Krzysztof "Chris" Bosak made some important and interesting points regarding the effect of open source on the overall health of the industry in a comment on another thread yesterday, and I thought they deserved to be discussed more fully (although there are many good comments in that thread, and I'd encourage you to check out that, too). So I'll give them their own thread, starting with my own thoughts.

First, here are some key points from Krzysztof's post:

"Marketing that you can make Ardupilot for $25, $50, $100 is like making the others look like the monsters of greed, while declaring the work of software developer is worth NULL, while not necessarily leading to the creation of competitive product in the long term."

All this has one effect: creates artificially crafted virtual reference point for price,that is used to dramatically weaken the public perception or the makers of complex electronics, without even making the makers of cheap solutions incredibly rich. At the end there is no progress, as the advance of open source is usually quickly swamped by absence of professional regression testing and all the things nobody would do for free."

At the same time, I noticed a New York Times article today that suggest that almost nobody has found a successful business model for open source. Together, these raise the question of whether open source does more harm than good to innovation, and whether it will ultimately lead to a sustainable industrial model for consumers and developers alike.

Needless to say, I believe that the open source development model, while not perfect, is the best one for overall innovation. But Krzysztof raises some valid concerns, which I'll tackle one by one:

1) Claims by open source developers about features and pricing tend to be unrealistic and serve to kill demand for higher-priced commercial products. I think there's some truth to this. Because open source development is done, by definition, in public, there is a lot of discussion about the broad ambitions of the project in the early stages, both to attract participation and to define the broad scope of the project. Not everything an open source project sets out to do is ultimately achieved, as the developers get into the hard work of executing. In contrast, commercial projects are usually developed in private and only revealed when the feature set is pretty much confirmed. The consequence of this is that the entry of an ambitious open source project can "freeze the market" while people wait to see if they can deliver. This is not good for the more cautious commercial players in that space.

As for pricing, open source hardware projects tend to be on the far low end, due to a general philosophy (which I share) not to charge for intellectual property. Our own policy is to charge 2.6 times the cost of the hardware (this allows one 40% margin for us and another 40% margin for our retail partners), but some other open source hardware companies charge just 1.5x cost. It's very hard for those who charge for intellectual property to compete with these prices.

2) Open source tends to "de-monitize" a market, eliminating the potential for anyone to make money. In the short term, this can certainly seem to be the case. But if you believe in demand elasticity, as I do, you would expect the lower price to vastly increase demand, growing the market for all. So it's a tradeoff between high margins and high volume.

In the case of ArduPilot, where the core board costs just $25 (something Krzysztof objects to, because it sets a consumer expectation that autopilots should be very cheap), we have sold about 2,000 boards this year, which makes it the best-selling amateur-level autopilot in the world by a wide margin. Although nobody make much money from those boards, the economic value around all the other parts you need to create an functioning autopilot is significant. Say there are now 500 complete ArduPilot systems out there now. That's about $800,000 in total spending (between us and our partners). Assume total margins (between wholesale and retail) are around 50%, that means $400,000 of profit in the first year. I suspect that's more than any of the commercial autopilot companies in this space can claim. Because you're charging for "atoms", not bits, open source hardware can be profitable in the way that open source software cannot, because the customer relationship starts with the assumption of paying for something.

3) Open source can't create products of equal quality to closed source, because nobody's getting rich. I think that Firefox, Linux and MySQL users would disagree with this, as would I. It's true that many open source project never achieve professional-quality polish, but that's mostly an issue of poor project management and leadership. I think you only have to look at the work HappyKillmore did on the ArduPilot configuration utility, or how Mike Black improved our GCS to see this: I'd argue that both are better than any of the ground station and configuration utilities from the commercial players in our space (and some, including Flexipilot, don't have groundstations at all). Note that these contributions were made not because someone was getting paid, but because the contributors had their own reasons to want better software. And because we set an open source standard, they chose to share their work so that others could build on it.

So, to sum up: I understand why commercial developers dislike the entry of an open source project into their market and hope it will fail. But the trend lines are clear on this one: open source is here to stay and is spreading, mostly because it leads to more, cheaper products faster. ArduPilot, for example. went from concept to maturity (with the 2.5 code, now in the hands of beta testers) in a year, including a full suite of supporting tools. There is no commercial autopilot that has come close to that speed of development. And as the DIY Drones community grows and our tools of group development improve, we are extending that to a host of new products created by the members here. To hire this many engineers would be ruinous, but by creating a community of shared interest and a culture of collaboration, we can do so at almost no cost at all. It's really quite magical.

Can commercial companies compete with this? I think they can, by offering more "plug and play" solutions, as Krzysztof has done with EasyUAV. Don't try to sell expensive apples to compete with our cheap apples; instead, sell oranges, with shiny bows on top. There's a market for both, and I think commercial developers would do well to find ways to do things that open source can't or don't do well, rather than just wishing that we'd go away.

Views: 539

3D Robotics
Comment by Chris Anderson on December 1, 2009 at 12:32am
Stephen, perhaps you could have actually done some research before getting on that high horse. The Eagle files are here, released alongside the board. Sparkfun makes it, not us.
Comment by Stephen Shorrock on December 1, 2009 at 12:41am
Heh, thanks Chris, sorry about that, I was looking for the shield eagle files and couldn't find them, presumed it was the same for the ardupilot.
Comment by brakar on December 1, 2009 at 12:59am
My view on open source vs commercial products is that the open source stuff sets the bar which the commercial vendors will have to jump over in order to succeed. They must add value and continue to innovate in order to stay in business, like it or not. Opensource only undermine re-inventors of the wheel so to say.

3D Robotics
Comment by Chris Anderson on December 1, 2009 at 7:48am
Marty, you wrote "The other thing is that sometimes I wish that Ardupilot was run semi commercially. My reasoning for that is that both chris and jordi are very busy people....It's getting better now with the workgroups but I would pay twice as much for Ardupilot to get greater support and greater fleshing out of the existing hardware and gcs."

This is the beauty of open source. If someone want to start a business offering a more polished or better supported version of ArduPilot or our other products, they're free to do so. There are no restrictions on the commercial use of our hardware or software designs. You don't expect Linus Torvalds to handle your Linux support; that's what Red Hat is for.
Comment by Ty on December 1, 2009 at 8:36am
Open source is here to stay. Adapt or perish.
As long as some guy is working away on his pet project in his garage, and discussing it with his friends, open source will be alive and well.
Adapt or perish.

I'm probably the least qualified guy to comment on this stuff. I don't have a working AP yet, my airframe is currently in pieces (I need to update that thread), and my engineering and subject expertise can be measured on the head of a pin. However, I've got my opinion and viewpoints, and strangely I've been musing about these issues a lot over the last couple of weeks.

First, there is the question of "Evil Open Source". It's bunk.
If a company is going to charge "X" amount for a product, then there should be a reason behind that "X". If another company comes along and charges 1/2X, then everyone will sit up and take notice. One of the first questions that is asked is "Why should I pay X instead of 1/2X?" Valid question. Mr. Bosak, you need to be able to answer that question to have a successful business. Similarly, Mr. Anderson, you need to make a case for why the customer is getting value for their money. If Mr. Anderson's product cannot work without a high level of technical expertise, trial, and additional polish, then a market niche for both products becomes evident. If the Anderson product rarely works, or has other extremely undesirable qualities, then it doesn't matter what the price point is, it will not be adopted, unless the higher priced product also has these same issues.

Open source is a realm for rapid innovation and communal examination. Frequently this examination is not done at any real depth (Let's face it, how many people here are making sure that their mods and software is capable of working on multiple airframes and systems?) or consistency. There are very loose standards, and it can be difficult to get innovators to provide support.
The flip side: For-Profit systems. Typically well tested across the user environment, documentation exists for almost everything, and if something goes wrong you can get support for the product. You may not have access to the source code, you may not have access to the documentation for the source code, and the support may not be what you expect (How often have we been told "Not our product's problem, but your implementation of the product").

I'm going with an ArduPilot (eventually) for a number of different issues. These are the issues that Closed-Source companies should really examine. First, I purchase something and I want to own it. I want to modify it, I want it to do things that I want it to do. I used to be in the very quiet minority. Now, thanks to the internet, I have a fantastic collaborative community to play with. I can examine the web for ideas, and post my own up and get almost instant feedback.
Second, I want my tools and toys to grow with me. As I learn more about a given hobby/occupation, I would rather have "stuff" that is going to allow me to do more, as I learn more about it. It touches on the above, but is a separate point (in my mind).
Third, there is a price issue out there. If I can cheaply get a product that will let me modify it (to the point of breaking it), then I'm going to have to seriously consider that one.

The interesting thing about this particular open source product is that it appears to be competitive to expensive systems. This week alone I've heard two negative comments about the ArduPilot from other companies. Not necessarily about the product, but about the threat it represents. It's interesting to me, because the whole project appears to be about as non-commercial as you can get. No dedicated support, certainly no immediate tech support. Instead it offers a basic hardware package (Who came up with the $25 number? I'm still looking at over $200 for a full system), AND a forum largely staffed with volunteers.

Finally, I hope that the competing organizations have an airframe with an ArduPilot on it. The system is cheap (you say so yourselves), and appears to offer enough features that it is competitive. Learn from it. Innovate from it. Make your products better. Hell, support the ArduPilot project as a part of your corporate efforts. Show your clients the ArduPilot. Then show them the support and out-of-the-box capability that your product demonstrates. Show the expertise that you have, building the exact product that the client wants, and the ability to keep it going, with little effort on their part. That's why you can charge a premium. On this, I can speak from real operational experience.

Comment by Sgt Ric on December 1, 2009 at 9:34am
Very well put Ty!

Comment by crystal garris on December 1, 2009 at 10:08am
One thing I would like to point out is that I doubt that even 10% of the people on this web site could tune a very expensive closed source auto pilot like the cloud cap system . closed or open if you don't understand it maybe you shouldn't buy it . I have integrated the CC auto pilot in to a few different airplanes , it is very ,very challenging .The main difference in the success rate of ardupilot vs its more expensive cousins is this , if I'm going to spend $25,000 on something i better damn well know what I'm doing . But if I'm spending $360 I would be much more willing to take a risk .
Comment by ladyada on December 1, 2009 at 10:14am
I am always confused by people who make the following points, in quick succession

1. There is no money to be made in open source hardware because the IP is free!
2. Open source hardware isnt really because there are costs involved in fabricating the IP, things need to be shipped!

I look at those two complaints and see a clear and straightforward business model.

Likewise, the complaints that

1. Open source hardware undermines prices by not charging for developer time
2. Open source hardware quality is low because developers arent skilled/focused

Are incompatible: if OSH was great quality AND ultra-cheap, sure I could see that being a little undermining. But if its true that OSH is poor quality and cheap, it just means that your commercial, quality product has very little to threaten it.

And of course, the same-old same-old:

1. It isn't open source hardware because its not using all open source tools

As if there are not tons of open source projects that use commercial compilers, or the fact that there is open source software that runs on windows, or that linux runs on proprietary BIOS's and motherboards and uses proprietary chipsets. Really, its ok to appreciate that someone did some work and decided to share it, instead of figuring out ways to demean its existence :)
Comment by bGatti on December 1, 2009 at 12:02pm
@Michael Zaffuto
On the question of whether or not Open Source diminishes reported GDP by moving real value from a transaction to barter of ideas: I think there is no question that Open Source is a transaction of value which goes unreported and untaxed. Open Source is not a gift, but a transaction, in which both sides are compensated for their effort in the exchange: The early effort is compensated by the later efforts of the user group. Imagine a society in which open source was the defacto transaction; how would the economists measure productivity? Might they not be justified in considering the value of OS as the measure of their productivity? I think they would.

OS has the macro effect of reducing the governmental burdens on technology; in the west IP is a huge component of GDP - putting that IP under the radar eliminates the regulatory burden.

There are other reasons; hiring people is a regulatory nightmare in its own right, with healthcare, liability insurance, and taxes.

In a regulation-neutral world, one might argue that paying people for their contribution and ideas is more efficient than the mutual condemnation of IP. Open Source might simply be an economic reaction to an inefficient regulatory reality - rather than a more effecient means of trade.
Comment by bGatti on December 1, 2009 at 1:11pm
New Thought:
Open Source adds value to the economy by encouraging standardization. Marx and Lenin spent their youth carping about the evil of wasted effort caused by competition. Admittedly, if everyone working on making autopilots small and cheap had been working on a single design, rather than duplicating their efforts ad nauseum, the world would have had cheaper and small at less cost. Open Source largely solves the tendency of competitive economies to be redundant - thus where standards are an implicit value - Open Source can offer an efficient market. I suspect this is one reason large companies support Open Source - if they see themselves making money on a knock-on product, Open Source creates an insular market for a single solution. An Ardupilot shield for example would have 2000 potential buyers for exactly the same pinout.


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