You Don't Have To Sell Software

from the seriously dept

Reader Philip writes in to ask about our thoughts on a commentary on News.com by Dave Rosenberg concerning Sun's open source strategy. Rosenberg seems very concerned that Sun has decided to forego trying to sell software directly:

Sun's approach--at least the way I'm reading it from Jonathan Schwartz's statements, is about making the software totally free and trying to sell support and hardware. This clearly diminishes the value of the products and doesn't offer a mechanism that encourages people to pay for software.

It's difficult to see what Rosenberg is worked up about here. Sun seems to be following pretty closely an economically sound approach to a market: using infinite goods (software) to make scarce goods (hardware and services) more valuable. That's a lot more reasonable than using infinite goods to try to get people to pay for more infinite goods. There's no reason why Sun needs to encourage people to pay for software, and there are many reasons why they should not try to make people pay for software.

Yet, for some reason, Rosenberg seems to think that this strategy is somehow damaging to the open source movement:

It also puts an unnecessary burden on the notion of open source--such that if Sun is wrong, everyone else will look wrong too.

Why? If, as Rosenberg notes elsewhere in the article, Sun's open source strategy is different than other companies', then such a failure should be seen as a failure of Sun's model, not a strategy of embracing open source. There are plenty of reasons why Sun may (or even is likely to) fail in this endeavor. The Sun brand name has been tarnished. People may not find the hardware or services Sun is selling as providing enough value compared to alternatives (even with the software included). On the whole, it's not clear what's compelling about Sun's offer compared to the alternatives, and that's its biggest challenge. But that hardly reflects poorly on open source software or on the idea of not selling software.

Filed Under: business models, economics, infinite goods, open source, scarce goods, software
Companies: sun

Microsoft Realizes No One Wants To Pay Microsoft To Fix Its Own Security Flaws

from the that's-how-it-works dept

Back in 2005, when Microsoft was first mulling the idea of offering security software, we noted that the company was between something of a rock and a hard place. If it decided to charge for the software, people would accuse the company of trying to get people to pay to protect themselves from the security vulnerabilities in Microsoft's own software. Yet, if they went free, then they would face screams about antitrust violations for undercutting competitors in the security software market. We also suggested a third option: design better software that doesn't need security software. But, failing that, Microsoft chose what I think was the worst of the three options: selling security software. Perhaps not too surprisingly, not too many people took Microsoft up on the offer. It could be a combination of reasons why. First, Microsoft just doesn't have a good reputation when it comes to security. Second, that whole issue of paying the same company that created the security holes in the first place. Finally, it might just be inertia. People buy from McAfee or Symantec because they're two names that have been around forever and are recognized (and, most importantly, bundled on many brand-name computers).

So, after a couple years of failing to make much of a dent in the market, Microsoft has abruptly shifted to option number two. It will no longer be selling its OneCare security software and, instead, will be offering a free security suite for users, though with fewer features than the old OneCare offering. The various security software companies put out statements saying, of course, that this is no big deal, but you have to believe they're now doing whatever possible to stir up some complaints out of the Justice Department that this is an antitrust violation. Maybe a few years down the road Microsoft will simply move on to option three, and make software that doesn't require separate security software.

Filed Under: antitrust, free, security, software
Companies: mcafee, microsoft, symantec

Microsoft Tries A 'First One's Free' Strategy To Lure Startups

from the you-know-you-want-to-try... dept

Microsoft certainly recognizes the fact that most startups these days are automatically gravitating to a LAMP infrastructure (Linux, Apache, MySQL and PHP). So, now it seems to be trying out a new program to lure startups by offering them free software for a few years and combining it with additional services that they hope will appeal to startups. It's an interesting approach, though, in the long run, it still seems like they may have the equation backwards. While they are giving some stuff away free initially, the ultimate goal is to lock companies into paying for infinite goods like software, rather than scarcities like services.

Filed Under: free, services, software, startups
Companies: microsoft

Microsoft Against Free Software... But In Favor Of Paying Nations To Use Its Software?

from the something-doesn't-seem-right dept

With more and more countries aggressively moving to embrace free and open source software, it appears that Microsoft is using its own money to its advantage, such as with this agreement to hand over $60 million to South Korea to get it to use its software, rather than the alternatives. While it may seem silly when you take a step back and look at the situation, it does show some of the mixed up incentives related to software. Individuals and organizations can simply embrace free software, or Microsoft can pay out $60 million towards various projects now, knowing that it will pressure the South Korean gov't and firms into spending a lot more than that on its software. At some point, people will begin to realize this is just a bad deal. The programs Microsoft invests in make out well, as do some government officials, but everyone else ends up worse off.

Filed Under: payments, software, south korea
Companies: microsoft

Russia Realizes That Free Software Beats Sending Principals To Siberia For Piracy

from the good-job,-Microsoft dept

You may recall the story last year of a Russian school principal who was arrested for buying computers for his school that had counterfeit versions of Windows. Even though he had no idea that the software was not authorized, he was threatened with being sent to a Siberian prison (seriously), leading to some international outrage. Even Mikhail Gorbachev got involved, begging Microsoft to drop the case (unfortunately, Microsoft wasn't actually involved in the case and couldn't do anything). While the original case was dropped, many were surprised when the charges were refiled and the guy was found guilty. While he wasn't sentenced to a Siberian jail, he was fined over one-month's salary.

Of course, if Microsoft and the BSA thought that these sorts of moves would help deter piracy, they might want to adjust their thinking.

What happened instead, of course, was that many schools started looking into alternatives, such as Linux and other open source offerings, that came with a much lower likelihood of having them dragged into court and threatened with Siberian exile. And, the latest news (found via Slashdot) is that Russia has now made it official policy that all schools should use free software. If they want to use proprietary software, they can't use gov't funds to buy it.

It seems that all that "cracking down" on piracy worked wonders, huh? It sent the entire Russian school system directly into the hands of the competition. Good work.

Filed Under: copyright, free software, russia, schools, software
Companies: microsoft

Open Source Isn't A Business Model... Just Like Free Isn't A Business Model

from the but-both-are-important-parts-of-a-business-model dept

Marshall Kirkpatrick had an interesting post at ReadWriteWeb last week declaring that "pure open source is no longer a viable business model." The post (and the title) are based on some research from The451 Group (which does very good research, I should mention). While the actual report costs quite a bit of money, the firm did put up a blog post discussing the research, and it's not as inflammatory as the title might have made it out to be.

The simple fact is that "open source" has never been a business model -- in the same way that free, by itself, has never been a business model. They both can be a very important part of a business model, but anyone who thought that "open source" was a business model probably also believed that "give it away and pray" was a business model. The research report simply highlights that point, effectively pointing out that, while some companies may have incorrectly thought it was a business model, "open source" by itself has never been a business model. Those that bet on "open source as a business model" rather than figuring out how open source works in a business model all realized they needed to change strategies down the road.

Unfortunately, the problem is that many will simply read the bottom line of these reports, rather than the details, and think they mean that open source is a failure as a part of a business model. And that would be a huge mistake. Ignoring the opportunities that are opened up for other business models by open source is just as silly as ignoring how "free" can be a part of almost any business model today. Brushing them aside as not worth pursuing is a strategy that will almost certainly come back to haunt those who underestimate the importance of both concepts.

Filed Under: business models, economics, open source, software

Insurance Discounts For Software That Won't Deliver Calls To Cars In Motion

from the so-that's-how-it-works dept

Remember how we couldn't figure out who would ever buy some new software that would stop calls from reaching mobile phones that were in motion? The (weak) idea behind the software is that it prevents drivers from accepting phone calls. Of course, it seems cheaper and more effective to just ignore your phone while driving -- or if that's too difficult, to just turn it off while driving. So it seemed difficult to believe that anyone would actually pay for such software.

Except we didn't count on one thing: car insurance companies.

Apparently Nationwide Insurance will (seriously) give drivers a discount on their insurance for buying the software. So, effectively, this is just a slightly indirect transfer from a gullible insurance company to a software company, but probably won't do much to actually stop people from yakking while driving. It's admirable to try to decrease dangerous driving habits, but this software is a gimmick, not a real safety technique.

Filed Under: driving while yakking, software
Companies: nationwide insurance

Would You Pay To Make Sure People Couldn't Call You While Driving?

from the i-sense-a-problem dept

We've seen all sorts of weird or questionable applications, but here's one that we can't quite figure out who would buy. It's an application for your mobile phone that determines if you're moving, and routes the call directly to voicemail. At the very least, it tells the caller that you're driving right now and can't come to the phone, but is that really that important? And how does the app know whether the mobile phone holder is driving... or just a passenger in the car? Or on a bus? And, more importantly, why can't people just not pick up the phone while they're driving? Are people really so addicted to picking up their phone when it rings that they would need to pay for an application that stops them from doing so? If there really are such people, we've got a better solution: turn off your phone when you drive. It's cheaper.

Filed Under: driving while yakking, software

Washington State Sues Company For Fake Error Messages

from the that-old-scam? dept

For years, questionable "software" firms would buy up ads that pretended to look like computer warning messages telling you that your computer was at risk. Then there were scamming companies that would include a web-based "test" of your computer to see if it was at risk -- and, of course, it always found that you were. The scam is just to get you to download (and buy) their software which rarely does anything (and most of the time you don't need it). The FTC had cracked down on these companies a while back, but it appears at least some are still in business. Washington state is now suing a software company that apparently did something similar sending messages to computer users claiming "CRITICAL ERROR!" and demanding that they download the company's product immediately to repair the problem. Of course, there was almost never an actual problem... but the software cost $40.

Filed Under: error messages, scams, software, tricks, washington state

Thomson Reuters Sues George Mason University For Making Its Software Output More Useful

from the how-dare-they! dept

A bunch of folks have been submitting the news that financial information giant Thomson Reuters is suing George Mason University for the high crime of releasing some software that can convert the output of Thomson Reuters own EndNote software into a more open format. EndNote is software for creating bibliographies, from a variety of different databases. The George Mason software, Zotero, does the same thing -- but also will take documents saved in EndNote's proprietary format and save it in its own open format. In normal times, under normal laws, this shouldn't be a problem. Reverse engineering is considered a perfectly legitimate practice in most cases -- and, in fact, is considered an important part of the competitive market in driving innovation. But, thanks to the DMCA, when it comes to software, this type of behavior can be blocked within a license agreement. This is one of the worst parts of the DMCA, in that it's clearly not about protecting copyrighted material, but about preventing any sort of competition in the market place.

If Thomson Reuters execs actually thought about this, they would realize that Zotero actually makes EndNote more valuable by making the output more valuable. As long as Thomson Reuters is willing to keep adding more and better features, then it should have nothing to worry about from Zotero, who only enhances the value of EndNote's output. Instead, Thomson Reuters is using the old claim of felony interference with a business model to shut down a university-produced open competitor. Thomson Reuters' claims make this quite clear, in saying that Zotero is "destroying the EndNote customer base." Back here, in the real world, most people call that competition and think it's a good thing, rather than against the law.

Filed Under: bibliography, closed, copyright, dmca, license, open, software
Companies: george mason university, thomson reuters