu- nity by releasing their improvements as open source. Cygnus was, at one point, doing 50% of all new development on the GNU compiler toolchain.4 They should be applauded for this, certainly, but the statistic overlooks the fact that they were not contributing 50% of the effort of defining the C language, nor of marketing its benefit. When the open source community is asked to produce products including the costs of definition and of marketing, I believe that the model will fall asunder. In "Giving It Away," Red Hat's Robert Young considers how they've succeeded at selling their brand ofLinux, when the customer can get the same software for free elsewhere.5 He compares this to Evian selling bottled water. Brand recog- nition counts for more than what the product contains (some bottled waters have even been found to be of lower quality than the local tap water). Tllis model will thrive in the pure commodi- ty market, but the engineeiing commu- nity is faced with challenges tl1at will only be solved witl1 real research and development effort. Young's model will not solve tl1ose problems, just repackage the solutions that already exist. Not only are tl1ese new, well-funded companies unlikely to innovate tl1em- selves, their commercial interests may stifle some efforts coming from acade- mia or elsewhere. Consider if I were to independently W1ite a cross compiler Embedded Systems Programming SEPTEMBER 2000 79

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