Is open source a regulated utility?

Is open source like a regulated utility, predictable and profitable?

Todd Barr of Fiveruns (formerly of Red Hat) has a thought-provoking post comparing the software industry to the energy industry. Specifically, he calls out open source as akin to regulated energy companies, while proprietary software vendors are more like unregulated energy companies. The interesting part is what happens when you combine the two:

I think the future looks similar to the energy industry: large technology companies will have a mix of regulated and unregulated businesses, that maximizes the advantages of both. For standard, widely-used technologies, open source "regulation" makes sense because it lowers development costs and provides a standards-based, predictable subscription base of business.

For niche and high-end software, companies will still expect a substantial return on their development cost, and therefore will protect that IP and sell it at a premium until competition makes that impossible.

IBM provides an example. IBM is particularly adept at foisting "regulation" onto its competitors by fostering open-source projects like Linux and the Apache web server. It uses open source as a "regulated" gateway to its higher-margin, proprietary businesses.

As more and more open-source companies get gobbled up by proprietary software companies, it's likely that we'll see this regulated/unegulated interplay for years to come. The question will be whether the industry will continue to trend toward open source. I think it will. We have decades to determine if I'm right or wrong.

Tech Culture
About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.


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