Is open source a threat for established software companies?

5/13/2010 3:00 PM EDT

Ever since the advent of Open Source Software (OSS), people have wondered about its impact. Is it a good thing that breeds innovation, or is it a dangerous thing that will put traditional software companies out of business? Even today as its popularity continues to grow, many are unsure of how they feel about it.

The truth is that fears about OSS are often unfounded. There are reasons for its popularity that have more to do with functionality and flexibility than with cost, and the new dynamic that OSS has brought to the technology world is actually a step in the right direction. By commoditizing the software market, it prohibits vendors from becoming complacent and propels us all much further than we might have gone without it. Here are some of the ways in which OSS can actually work for us rather than against us.

What is OSS? It's is software that permits the use and modification of its source code by anyone. It is characterized by some of the following attributes:

• Free redistribution: The software can be freely given away or sold, enabling frictionless idea transmission.
• Source code: The source code must either be included or freely obtainable.
• Derived works: Redistribution of modifications must be allowed.

This phenomenon started with hardware before moving into infrastructure areas like operating systems, where the most exciting advances have been made (e.g. Linux, FreeBSD). Next came middleware like database servers (e.g. PostgreSQL) and webservers (e.g. Apache). Next came applications that tend to be general enough to appeal to a wide demographic. For example, you would not find an OSS application for managing a dry cleaning store, but you can find plenty of OSS applications for time tracking or general budgeting. It happens more slowly in this space than it previously did, though the industry continues to shift and blaze new trails.

The International Intellectual Property Alliance (IIPA) recently released the 2010 Special 301 Report on Copyright Protection & Enforcement which claims that open source is responsible for a "tidal wave of losses in U.S. jobs and competitiveness." Indonesia was recently added to the "Special 301 watchlist" because its government encouraged its agencies to use open source software. Many in the open source and technology community have found this indictment ridiculous, yet it illustrates a very real fear that some groups still feel about the open source movement. Years ago, internal emails from Microsoft were accidentally released that exemplified this fear, stating, "OSS poses a direct, short-term revenue and platform threat to Microsoft, particularly in server space. Additionally, the intrinsic parallelism and free idea exchange in OSS has benefits that are not replicable with our current licensing model and therefore present a long-term developer mindshare threat."

Yet some thought leaders disagree. Daniel Tunkelang, chief scientist for Endeca, has said, “Open source drives innovation by making yesterday's technology a commodity, forcing proprietary vendors to innovate in order to justify their paychecks.” Such a process is great for consumers and for technology in general because it forces companies to move to new value delivery areas. In fact, some believe that open source software providers now have to innovate just as much as traditional software providers do for fear of being squeezed out by even newer OSS solutions.

Not only that, but there are also areas in which software companies actually have an advantage. In his blog post, “How to Compete Against Open Source Competition,” Rob Walling writes, “As a developer, I’ve probably had contact with 300 open source projects, components, and applications. I estimate 80% of them required substantially more time to install, use, or maintain than commercial counterparts.” His argument is that what you don't spend in money you will spend in time and energy. (Walling does, however, acknowledge that there are exceptions to the rule, saying, “When an open source project gets enough talented people working on it, it can become a downright masterpiece.”)

Journyx has benefited from the OSS movement. Though we are not an open source company, our software was built on open source tools like Linux, Python, Apache, and PostgreSQL. These tools allow us to ship a free product, called Timesheet.

As time goes on and more people around the world get online, competition will get even worse. While OSS forces you to innovate to stay in business, so do non-OSS competitors. Data will always get through. Once you publish and release it, you lose control over it; that's the nature of information. Someone invented the wheel, and it's too late to patent it. Rather than trying to change this inevitable fact, companies should focus on the benefits of OSS and learn how to leverage and work with it to bring top quality solutions to their customers every time.

Curt Finch is the CEO of Jounyx. He is an avid speaker and author, and recently published “All Your Money Won’t Another Minute Buy: Valuing Time as a Business Resource.”