Is open source immune to bubble economics?

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Open source business models are booming in the software industry, a rapid rise that has some experts wondering if it’s a bubble that will burst.

Is open source a bubble ready to burst? – ZDNet UK Insight

Knowing full well that I’m adding to a meme that needs no help in spreading, I’d like toss out a theory inspired by what appears to be growing speculation about the Second Coming of the Bubble (y’know, since the first one (referred to as the “Dot-com Boom” back in the day) and its subsequent bursting sucked so hard).

My theory is based on absolutely no math and certainly no experience with economics. My background is in design fer crissake. But that doesn’t mean that I can’t make obversations and conclusions about the state of things from where I sit. Pffthb.

So here’s the deal. Bubble or not, it doesn’t really make much difference. Well, not in my corner of the world. In fact, I would be delighted if we are going through some kind of dot-org bubble — in which case, it would be certainly less like the first go round, when all these brilliant ideas got sucked up behind barriers of proprietary software licenses. No, a dot-org bubble would be more like the way things were back when no one knew or cared about the intarweb except for a few dorky blokes in sweaters and tight chinos pushing packets around and having one helluva good time.

But back to the previous bust. In spite of all the money that got pushed around, one of the few good things seems to have been Firefox‘s Athena-like explosion from the head of AOL. Which also incidentally seemed to be the tipping point that brought the entire house of cards crumbling down… but I digress.

See, the question on most people’s minds seems to be “Can something like that happen again?!” or “Oh my god! It’s happening again! …Isn’t it?”

Well, maybe the right way to ask that question is, “Shouldn’t it keep happening until we get it right?”

I mean, what if these bubbles are part of some grand Darwinianly organic weeding out process that will lead to all the source code in the world being released under open licenses! Wouldn’t that be great?! …Ah yes, but then there’s that tricky thing we call reality.

Foiled again.

So back to my theory. What’s really happening here is that the focus has been exclusively on the fact that some people are trying to make some make money using open source tools and methodologies and have pulled in some VC to support their efforts. Yet the real story is that open source has reached critical mass and is gaining widespread adoption — so much so that people with dollars are willing to make some serious bets on its future. Let’s get down to the brass tacks of the matter: you invest in something either to see it grow or because you’d like to reap some benefit from your willingness to take a risk. What’s being communicated is that open source is now a less risky business proposition and it’s cost-competitive too:

Ron Rose, the chief information officer of Priceline.com, said that the company has become “predisposed” to buying open source products because of the “economic benefits”. A vibrant community behind a product also ensures a long-term road map, he added.

So all this hubbub over an impending open source bubble is silly. Open source doesn’t work that way. Companies will make money building open source tools or fail trying, not simply because they’re part of the open source ecosystem, but because of the quality of their ideas, execution or people. So even if all this “neue bubble” money dries up, open source will continue remain as vibrant as it’s ever been. It survived the first dot com boom and bust. It will survive the next.

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One Comment

  1. at 2pm on Nov 8th # |

    Open source is immune, but not the companies that build it.

    It is fantastic that a landscape is emerging in software development where users’ desires and collaboration are embraced to be successful. A landscape that protects uses and software developers from being locked into technologies that don’t meet their desires, or they can’t afford. Although, it seemed inevitable for software to be accessible in a connected world, and to combat the near monopoly of a few organizations, the sooner the better.

    Every organization can pitch that it is “about community”, but not every org can execute on it, and maybe there is not room for everyone? How many bookmark and photo sharing platforms do we need.

    I read an article the other day about Wal-mart, and how in America, unlike Europe and most of the rest of the world, price (value?) overrules all other considerations. I do hope for the transition to be as unbubble-like as possible since there are people and their families to think of, and also why can’t we get it correct this time? I long for similar models to emerge in all industries.

    PS. I see a Flock bug a couple of times in your post, which I have not been able to track down yet, “blog editor eats spaces between words some times when text is pasted in” (bug #1569). Julia discovered it Saturday night @ SHDH.

3 Trackbacks

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    Should web 2.0 be called a dot-org bubble

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    So here’s the deal. Bubble or not, it doesn’t really make much difference. Well, not in my corner of the world. In fact, I would be delighted …

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