15 August 2008

Another Reason Open Source Is Unbeatable

The post by Tom Evslin is talking about ad networks on blogs, but the insight is general:

Big profits attract lots of competitors. Would-be competitors can point to your profits and easily get funding. Funded competitors can undercut your rates and "steal" your bloggers. Whoops; the circle is now turning in the non-virtuous direction. If you're doing well but running at or close to breakeven, you've made it impossible for anybody to undercut you without running at a deficit which is hard to get funding for – at least in this market. The biggest danger to you is someone who finds a way to substantially cut costs or to deliver a better product. Obviously you've got to be vigilant about that and ought to lose some sleep over these possibilities – but keeping prices down keeps a plague of me-too competitors from cutting off your growth.

This is why it's so hard to compete with free software: it's free, and the profits made around it are much smaller the the price-gouging that proprietary software has traditionally gone for. (Via Jeff Jarvis.)


zaine_ridling said...

Unbeatable, indeed. No matter what proprietary app you stack against an (good) open source app, you can always fall back on: "All things being equal...."

And people wonder why that whole Linux thing just won't go away.

glyn moody said...

The problem is they look at open source as just another kind of proprietary....and then wonder why things are so strange.