Open-source innovation: A matter of price?

If human progress can be measured by the number of blades we've managed to fit on a single razor, it's clear we have arrived on a massive scale. Both Gillette and Schick will shortly have a five-blade razor on the market.

Certainly it's progress of some kind, but whether its utility outweighs its cost is another question (and one that Wall Street Journal columnist Neal Templin answers in the negative). It also leaves plenty of room for a one-bladed, disruptive innovator to steal a march on the Gillette/Schick arms race, as Jeff Stibel argues in Harvard Business Review.

This same phenomenon is driving open source into consumer electronics, enterprise computing, and everywhere else: it's often a much simpler solution (one blade!) at a dramatically better price.

That's one of the messages that emerged from Gartner Research Vice President Brian Prentice's session at the Open Source Business Conference on Thursday, where Prentice argued that cost rather than freedom was the primary driver for open-source adoption.

Critics suggest that open source offers little beyond a low price tag, and has little to say about real innovation.

Perhaps.

Perhaps open-source developers aren't the ones to create the iPhone. Instead, perhaps they're the ones to make iPhone-like capabilities in the hands of the several billion people on the earth.

Isn't this innovation, too?

Yes, but it's not the kind most people envision when they think "innovation." After all, "real innovation," as innovation guru Clayton Christensen suggests, raises prices while disruptive forces like open source lower them:

Economists are wrong in asserting that competition controls costs. Most often innovation and competition drive prices up, not down, because bringing better, higher-priced products to market is more profitable. Hospital-vs.-hospital competition causes providers to expand their scope and offer more premium-priced services. Equipment suppliers boost the capability and cost of their machines and devices. Drugmakers develop products that bring the highest prices. It's because we have such competition, not because we lack it, that health costs are rising by 10% a year.

The type of competition that brings prices down is disruptive innovation.

It strikes me that both are necessary, and that this is as true at the industry level as it is at the individual company level, a theme touched on by Prentice in his OSBC session.

Companies like Google open-source their complements (Android, MySQL, etc.) while keeping tight control over the areas that fund employee paychecks. This doesn't make them evil. It makes them rational.

And it puts them in a position to fund even more open-source development as they seek to grow into new markets. This is a Very Good Thing.

We've reached the point where it doesn't make sense to talk about open source as a company's strategy--as if it's a standalone, viable strategy--because we live in a world where every technology company, including Microsoft, has an open-source strategy. Some are more developed than others, but open source is no longer a differentiator.

Every technology company and, really, every technology buyer, too, must ask itself: where am I going to use open source? And what will I charge for that which isn't easily available anywhere else? For Red Hat it's software updates via Red Hat Network. For Apple, which has built services like iTunes using open-source technology, it's the seamless iTunes-to-iPhone/iPod buying experience.

What's yours?