Saturday, March 12, 2005

Economics of the Bazaar

If you have been associated to opensource software in an intimate way, say as a programmer, business developer or the marketing/sales person, you must have asked yourself this question at some point.

"How can opensource software be a viable business? How do you make money by creating software whose source code is free?"

Bruce Perens, one of the founders of the OSI (Open Source Initiative) has some interesint insights on this. According to him, open source reduces the costs for your business IT infrastructure so that you save money which can be used for creating software that differentiates your business from others. In other words, you can spend your money on researching and developing your actual technology instead of spending it on buying up software infrastructure. The money you save becomes additional profit or can be spent on other areas where it is required.

Well I never looked at open source from that point of view. I think this comes from the my programmer's mindset where the focus is immediately set on the free and available source code rather than thinking about the economics behind it.

Bruce's article contrasts the open source model with other software development models and points out the benefits of the open source economy. The complete article can be found here. A must read for any open source afficianado.