Open Sources | Rodrigues & Urlocker » Open source = helping customers pay for what they want?

November 29, 2006 | Comments: (0)

Open source = helping customers pay for what they want?

TAGS: Open Source

William Bulkeley has a fascinating column [Subscription required for an inane reason] in today's Wall Street Journal. The gist is that the Internet has enabled consumers to pay for what they want, rather than what various industries try to sell them. In Bulkeley's words:

Photo companies made customers pay for 24 shots in a roll of film to get a handful of good pictures. Music publishers made customers buy full CDs to get a single hit song. Encyclopedia publishers made parents spend thousands of dollars on multiple volumes when all they wanted was to help their kid do one homework paper. The business models required customers to pay for detritus [great word!] to get the good stuff.

Inevitably, their industry revenues are shrinking now that customers can use digital technology and the Internet to select only what they want.

Marketing 101 says success comes from selling things people want. But advanced marketing calls for companies to leverage the relationship to get the buyer to pony up for other products - or at least for extra product. When customers find a way to avoid buying the excess baggage, they change quickly.

Could the same phenomenon be hitting enterprise software? I think so. Open source is one more way that customers are choosing to buy what they need, rather than what a vendor needs to sell. Open source is very much a fulfillment of the positive force in Clayton Christensen's "innovator's dilemma":

Linux initially thrived in the embedded world in large part because of one aspect of this ability: remove the part of the kernel that you don't need to improve performance, enhance security, and shrink its size. SugarCRM thrives because, not in spite of, its more manageable, intuitive code base and UI. Simplicity is selling, and open source - that so-called complex phenomenon for developers by developers - is the king of simplicity. Good enough and cheap is beating bloated and expensive. (Some day, I assume open source may well become the same, but we're many years from that point, and we have built-in inhibitors like support fungibility to stave off or prevent that day.)

Simplicity of code (the better projects, anyway), and simplicity of business model. That's open source. Want to know one reason customers appreciate my company (Alfresco)? Because our pricing model fits on one line of a sheet of paper (one number, one symbol, and two words). Compare this to Documentum's, which runs on for volumes (and not solely because there are so many $X,000,000 attached to each price :-).

Today, open source companies basically sell support, however we may choose to package it. Is this what customers want? Or do they want to pay for software, too, just not as much as traditional vendors charge? I think it's an open question, and one that I'm looking forward to watching customers, not vendors, decide.

Posted by Matt Asay on November 29, 2006 05:30 PM

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