I'm reading through Dirk Riehle's paper, "The Economic Motivation of Open Source Software: Stakeholder Perspectives," finding plenty of interesting discussion points. As my plane is about to take off, I'll just post his thinking on the open source services market. In short, open source drives costs down and hence increases the size of the potential market:Switching from more expensive closed source software to l I’m reading through Dirk Riehle’s paper, “The Economic Motivation of Open Source Software: Stakeholder Perspectives,” finding plenty of interesting discussion points. As my plane is about to take off, I’ll just post his thinking on the open source services market. In short, open source drives costs down and hence increases the size of the potential market:Switching from more expensive closed source software to less expensive open source software increases the profits of a sale through the money saved on the software. It also reduces the lower price limit for possible deals and puts a new set of more price-sensitive customers within reach. Not only does open source software improve profits on the original individual sales, it also increases the total number of potential customers.Here’s what it looks like, schematically: He then suggests, however, that the preferred price point for SIs is $0.00: If it were up to the system integrators, all software would be free (unless they had a major stake in a particular component). Then, all software license revenue would become services revenue. To this end, I believe that system integrators prefer community open source over commercial open source. Only community open source software prevents vendor lock-in.I’ve certainly seen this in the SI community – including Alfresco’s – but I disagree with Dirk on this one. While $0.00 sounds great on its face, an SI (just like an enterprise) has an interest in seeing customers pay for software. Why? So that there will be more of it. “Free” sounds great until you start thinking of a lack of new software written, support on the software (Most SIs are not set up to support the software they implement on a lengthy, deep basis), etc. As I’ve found at Alfresco, there are SIs attracted by “free” and then there are those who understand the importance of feeding the core development team behind the project. As a vendor behind an open source project, you need to quickly figure out which of your partners/prospective partners fit this latter category, and do everything possible to feed them deals. A great SI partner is worth its weight in gold. Open Source