Desktop platforms Toolkit

The commoditising of software

Martin LaMonica CNET News.com

Published: 13 Feb 2004 11:35 GMT

Like that of many companies, Sun's investigation of open-source is purely practical. Even before open-source products grew in popularity, companies had been trying new tactics, as the traditional software licensing business suffered rampant price competition.

"Given the way that the cost of goods sold on one unit is essentially zero, it tends to drive the prices down to zero, anyway, whether it's open source or not," said Gosling, who is active in Sun's NetBeans open-source tools initiative. "The average software developer spends more on lattes than they do on tools."

Despite the business conflicts open source poses, commercial stalwarts such as IBM and Novell insist that they benefit from it. In addition to its value as a hedge against Microsoft, some say open source clarifies where software companies should focus their energies.

Marten Mickos, chief executive of MySQL, argues that open-source software benefits all technology companies by creating more demand. As with other products in other industries, open-source offerings can fill the role of commodity goods and leave opportunities for companies to supply high-end products or services.

"Ten years from now," Mickos said, "we will look back and say, 'what did we do before open source?'"

Novell, which is in the throes of a huge internal transition, doesn't have the leisure of looking back just yet. It's not even totally clear that its dual approach of balancing open-source with proprietary software sales is more profitable than the traditional licensing model. But at least some of its executives believe that Novell can make it work, if the company is clever enough.

"The challenge is to stay ahead of the line, where software is commoditised," Nugent said. "You don't want to find yourself on the wrong side of that line."