Section 5.7. Global Development


5.7. Global Development

The flow of capital and information across borders has transformed the world from a collection of economic islands into a more integrated global economy. That trend will surely continue, and will likely accelerate, over the next decade. At the same time, security concerns, and particularly worries about terrorism, create a strong political incentive to encourage the development of a prosperous middle class with an economic stake in the future in emerging economies.

Worldwide economic development is necessarily influenced by information technology. Leaders of emerging nations are clearly interested in building clean, sustainable IT industries. Doing so requires a significant investment in education, but also an investment in enabling technology.

Dual licensing provides a way for nascent knowledge economies to grow. Because dual-licensed software is available for use at no charge under open source terms, emerging businesses can preserve precious capital by choosing to comply with the terms of the open source license.

China is an instructive example. In 2004, the Chinese government announced its intention to invest in the development of a version of Linux tailored for use in the country, with language and character set support and other new features. The economic advantage conferred by a low- or no-cost operating system in a country where an enormous number of computers will be installed soon is obvious. Between 2005 and 2010, China is likely to become the world's largest consumer and producer of open source software. Consumption will increase earlier, and faster, than production. Demand for high-quality open source and dual-licensed products will be very high.

Although there is little or no short-term revenue for dual-licensing businesses here, they do establish a long-term competitive advantage. As these small businesses in emerging economies grow, and as they build value in expertise or new hardware and software products, they can choose to pay some of their new capital for the more permissive terms of the proprietary license. The cost of switching encourages customers to stay with the product that they know, and the one built into their own products.

This same strategy applies to developed economies. Software vendors are generally interested in the education market, in part because they want the next generation of software consumers trained to use their products. Many vendors encourage university researchers and students to use their products so that the students will prefer those products when they graduate and eventually recommend software purchases to their new employers.

Dual-license vendors have an advantage in both cases, relative to proprietary vendors. Because the open source license terms permit use at no charge under reasonable conditions, individual business owners, as well as researchers and students, can choose the open source software easily. They do not need to negotiate a special low- or no-cost introductory license to use the product. There is much less friction in the distribution of open source software than in most proprietary software distribution, and the lower friction translates into higher adoption.



Open Sources 2.0
Open Sources 2.0: The Continuing Evolution
ISBN: 0596008023
EAN: 2147483647
Year: 2004
Pages: 217

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