Category: Economics

Outdated example, typo in The Emerging Economic Paradigm of Open Source and other comments & suggestions

I once wrote a long email to Bruce which I never finished and sits in my GMail’s Drafts. I decided to posted here.

Draft saved at Monday, April 17, 2006

Hello Mr. Bruce Perens,

I’ve read word per word your explanation of FLOSS as I’m very interested. I was a volunteer programmer for a jabber client written in Python and GTK ( and now I’m focusing on my last semester of my compsci undergrad studies. I was and am always interested in things outside of hacking (politics-economics, management, music, cinema) eventhough I easily get considered as hacker.
That small profile I wrote it later to the below text because sadly what follows is a bit big so the intro was begging for sth more to keep you interested (well..). Anyways:

The paper really needs a better example when talking about amazon and differentiation. See why (Scroll down if you have small screen)

The overhead of the traditional brick-and-mortar retail sales paradigm is extremely high, with the result that less than 10% of the money paid for the software by the end-user actually goes into product marketing, software development, and documentation[7]. Micrsoft spent only 16.8%

Micrsoft is missing an o. I caught this by eye.

from the html source I understand you wrote this straight to html? Anyways try opening your HTML with OpenOffice and hit the MS-standarized key F7 (at least to me MS standarized it :$) to spell check the rest of the document.

Also if you consider providing a PDF version of this document, that would be great. As people very rarely read to the full extend a onscreen document as opposed to a printed version (I’m no expert in this, I know my colleagues all below 22 years old almost never read html documents to full extend)

Also I’ve spotted some ‘can not’ which prefferably should become cannot (,

another problematic (imo) section is where you describe The In-House and Contract Development Paradigm.

first the mixing, it’s cool at first, but then you go and mostly examine contractors and not in house. this to a real-reader is very obvius and annoying.

Especially this:

In general, a contractor will try to use some of the work he does for one customer to leverage his business with other customers by re-selling work that’s already been paid for. How successful he is at this depends on the contract terms and the honesty of the contractor. If your contractor is confident that he can re-sell work he does for you, he might charge you less and you might benefit from some distribution of cost and risk to the contractor and his next customer. However, this is not generally an appropriate scenario for differentiating software: if your contractor is selling your business differentiators, your business could soon be in trouble.

this is 100% false for in-house. So perhaps split them and try to find something about in-house?

in FLOSS you conclude that FLOSS is at least successful as in-house. so I guess you could give a hint in the in-house section that “hey that’s cool too as it works most of the times [as does FLOSS]”

Also in the FLOSS section you say:

In the case of differentiating software, they have little choice but to make use of the in-house or contract development paradigm, because they need to prevent their differentiators from falling into the hands of their competitors. For their non-differentiators, they have the choice of the retail or Open Source paradigms. But which is more efficient?

But which is more efficient? I couldn’t find the for-sure reply in what follows in the same section. was it me and I just overlooked?

some lines above that one reds:

It’s not important to these companies that Open Source does not in itself produce a profit.

then you go to call Business Software Alliance requests as nonsense.
Now it’s clear to me. Companies that produce only or mostly software (eg. MS, Corel, Adobe, Oracle) cannot survive.

This should be super clear in the beggining of the paper imo, but gets reveleaved about in the middle of the document, eventhough you hint before I think it must be more clear that this document is not targeting Software Companies CEOs or whatever but that it’s written for “those CIO/CTO/CEO that cannot stand MS or FOO vedor locking, and would like to still sell there hardware, potatoes or whatever without the need to pay Microsoft so much money”.

This reminds me of MS when they stopped a paper advocating on FLOSS usage in a UN conference. MS said: “Free/Open Source makes it impossible for software companies to make (big) money”. (the big is mine). Apparently you seem to propose that open source core, prop the extension, but that doesn’t work most of the times as the money that come in it’s not worth it (you better try so hard selling shoes in a shop, if you succeed you gain more money instantly)

moving on..

Businesses that require non-differentiating software (really, all businesses) would be well advised to shift some development to Open Source and reap greater economic efficiency.

what do you mean by “(really, all businesses)” ?

I feel that their motivation is similar to that of an artist: just as a painter wants people to appreciate his paintings, a programmer wants to have users who appreciate his software.

well. everyone is saying that. the thing is that artists also happen to sell (or would like to sell). Since you talk to people that put proft first (as you say so) I think the above begs to be rewritten. Your target people will not consider an artist that became successful a sellout, the rest of artists that didn’t (or don’t want to) will consider him a sellout though.

somewhere where you say that most support RH, SUSE, DEBIAN, you point to which if someone reads it and is a sucessful linux distributor says: “oh thank god LSB failed and continues to fail!” so this again sends contradicting messages. Unless you just describe the current reality which still gives a message of uncertainty.

Nikos Kouremenos
Undergraduate Student, Computer Science, University of Piraeus

Mistakes in Paul Graham’s “Why Startups Condense in America” (as seen by a young european citizen, aka me)

I sent this to Paul Graham, just because I couldn't easily skip the fact that places in his latest essay were false and that they were false because of failure of understanding the concept. (because else, if just false or mistakes, I don't care I just skip):

What I sent goes like this (I improved/edit some minor bits after reading and reading, but the meaning is the same):

The long war of philosophies about jobs and employment between US and EU cannot be solved or even argued to a good extend in 2liners, but you fail to point out that (perhaps because 1990 in Italy EU was like the old EU (after all it even changed a name and became a political union some years later)) that:

a. EU has programs that act something like VC firms. (or even better). f you apply and you're lucky and persuasive and/or have an original idea, chances are you get funds from EU that you don't have to return at least AFAIK) and that helps a lot. Of course more VC Firms in EU are more than welcome.

b. Research means "want to learn more" after all THAT is the basic thing that keeps smart people hungry for new knowledge, and thus PhD argument you make is totally mistaken. (no need to say more)

c. Germany and France won't speak their native lang only in their homes or by future idiots like Leppen, simply because both countries (as well as most of the rest of countries in EU) have LONG HISTORY behind them. You fail to understand the importance of that in the "genes" of the human. 9/11 was a relief for some in EU because many here said "at last". You there were doing like Iraqis are doing now thanks to you (not personally you). You were under attack. Your "stupid" ideas about american dream, freedom or whatever. This proves that stuff that you share with rest of people from the same country make people act different. France for example didn't like that poor africans in Paris were burning the streets and swearing in FRENCH. Laden's followers in UK bombing, spoke fluent British! That shocked the british people more than anything and doesn't want more analyzing /me thinks.

d. EU is accepted in many countries, just because it guarantees that everyone gets to keep his identity. EU is alternative model to US. If it 'll succeed noone can say. I don't disagree that english is the current earthian (as it was french in europe some decades ago, as it greek two thousand years ago), but trying to saying EU will end up US (or that it should or else will fail) is a bit naive and it's the most common mistake (not really) that "i-like-america" think tanks/analysts that even are EU citizens often do.

I guess I should stop here, as it's getting big. You can imagine the rest. The only american modern capitalist that I've read and has got right what EU is about, is Jack Welch of GE fame. Thanks for sharing your thoughts, and please hit F7 in the last article, and good luck and *have fun* with your VC Firm and rest of activities.

FLOSS model: All you ever wanted to know, and were afraid to read

First, take it or leave it.

FLOSS (Free/Libre/Open Source Software) can be seen in two different ways. Both are good ways, but I mostly gonna focus on how corporations view it. I'm not gonna say something new, but I will summarize in very short setences my understanding of FLOSS after having read many papers and documents from GNU philosophy (mostly Richard Stallman), Bruce Perens, Joel Spolsky, and Eric Raymond. I can also speak from the inside for one of the two ways.

So what are those two ways?

  1. FLOSS is fun, free, you learn and all that
  2. FLOSS is an economic model for non-software-centric (in terms of profit) businesses to do their software work.

I will shortly say that 1. is true. And as a CompSci student that visits his University rarely, I have had the mood and the time to use and later contribute to FLOSS in various ways (first as translator of Psi Jabber Client, and later as more than a year everyday programmer for Gajim Jabber client). Becase I dislike amateur work, I ended up to understanding that it's impossible to do professional work without profit. And this leads us to 2.

Economic science is perhaps one of the best ways to accomplish truth (well.. your truth) about a given status and hope that your truth has more in common with the reality (as seen by majority) than less in common. Because being an Microsoft/FLOSS/Redhat whatever hateboy or fanboy with no reason is not my cup of tea, I couldn't resist trying to understand how come FLOSS works and most importantly where it works. Again the answer is not something new, but requires a better understand of FLOSS:

FLOSS is just a way for a group of companies to make together a common software they all use with the lowest risk taken by this common production procedure. Thus FLOSS is bad for software-centric companies, and it's more than healthy that Microsoft attacks it.
This is explained very well (eventhough with some eyecatching typos and some outdate information) in Bruce Perens paper.

In other words, if you are a software company if FLOSS would prevail allover will kill you. But of course FLOSS cannot and will not prevail allover. If you are a small software company it's likely you will continue to have work to do (and receive profit from it) either in providing indoor or otherwise super specialized software, or by customizing FLOSS to meet the needs of the client that hired you to do so. And the last customization is what distro companies are doing, eventhough because the market is very small, not many do it with profit.

FLOSS everywhere also means fewer jobs for software developers. Stallman not only agrees with it, but proposes a software tax. Now in USA the word tax is bad word to economic minds, and that's why nobody speaks about it and chances are you first heard it here. This understanding doesn't imply that I support a software tax.

Now GNU also says that software is common good and all that. That's not the case. Nothing is common good in reality. Some are seen as such because else civilized society cannot work. Software is so new (when compared to clean water, food etc) that nobody outside of a communistic view can be persuaded that software is in fact or needs to be a common good. Rest pundits of OpenSource (it's why GNU disagrees with the term) don't speak about tax and mostly not about common good. Nobody should accuse GNU of speaking about it though, as they don't care about the economics of the model. They are happy it just works and want to see it working better (as they understand better).

But for companies that "get it", FLOSS is great. It means with many times less money they can have the same or almost the same job done. Every company tries to cut costs and FLOSS is the best way to do it when you want to reduce software costs. You also may need less staff working at software if you adopt to a model of adopting a FLOSS to your needs. Even if you as a company want to make something new, either you find some competitors that can work with you on the common base of this new product, or you start your own and you hope that upaid community hackers (or geeks) will do even 1% of your work for you for free. You don't care why, you just wish they do so you can spend less money. If you agree with competitors to do the common software base together and do it as open source you have higher chances to not get trapped in the risk taken. Perens provides his facts on this and proves (in his view) that FLOSS is the way to go for common projects instead of closed-doors boards etc.

Summing up, if you are a software company you can make from FLOSS by customizing it to the needs of the client. And if you are a company that just has an software dept you can (if you really get it, and your staff also gets it) reduce costs. And that's all there is to it. Companies like Redhat or Novell didn't suddenly agree with communism, they just think they have this good way to make money. The fact that you or me can run Fedora or whatever FOR FREE is a "side-effect" of the whole thing and not the target. Eventhough it doesn't really hurt, as even Microsoft is somehow okay with illegal copies of windows in desktop machines (no matter what it lately says) as in the end when you'll work in a a company you'll say to your boss: "I know word, excel" but you didn't buy MSOffice in your house or did you? The same holds true with Fedora or whatever with the exception that with FLOSS you are really not required to buy it.

That's it. sorry for being big, and I don't have the courage to proof read it atm. I also have work to do. Have fun