The commoditising of software
Published: 13 Feb 2004 11:35 GMT
Once every three months, Alan Nugent, chief technology officer of billion-dollar software company Novell, sits down with a small group of colleagues to decide what software the company will give away for free.
For the most part, Novell still sells software the old-fashioned way, with a licence to use applications written and controlled by Novell. But in the past year, the company has partially converted to the open-source software approach, with which anybody can download a program's source code and modify it.
The result is a hybrid strategy that forces Novell to question whether its commercial products -- even portions of its flagship NetWare line -- have become commodities that can be easily replaced by open-source substitutes. And increasingly, the answer is yes.
"One of the attributes we look at is whether there is a potential open-source alternative or what elements of open-source can be used in this product," Nugent said. "It's a very dynamic thing."
A rising number of software companies are facing the same dilemma. Once considered a diversion for computing hobbyists, open-source software is increasingly encroaching on traditional markets and, in the process, altering the strategies of powerful technology companies. Many software manufacturers believe that they have little choice but to adopt at least some form of the popular trend, just to keep pace with the rest of the industry.
Some large companies, IBM and Oracle among them, backed open-source operating systems such as Linux as potential replacements for Windows with the hope of loosening Microsoft's grip over much of the industry. In doing so, however, they may have fostered the expansion of open source into their own fields, threatening their products as well.
"This is a complex dynamic, because on the one hand, you need commercial support for [open-source products], but on the other hand, you have this phenomenon of wanting to resist, if you're a commercial provider," said Ted Schadler, an analyst at Forrester Research.
Indeed, just the threat of a viable product born of an open-source project -- and such projects now number in the tens of thousands -- is already affecting prices of commercial offerings, Schadler said. Microsoft is feeling it with desktop software; others, such as companies that manufacture server middleware and database software, are probably next.
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