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| Newer page: | version 7 | Last edited on Monday, June 1, 2009 4:01:58 pm | by LawrenceDoliveiro | Revert |
| Older page: | version 6 | Last edited on Monday, June 1, 2009 3:47:39 pm | by LawrenceDoliveiro | Revert |
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[Proprietary] software relies on recouping the costs through selling the software. Since the unit cost is essentially zero, the costs being recouped are largely fixed costs. Once these have been paid off, the price of the software can be greatly reduced, and the company can still make a profit.
But conversely, if there are a number of different competitors with proprietary software products, the price could drop to the point where only the number-one vendor is still making a profit, while all the rest are losing money, and eventually go out of business. This seems to happen sooner or later in every market segment with proprietary products, which is why proprietary software is dominated by a small number of very large companies.
-So the fixed cost can itself become a competitive weapon: by developing a piece of software with higher fixed costs, you make it harder for your competitors to do the same—you’re raising the ''barriers to entry'' into the market. This is why proprietary software tends to suffer from ''bloat''
, where subsequent versions become more complex and need more and more computing resources to run.
+So the fixed cost can itself become a competitive weapon: by developing a piece of software with higher fixed costs, you make it harder for your competitors to do the same—you’re raising the ''barriers to entry'' into the market. This is why proprietary software tends to suffer from [Bloat]
, where subsequent versions become more complex and need more and more computing resources to run.
With FreeSoftware on the other hand, the fixed cost can be spread out in a number of ways, by reusing code from other projects, and relying on a large pool of contributors to divide up the work between them. This low fixed cost makes it very easy for new players to enter the market: instead of having to develop their products completely from scratch, they can build on work that someone else has done, and just put their own innovative variations on top.
For another example, consider the market for passenger cars: there are dozens of manufacturers and hundreds of models and variations thereon, yet nobody claims that this profusion is “fragmenting the market” or “putting off car buyers”. No single vendor or model dominates the market: their costs are such that most of their models can make a comfortable profit selling just a few hundred thousand units per year worldwide.
