The ‘other’ value of open source in this economy

We’ve talked recently about how the down economy can be both good and bad for Linux and open source software in general. The more I consider the continued gloomy outlook, the more I am convinced the economic struggle will translate to increased interest, use and adoption for open source software. Part of this is the fact that when fuel is $4-a-gallon, the monthly heating bill tops $150 and you just have to have that expensive wireless data plan, anything that is free is going to get more attention and uptake. Still, the appeal of Linux and other free and open source software in tough times does go deeper than that.

As we watch the global markets skid through an agonizing rough patch, one could argue the lower the value of shares in the market, the higher the value of open source software. Open source is not only a likely alternative for cost-cutting, but which it also benefits from its uniquity from traditional models of value and property. This may even translate through to the vendors that develop, sell and support open source, since rather than sheer economic value, their open source software and development projects and communities, including developers and users, represent potential innovation and opportunity, rather than money in the bank, which at this point has diminished value.

That’s why I believe the value of communities actually serves as a significant differentiator for open source software right now. The value of open source software communities, which has figured into open source M&A activity characterized recently by higher prices because of strategic and longterm value, may be more apparent now. Although it is difficult if not impossible to try to valuate an open source software development community, this other form of value shows how open source can retain its value in good times and in not-so-good times.

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7 comments ↓

#1 Boycott Novell » Links 10/10/2008: Mandriva 2009 Released, Wikipedia Consolidates on Ubuntu on 10.10.08 at 4:41 am

[…] The ‘other’ value of open source in this economy […]

#2 Jeb Bolding on 10.10.08 at 5:39 pm

I guess the one comment that I have regarding this is that it seems the real impact of the downturn will be a desire not to hire, or, even, to lay off IT workers. With fewer resources, IT usage of free and non-commercial will drop off (not what’s already in place, but, rather, the adoption).

Linked to that is that generally, I believe most open source IT solutions require more work by IT to implement. Ease of use isn’t typically the highest priority for IT open source software. If you agree with this assumption, it seems to me that open source adoption will decrease further compared to commercial because of the IT shortage (assuming that an IT shortage does appear) and lack of resource to implement the often more manual open source products.

#3 Jay Lyman on 10.17.08 at 4:23 pm

Thanks for the comment Jeb,

I would have to disagree that open source requires more work by IT to implement. This may have been more true a few years ago, but it seems the comfort, experience and skill level with open source has risen to the point that it is no longer as foreign, new or difficult for most enterprise IT shops.

You raise an interesting point, though. I think what we may end up seeing is more adoption of open source which is free, but not necessarily adoption of commercial open source or commercial support that costs. Still, commercial open source is still arguably in a good position if it costs less.

JL

#4 451 CAOS Theory » Where have all the community managers gone? on 02.04.09 at 6:03 pm

[…] as we covered in an interesting discussion of the value of community on our last CAOS podcast, there is opportunity in sustaining an open source community in difficult […]

#5 451 CAOS Theory » Economy down, Red Hat and open source up on 04.01.09 at 5:37 pm

[…] numbers. This is further reinforcement of the value of open source software and particularly the value of communities, which may not translate to dollars today, but can certainly mean value in the future — […]

#6 The Open Source Innovation Backbone for Startups on 08.03.09 at 5:48 am

[…] Open source can enable innovation, not only in recession times. Companies like Google (probably before anyone else), Facebook or Twitter are all heavily relying upon open source technologies. Beyond standing on giants’ shoulders, those companies give also back to the open source community, as seen with Google summer of code and at large with Google code, open source at Facebook as well as open source at Twitter. […]

#7 451 CAOS Theory » Does Consona-Compiere mean community doesn’t matter? on 06.22.10 at 11:26 am

[…] how does this jibe, or not, with our views on how M&A deals and valuations involving open source software vendors tend to highlight the […]