Open Sources 2.0

Chapter 6. Open Source and the Commoditization of Software

Ian Murdock

It is said that the only things certain in life are death and taxes. For those of us in the IT industry, we can add one more to the list: commoditization. The question is, how do we deal with it, particularly if we are IT vendors and not simply IT consumers, for whom commoditization is an unquestionably positive event?

Commoditization is something that happens to every successful industry eventually—success attracts attention, and there are always competitors willing to offer lower prices to compensate for lesser-known brands or “good enough” quality, as well as customers to whom price means more than brand, quality, or anything else the high-end providers have to offer.

Often, to remain competitive at lower price points, the low-end provider employs a strategy of imitation—for example, investing less in research and development than its high-end peers, and instead relying on the high-end providers to “fight it out” and establish standards and best practices it can then imitate in its own products.

This strategy works because success also breeds interoperability. Unless a company monopolizes a market (a temporary condition, given today’s antitrust laws), an industry eventually coalesces around a series of de facto standards that govern how competing products work with each other, or how consumers interact with like products from different vendors. In other words, given time and a large enough market, every industry ...