The reason I am studying MBA is not to get out of the world of software into something mundane like selling soaps, but to understand the software from business perspective or a more holistic one. Not to say that I want to become a programmer again. But to be a businessman who has a much bigger say in what software needs to be developed and how it has to be monetised. Technology I now realise is there not to show off the scientific greatness but to meet business and human needs.
By thinking from a Businessman's shoes, I wondered whether it makes any economic sense to give “software for free” and more importantly the source code and hence freedom. I couldn't think of the answer myself. So, I searched the web for "economics of open source software" and explored further by reading fully the following materials. This really was an eye-opener, I feel I have gained a lot more knowledge now than before.
Books
“Wikinomics : How Mass Collaboration Changes Everything” - http://www.wikinomics.com/book/
“Free Software, Free Society: Selected Essays of Richard M. Stallman” - http://www.gnu.org/philosophy/fsfs/rms-essays.pdf
“After the Software Wars” by Keith Curtis (Former employee of Microsoft) - http://www.lulu.com/content/4964815
Papers
“The Cathedral and the Bazaar" by Eric Steven Raymond - http://catb.org/~esr/writings/cathedral-bazaar/
“Some simple economics of open source” by Josh Lerner and Jean Tirole - http://www.nber.org/papers/w7600.pdf
“The economic motivation of Open Source Software: Stakeholder perspectives” - http://www.riehle.org/computer-science/research/2007/computer-2007-article.html
"An Analysis of Open Source Business Models" by Sandeep Krishnamurthy - http://www.linpro.no/no/content/download/646/4790/version/1/file/Analysis%20of%20Open%20Source%20Business%20Models.pdf
Basically, free software is about giving the users the freedom to use, read/understand, modify and distribute the software. It doesn't specify that the software should be given for free (at 0 price). "Free as in free speech, not as in free beer" - Richard M Stallman. Money is made through sale of things auxilary to the product/software like service, hardware, training, customization, donations etc. It is a sustainable model and benefits the developers, businesses, users and most importantly society as a whole.
Wikipedia, Firefox, GNU/Linux, Apache etc are few of the most successful open source products. We generally think that only those companies that sell software (for a price) make money e.g. Microsoft and Apple but there are a whole lot of equally big companies making money by distributing software for free e.g. IBM, HP, DELL and SUN.
The model can be replicated to all industries not just software. But it works best in software because there is no cost in copying software once produced and writing software is a work of art and programmers enjoy doing it. Internet is the key enabler of collaboration.
After reading all these literatures, I am so convinced of the open source model that I now wonder whether there is any sense in proprietary model. Whether Microsoft will survive for long if it doesn't open up? My answer is that Microsoft wouldn't survive, we have seen a dip in the market shares in its own bastion i.e. Operating Systems, Web Browser and Office productivity space. I will now head out to explore its version of the whole story.