A lot of debate about open source code versus proprietary code these days centers on the personalities of the folks involved, or on the politics behind the idea of open source.
But, from a business perspective, the availability of open source alternatives is a net positive for enterprise — and retail — users, but a mixed bag for software vendors. Meanwhile, proprietary development helps the open source community to a significant degree.
How proprietary development helps open source
Commercial companies take great risks in exploring new markets, and finding new ways for users to interface with their software. Apple’s graphics-based user interface for the Macintosh is one example. Apple’s iPad is another.
But other products have inspired the open source community as well, including Windows Office (the top open source alternative is OpenOffice), Photoshop (GIMP is the popular free alternative here) and, of course, Second Life.
Commercial companies spend a great deal of money and effort to create markets were none existed before. AOL helped get a generation of Americans online. Second Life proved the utility of multi-purpose immersive virtual environments.
It is much, much, much easier to reverse-engineer a successful product feature than to dream one up in the first place.
The fact that proprietary software exists is not a competitive threat to open source code unless the commercial vendor gives their version away for free or bundles it with other products. Open source projects die all the time, but usually because the developers lose interest, or their product is no longer needed. But as long as there are active users, and active developers, an open source project continues on — and can always be resumed.
Microsoft, for example, won only a temporary reprieve when it won the first browser wars. Competitive open source browser alternatives continued to evolve, forcing Microsoft to maintain the free pricing on its Internet Explorer browser. Microsoft continued to invest substantial resources in maintaining and upgrading its browser, without any commercial benefit.
But with the iPad, Apple created a brand new market and a giant new revenue stream — even as tablets based on the open source Android operating system begin to trickle out. With its history of innovation, Apple is likely to main a strong market position for the near future, even if not necessarily the 99 percent market share it enjoyed when the iPad was first released.
Open source a mixed bag for vendors
Some vendors do extremely well with open source software. IBM, for example, is a major contributor to many open source efforts, including both Linux and OpenSim. It makes its money by reselling services and products that sit on top of the main open source code base.
Vendors that compete directly against open source products, however, are in a very difficult position. They have to continually invest in their technology to keep ahead of the open source community, invest in marketing and advertising, price their products high enough to make back their investment — all while the competing product is free and marketed completely by word-of-mouth.
I believe this may be one reason why commercial browser-based viewers for OpenSim are having a hard time getting off the ground. It’s too easy to imagine an open source alternative coming out soon afterwards, and completely destroying a company’s investment.
Microsoft, for example, struggles to compete against the free, open source Apache web  server.
There is also a third category of vendors — those who build tools or add-ons that sit on top of open source software.
Today, for example, many vendors are releasing their own tablets running some version of the Android operating system. Since Android is open source, tablet manufacturers can tweak the software to better run with their devices.
However, if they tweak the software too much, it could create compatibility problems with the downloadable Android applications. Or, say, they add features that Android doesn’t have — only to see Google add those same features in the next release. The extra lead time over the other Android-based competitors could be worth it if it brings in new customers — or it could turn out to be a waste of money if the customers turn out not to care too much about the feature.
Today, we have a number of vendors developing add-on software for OpenSim. This is great for the OpenSim community — it offers more choices for customers, for example. And whenever the vendors promote their own products they are also promoting OpenSim.
Like IBM, some vendors contribute code back to the OpenSim community. This simultaneously gives them some influence about the direction that OpenSim development will take, and also ensures that their own code remains compatible with mainline OpenSim.
Other vendors create their features in such a way that it’s easy to move them from one version of OpenSim to another, so as to incorporate ongoing work by the open source community.
How open source benefits users
Having a legal, open source alternative provides downward price pressure on vendors, and what customer doesn’t want lower prices?
Without competition from Mosaic, Firefox, Opera, and, now, Chrome, Microsoft would have been able to start charging for Internet Explorer.
In addition, open source offers a legal option for areas in which the pricing of the legal, proprietary software is prohibitive, such as the emerging markets.
In fact, as more and more applications are delivered via the Web, the Linux-OpenOffice-Firefox combination becomes increasingly realistic for wide spread use, and for small companies looking to save money on their desktops.
Open source software is also great for education, since neither students nor educators have to pay for software licenses, and programming students can actually contribute back to the code base.
Another advantage for users of open  source software is that it is customizeable. Open source software is just that — open. Companies can lift off the covers and tinker with the code as much as they want to adapt it for their own use. This isn’t typically an option with proprietary software.
If a large number of users want the same feature, they can get together and add it to the standard release of open source software. By doing so, customers can reduce their own development costs, and ensure that future maintenance of the feature will be taken care of by the open source community — they won’t have to worry about porting their feature when they upgrade.
Open source software can appear whenever there’s a big user demand that isn’t being met. For example, in the early days of the World Wide Web, scientific institutions used the first open source Web servers, followed by academics and then, later on, business users. The Web wasn’t originally seen as a commercial destination, and there’s wasn’t money to be made in server software. In fact, Microsoft didn’t release its Web server until 1995, four years after the first Websites went up.
Similarly, today, there are no proprietary hypergrid servers. The Second  Life Enterprise server could have been a commercial alternative to OpenSim, it if allowed the hypergrid option — and if it wasn’t discountinued by Linden Lab due to a lack of commercial success.
Having viable open source software available reduces the cost of doing business, which  helps the economy, and offers more opportunities for new kinds of business to emerge.
Today, we’re seeing a rapid flowering of independently run personal, educational and commercial virtual worlds on the hypergrid because of the low cost of the OpenSim platform. Group that have the hardware and in-house technical skills can run the worlds at no cost on their own, and others have more than forty different hosting options to choose from.
As competition grows, OpenSim hosting prices are likely to continue falling, following the same path as that of Web hosting companies — even as technology continues to improve.
Which should you use?
Every company makes its own decisions about the use open source software, on a case-by-case basis. For example, most US companies run Windows on the desktops, and Linux and Apache on their Web servers.
My own office, though tiny, is similarly a mixed environment. I run Windows on the newest computers, the install Linux when they get old and slow and cranky. I paid for Dreamweaver and Filemaker back when those were critical to my company, and used to use Microsoft Office. Recently, though, I’ve switched to OpenOffice because it has more of the functions I need at work — and still lets me create Word-compatible documents when I need to send them to people outside my company.
I own an iPhone and love its user interface, but am waiting to see how the Android tablet space develops before buying my first tablet — even though I know I won’t be able to access my already-paid-for iPhone apps on the other devices.
In the virtual space, I have an office in Second Life (thanks, Per Ericsson!) but my company grid runs on OpenSim. I buy hair and shoes and clothes, but use Creative Commons-licensed content for buildings and textures.
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