Archive for April 8th, 2008
Innovator’s Dilemmas: open source… salvation or suicide?
“Closed companies must recognize that by virtue of their strategy decisions, they have a smaller market opportunity than open companies (…) the iPhone is a beautiful piece of technology at a premium price. But Apple shipped only 4 million iPhones in 2007, whereas Nokia ships some 400 million handsets a year (…) the phones are open to anyone who writes to Java, the platform Nokia uses. (In 2006 Sun Microsystems made Java, which it had developed, open source under the General Public License.)”
Jonathan Schwartz, President and CEO, Sun Microsystems.
Unlike software that is available for purchase, open-source code carries no guarantee that it doesn’t infringe on some third party’s intellectual rights (…) the liability risk has become even more acute with the proliferation of patent trolls - companies that buy patents for the sole purpose of litigating them and feeding off the damage payments.”
Michael J. Bevilacqua, Partner and Cochairman of the Technology Transactions and Licensing Group in the Boston office of the law firm WilmerHale.
Open Source: Salvation or Suicide? HBR Case Study and Commentary.
I started writing this post last week in Las Vegas where I took the picture of Elvi’s statue at the Hilton on my way to the conventions center. I’m now in Montreal and thought of rereading this month’s HBR case study on on open source.
A year ago blogged about Slim Devices which has been acquired by Logitech since. Slim Devices got significant help from customers who did much of the engineering for them. This being an example of crowd sourcing. So, I started this post thinking of expanding upon what I wrote on “to invent or not to invent“.
However, embracing open source does not necessarily imply that you stop inventing. In actuality, what it means is that you give up some or all intellectual property rights. In exchange, many companies expect to benefit from lowering the cost of development, and accelerating time to market while staying focused on the company’s actual core competencies.
For instance, this makes sense in industries where margins had migrated from one part of the value chain to another. As an example, there are cases of value migration from hardware to software sales, which in turn could be shifting to value added products and specialized services. Not all crowd sourcing projects involve open source models though. Have a look at Dell’s IdeaStorm. Last time I checked, the Dell Community contributed 8896 ideas. The following is some of the language shown in the terms of service page:
“You grant to Dell and its designees a perpetual, irrevocable, non-exclusive fully-paid up and royalty free license to use any ideas, expression of ideas or other materials you submit (collectively, “Materials”) to IdeaStorm without restrictions of any kind and without any payment or other consideration of any kind, or permission or notification, to you or any third party.:
“Dell shall have the exclusive option to purchase from you and acquire all right, title and interest, including, without limitation, any copyrights and other intellectual property law in and to the Materials you submit (…) The option shall be exercisable by us from the date you submit the Materials until 1 year from that date. If we exercise the option, you agree to accept payment in the amount of $1000 USD or value in kind at Dell’s discretion.”
I have some more notes I’d like to post, hopefully tomorrow.
| J. de Francisco |  |
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| Montreal, 04 April 08 |  |
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