Reading 09: SaaS

 I think this collection of essays continues to build upon ESR’s ideas in the “Homesteading the Noosphere,” as well as furthered my understanding of economics surrounding open source software. After last week’s reading, I still had questions about the profitability of open source software. After all, if the code is open source, how can you even make money off of it? Well, ESR argues that there is more value in selling services on top of your open source software than selling the software itself. He defends this claim by stating that 95% of software (can someone fact-check this number?) is written for in-house use, meaning that it is developed by a firm/group/individual for themselves. He goes on to further say that the software market needs to be a service industry, and not a manufacturing one, as that is essential for sustainable and efficient software economics. Now this, I can get behind. After all, ESR mentions the ephemeral nature of software, so naturally it makes sense for this to be something that continuously evolves and improves. Thus, software as a service makes more sense than a manufacturing product, which I wholeheartedly agree with.

ESR then goes on to give an example of developers using Apache to host a web server, as opposed to building their own or buying one. For a long time, I always thought developers would always try to just build any software they needed to use. After all, if you’re a developer, isn’t that your job? However, over my internship this summer I learned that there are considerable drawbacks to doing so. I sat in on a few meetings with my boss, and he was kind enough to explain why our team was looking at outsourcing some ETL pipeline development. I was confused, since I thought our team's job was to develop that software. However, my boss explained some of the drawbacks to doing so, with the primary one being that we would need to maintain it. So, even though there are certainly open source ETL pipelines out there, and even though my boss had a team of ultra-capable programmers, he made the decision to outsource the ETL pipeline. While this doesn’t correspond directly with selling open source software, it helped me understand that people are still willing to pay for software services even though they can get open source software themselves. And so I think this story corroborates a lot of what ESR argues about selling software as a service, and not a one-time product. After all, even though you could get a one-time snapshot of software for free, paying for the continuous development and service can oftentimes be the better route for a firm, as demonstrated by my boss’s decision.

With my closing remarks I want to try and tackle one of the headlining questions for this week’s reading, which is whether “the open source business is broken or if the magic cauldron still has power.” I believe that the open source business will continue to exist, simply because it can in a capitalistic society. Because open source software is (mostly) free, people will continue to look towards it. And people looking towards open source software means people will use that software. And as long as they use it, open source will continue to be a fundamental business model in the software world.


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