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What technology can learn from the grocery business

Asda's CEO believes that consumer behavior has changed forever in favor of low-cost business models. Will the same be true for the software industry?

Wal-Mart is growing in the midst of a global recession, and its engine of growth is clear: "always low prices." Andy Bond, CEO of Wal-Mart-owned Asda, told the British press that this model of austerity is the only viable option going forward, as reported by The Guardian:

We are moving into an era of the frivolous being unacceptable, and the frugal being cool. This won't be a recession where it is a blip and then we are back to where things were.

The era of conspicuous consumption is over. Saving money by cutting out waste of all kinds will be the priority. I don't see this as a short-term response to the recession, but a fundamental shift that will see the emergence of a new breed of consumer.

There are a lot of struggling retailers who are confusing customers with 20% off this day, 50% off that day. What's typical is that companies who have sales wil offer a much higher price in the other 50 weeks of the year. In the long term, you lose people's trust and that's no way to run a business....[T]hat will not be the way to grow a business in the economic downturn.

Bond went further to argue that those with "authentic", transparent low-cost models will be those that thrive. With a message like that, Bond might as well work for Red Hat, or another open-source company.

His commentary on the retail grocery business mirrors that of the technology industry. He talks about consumers spending on home hair-dye kits and less on packaged meals, but he might as well be talking about enterprises buying fewer promises from proprietary vendors, insisting instead on the proven technology that open source affords (because customers can try before they buy).

Open source is all about wringing inefficiencies out of proprietary software development and distribution, and then transparently transitioning those cost savings to customers. It's why Dave Roberts criticizes Cisco for taking the profitability of embedding open source into its products without passing on this benefit to its customers. It's also why my company, Alfresco, has the strongest sales pipeline in the company's history by a factor of three going into the worst recession in decades.

Open source, like Asda, is about value, and that value is a winning argument in troubled times. To deliver value, of course, open source needs to be more than a cheap price tag. As open-source vendors and communities, we need to ensure that our products meet or exceed the performance and functionality that proprietary peers do.

If we do, we will win. Period.