The Business of Open Source

A look at the challenges facing the Linux/Open Source desktop and server markets, with a close examination of current market dynamics.
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It has been more than two years since the Yin and Yang article was published on LinuxPlanet, a long time in the information and communications technology world. The purpose of that article was to highlight the opportunity for greater entrepreneurial focus to gain broad, fast adoption of Linux and open source computing solutions. Absent significant market uptake on the personal computer (desktop and laptop) of Linux and/or open source products, goods, or services, those who measure market share will continue to ignore these as irrelevant to most users.

The process of gaining wide market share for Linux and open source solutions is challenging. The information technology (IT) market is littered with obstacles to success. Even well entrenched market leaders can be negatively impacted by these. The release of Microsoft Vista has shown that negative market forces can hold back even the heavy-weights of the IT game. A bad move, whether real or imagined can significantly alter the course of events. Bad press, or news of potential litigation can really place a damper on a product launch. Everyone who brings a product or service to market is subject to market forces that may exert a control that goes beyond that expected.

Much has changed in the IT world over the past two years. In this article we consider a few of the key developments over this period within the context of opportunity for getting the open source solution offering right to enable them to gain rapid market penetration. It is the author's hope that the statistics and opinions presented here will inspire you to help create the personal computing future that you would wish for.

In the spirit of open reflection, your criticism is not only welcome, but is actively sought. No one has all the answers, but by working together we can achieve more that the sum of single contributions. How do you think the future of Linux and open source will evolve? Will Microsoft be toppled from the average personal computer user's desktop? How? Who will make this happen?

The purpose of business is to make a profit, or at a minimum to be able to sustain operations from incoming cash flow. For the personal computing market this is particularly challenging. I invite you to consider why.

The holy grail of business is to sell stuff in acceptable volume at sufficient margin to be rewarding. The reward, or return, that justifies sustaining of the business depends on the goals and objectives of the organization. A not-for profit organization has entirely different objectives than a for profit business. In a market such as the information technology world, where component costs are falling rapidly and where consumers expect accelerated cost reduction and like to see increasing overall system performance , finding the right reward can be a vexing proposition.

Computer hardware vendors do battle with supply-chain and distribution-chain dynamics in a highly competitive world. This business environment results in extreme conservatism and reluctance to engage in products that may not move rapidly, or that may result in excessive post-sale support costs. Slow moving inventory is a sure recipe for financial loss where supply-side prices are constantly in rapid decline and where early obsolescence results in short product life cycles.

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Tags: open source, Linux, services, server, desktop

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