January 16th, 2009

Is cash king of open source?

Posted by Dana Blankenhorn @ 9:21 am

Categories: General

Tags: Open Source, Dana Blankenhorn

There is an assumption throughout the financial press that since we’re down, cash is king. (Picture from a fantasy football league.)

Time to consolidate. Time for the winners to buy the losers, to clear the board, and wait for the next technology hand to be dealt, monopoly profits in hand.

The extent to which this applies to open source, however, is something which deserves to be questioned.

Certainly any outfit with money to invest, especially if it’s cash flow positive, has a big advantage right now. But in terms of open source what can you buy?

You can’t buy the technology. Even if you take an open source project and make it closed source, you’re still trying to hold water in your hand. You have cut yourself off from the means by which that technology advances.

You can hire the developers. You can take over their employment contracts, as was done this week with SourceLabs. But you had best have another job for them.

You can buy a service which is based on open source software, but the make vs. buy decision has become more complex, as it’s so cheap to make things with open source why buy?

You can buy a product business based on open source software, but again what are you buying? Mainly the channel, the distribution and production agreements, all of which may be easily replicated by someone else.

What you can do, however, is build something. You can design a service, a product, a business model.

You can do that with very little cash. But delivering something in the present environment is problematic.

So the present news shortage is no surprise. This should be a time for reflection, for constructive work, for planning the next boom.

Building, not consolidating, is the order of the day. That’s the nature of the open source paradigm.