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Developing open source

David Becker CNET News.com

Published: 16 Feb 2004 14:05 GMT

In the past, rampant piracy, especially in Asia, has limited Microsoft's enthusiasm for addressing some markets, said Stephen O'Grady, an analyst for research firm Red Monk. But with looming competition from free open-source software, the giant may no longer have the option of writing off countries with heavy black-market trade.

"In Thailand, [piracy] was one of the compelling factors for Microsoft to look at that and say, 'it doesn't make sense to put money into developing software there,' " O'Grady said. "It may not any longer be a simple economic decision based on piracy. It becomes a more complex long-term decision based on is this going to be a potential threat in terms of their market position."

DeGroot agreed that developing nations are a long-term concern for Microsoft, posing substantial risks and rewards in the coming decades. "It is important for Microsoft not to let any open-source product become the only option for people in a particular region or language group," he said. "If that happens, in a sense it becomes Microsoft fighting someone else's monopoly, and their monopoly with American consumers doesn't really have much of an affect there."

The potential upside if Microsoft can plant seeds in emerging markets is considerable, DeGroot said. "The North American business market is already pretty saturated, so you have to think about 'where is the growth going to come from?'," he said. "This is one of those gleam-in-your-eye type things. As populations around the world get the benefits of computerisation, Microsoft will need to be there."

Open-source advocates believe they have the upper hand, however. By separating software development from profit motives, they can respond more quickly and completely as computing communities arise.

"It's one of those areas where proprietary software companies are fundamentally at a disadvantage because of their method of allocating resources," said Hiser. "You've got markets that are fragmentary at best, where software as we know it is not economically viable. But that doesn't matter for an open-source project. You just have to have a need and some people willing to work... It's going to be like the cellphone technology that went into some of the developing countries, where they went from having no telephones to fairly advanced services very quickly."