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(originally published by Booz & Company)


Why Open Source Stifles Innovation

Businesses have a stake here, too. It certainly makes sense for firms to compare the life-cycle cost of open source and proprietary software in their procurement decisions. But government-led success of open source could undermine the network economies that have driven some software market niches toward winner-take-most outcomes.

Thus, while firms may find that the advantages of using free software outweigh the disadvantages, they have not yet had to confront the headaches of a world in which they must worry about the compatibility of files produced on different software platforms or about the need to train employees to use applications for multiple platforms.

The success of open source could also retard innovation. As noted earlier, GPL software cannot be integrated into proprietary software. By the same token, an attenuated market for proprietary software would reduce private incentives to invest in software development.

Open source is here to stay. But whether it will, in the end, prove a boon to global productivity depends on how the competition with commercial software plays out as commerce mixes with ideology, nationalism, and special-interest politics.

The bottom line for business: Enjoy something for nothing, but be wary of ideologues who would restrict your diet to free lunches.

Peter Passell, [email protected]
Peter Passell is a former New York Times economics columnist, is a senior fellow at the Milken Institute in Santa Monica, Calif. He has worked as a consultant for the Microsoft Corporation.
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