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Nuclear winter? More like global warming

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Is mainstream acceptance for Open Source a “nuclear winter” for the software industry? I certainly hope so.

Some argue that Open Source and Free Software are best left as a niche market, and that widespread acceptance of software without license fees will harm the economy. Certainly, widespread adoption of Linux, OpenOffice and other freely available software would be harmful to the bottom line of certain companies, but would it be harmful to the economy overall?

Their Bottom Line Is at Your Expense

My guess is that it would be beneficial. Right now, many companies and organizations are facing budget cuts. They must choose between cutting manpower and not buying software that they need to run their businesses. While companies can put off some software purchases, they cannot avoid others. In the face-off between employees and license fees, employees are losing all too often.

It was reported recently that Microsoft pockets 85 percent of the revenue from Windows sales. That kind of profit margin is unheard of in any other industry. There’s nothing wrong with turning a profit, of course, but the money isn’t just falling out of the sky and into Bill’s pockets. It’s coming out of your pocket and, more than likely, your employer’s.

While companies across the country were cutting costs to survive, laying off thousands of people, Microsoft was using its dominance to gouge companies and consumers by raising the retail cost of Windows and instituting Licensing 6. This new subscription-type licensing deal guarantees Microsoft income on an annual basis. But there’s no guarantee that Microsoft will deliver new products to subscribers.

Not Boosting the Economy

More importantly for the economy, there’s not much likelihood that Microsoft will be spending its money anytime soon. At last report, Redmond was sitting on about US$40 billion in cash. That money has been drained from the economy and is not being put back into play to buy products and pay salaries for people who don’t happen to work for Microsoft. Instead, it is being put into a war chest to expand Microsoft’s influence into other business areas and pay for its presently unsuccessful ventures, such as Xbox and MSN, so the company can make obscene profits in those areas someday. Do the math. The money that goes into licensing fees for Microsoft products would pay a lot of salaries for out-of-work techies.

It is true that Microsoft has to find ways to ensure steady income. As a public company, it is on a mission to continually improve profits. The licensing plan is a very good way to do that. But is it good for the company’s customers? Increased profit for Microsoft has to mean increased expenses for its customers.

The Problem with Proprietary

I’ve picked on Microsoft to make a point, and it’s certainly an easy target, but it’s not as if the Redmond-based giant is the only company at odds with its customers. The entire proprietary software industry is, in a very real way, involved in this conflict. An IT department’s goal is to deliver the services a company needs as inexpensively as possible. The goal of a proprietary software company is to find ways to ensure steady and increasing profit margins. Those two goals are diametrically opposed to one another.

Let me explain. As a rule, you buy a product and use it until it needs to be replaced. For example, you buy a car and use it until you get tired of the car, wreck it, or just run it into the ground. If the automotive industry plans everything right, then cars will last long enough and run well enough that you’ll want to do business with them again when the car needs to be replaced. There’s an element of planned obsolescence, but they can’t be too blatant about it or people will simply go to a different automaker that’s willing to build a better car.

The Upgrade Treadmill

Unfortunately for software companies, software doesn’t suffer wear and tear. Instead, software suffers from deliberate sabotage by the companies that make it. The documents created in, say, Adobe Illustrator 10 are guaranteed to be incompatible with old versions of Illustrator. So, when a certain percentage of the publishing industry moves to 10, I’d need to upgrade just to be able to exchange documents. Some of that may be the result of legitimate innovation, and to be fair it does happen over time with some Open Source programs, but it’s also a deliberate design to ensure that customers will stay on the upgrade treadmill.

Software companies cannot depend on the lure of new features to guarantee that customers will continue to buy new versions of their wares. Once users are happy with a certain program, they have little incentive to upgrade. In fact, they have a strong disincentive to upgrade as a rule. Aside from the obvious expense of new software, they usually find themselves having to relearn how to use their tools and sometimes find that functions they’ve come to depend on have disappeared.

Let History Be a Guide

The history of the Web is a good example of how Open Source is beneficial to the economy overall. If Apache, Perl, BIND, Linux, *BSD and Sendmail hadn’t been freely available, then a lot of the growth of the Web would never have happened. Yahoo! wouldn’t have happened. Hotmail wouldn’t have happened. (Think back: Microsoft hasn’t always owned Hotmail.) Local ISPs, by and large, wouldn’t have been able to make a go of it if they’d faced enormous licensing fees on top of equipment costs and connectivity fees.

It’s time that proprietary software be relegated to niche markets. Let the proprietary software companies deliver software for markets that are too small or too specific to support successful Open Source projects. Companies and organizations could better spend their money on salaries instead of licensing fees, something that would truly benefit the economy.

(Originally written for and published on OSOpinion/NewsFactor. Retrieved from the Wayback Machine. Presented warts and all, this was my thinking circa 2002 about the future of open source and software subscriptions. In some cases, dead wrong, and definitely didn’t make the case quite as well as I’d hoped.)