The Simple Economics of Open Source

Raffael Cavallaro raffael at
Mon Apr 24 05:57:00 CEST 2000

In article <MPG.136cc01af4ab703b989709 at>, Richard 
Hale <rkhale at> wrote:

>The Open Source software that I have used has been very valuable to me.  
>Did those who produced it not see as much value in it?

Well, they probably knew they couldn't sell it as a closed source 
product and make much money from it.

Fact is, only commodity items, that are known to many programmers, are 
open sourced. If there were sufficient demand to support a closed source 
business, then it would have happened that way. The proof of this is the 
BSDs, which would allow a closed source, proprietary fork at any time. 
Hasn't happened 'cause there's no demand for such a product.

The closed source biggies are not open sourcing the crown jewels. Why? 
Cause there's plenty of cash still left to milk from those cows. Notice 
that Apple has open sourced only those parts of MacOS X that *aren't* 
lucrative consumer software. Where's the Darwin QuickTime (not the 
streaming server, but the client?) Where's Darwin Quartz, Darwin Aqua, 
Darwin Cocoa? Don't hold your breath for these, because these parts of 
the OS are what allows Apple to turn a profit. If they became open 
source commodities, Apple would become just another clone maker.

Of course this is even more true for MS. If they open sourced their 
stuff, the only thing they'd have to sell is support. Ever looked at the 
margins MS has on their software? Ever seen the margins that support 
businesses have? Guess which one MS would rather have.

Open source will only ever have commodity items for the simple reason 
that anything truly unique can command a much higher profit margin than 
support and service, which is what you really sell if you're in the open 
source *business* (as opposed to hobby).

It's just simple supply and demand. Unique items have (by definition) 
only one supplier, so prices can ge high - supply is fixed. Commodity 
items have (by definition) many suppliers, so if one supplier raises his 
prices, customers just move to another equivalent vendor - supply is 


Raffael Cavallaro, Ph.D.
raffael at

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