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.

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3D Robotics
Comment by Chris Anderson on December 1, 2009 at 4:56pm
bGatti, please don't once again be the one who makes me close another thread. Please respect our rules.
Comment by Eric Tamme on December 1, 2009 at 5:04pm
"Does open source undermine innovation?"

No. Open Source provides tools for people to innovate with.

Case in point: Ardupilot:

Neither Chris or Jordi invented the Arduino platform on which Ardupilot runs. Arduino is open source hardware and software that allows for others to build on, commercially or Open Source.

AVR-gcc and AVR-libc, on top of which Arduino software runs, is Open Source.

Lets take a quick glance and see.... how fast has Ardupilot grown and... "innovated" compared to commercial UAV's IMO, very fast. Is there anything preventing commercial UAV vendors innovation because Ardupilot exists? No.

Im not sure the actual licensing of Ardupilot hardware and software, but im guessing that the terms would even allow a commercial UAV mfg. to use the Ardupilot software to enhance their current products and further innovate based on an Open Source platform.
Comment by Eric Tamme on December 1, 2009 at 5:07pm
P.S. I second the cry for cross platform (or at least Linux compatible tools) to use with Ardupilot. I am just getting my "shop" setup with arduino etc. (just finished installing the cross compiler toolchain) but I would be interested to help out with cross platform tools (ruby, java).

Maybe we can setup a github account for code - i think you guys use google code right now :\
Comment by Zak on December 1, 2009 at 5:22pm
Presupposition leading to the belief of what is useful for one is what defines what is useful for all creates fallacy. Stating the problem with Open Source is that a company, big or small, is the only one benefiting from a project is one such fallacy. While it is true an open source project can allow a company to gain from relatively small financial investment, nothing stops another entity from taking the same project up and utilizing it for their own gain.

In the very real world of cell phones and operating systems, this is exactly what has happen with Android. While Google is the company behind the OS, varieties of other large companies have taken up the project and have begun producing products. Yet ANYONE can pick Android up and make something, even you.

Open Source not only leads to big companies finding success economically, it creates standards which creates jobs right down to the sole proprietor. Web technologies thrive on this principle, from Facebook, Amazon.com, and individual web masters who provide a technical service and product for their customers. In the bigger pictures, there are far more individuals employing themselves through their knowledge and expertise in these technologies than there is working inside big business. Both sides win.

In fact, the real trend in successful open source projects comes through the financial support of these projects. Sun Microsystems picked up MySQL, but everyone using the technology benefits from this corporate support.

Even proprietor companies like Adobe utilize open source to cut down the cost of delivering a powerful tool to its customer i.e. Flex is developed through Eclipse. However, Adobe faces a fact that a closed system doesn’t guarantee people simply won’t hack their products to use anyways.

This brings up a point on why open source works. Technology needs platforms everyone can access to grow. Just ask Microsoft as it has begun to grudgingly accept this fact in the browser wars, despite its domination on desktops for years both in OS and Browsers. IE8 is filled with the reality that it must assimilate or become irrelevant, and for a software company which built its reputation on operating systems, ignoring the fact that the browser is becoming the OS would be ruinous.

Proprietor systems inside the web are facing stiff competition from the growth of open source. Flash not only faces Microsoft’s Silverlight, but there is an emerging push for these kinds of capabilities in a much more accessible fashion. Strangely enough, these proprietor solutions already rely on open source standards in the form of Ecma.standards – Adobe’s action script, for instance, is a very close kin to javascript and are based in EcmaScript.

Let me put it another way. In World War II, the Germans built a train rail system which had a narrower track then the rest of Europe. But they fitted their trains with the ability to ride both tracks. The Germans were trying to protect against the rest of Europe from easily obtaining a position inside their own territory, it was a defense to control logistics and lock a potential route inside Germany itself.

Standards are necessary and useful. Europe kept to a standard rail width because it made it possible to travel from one country to the next. This sort of mutual agreement is advantageous to everyone involved.

Essentially, arguments against open source are arguments of protection. Arguments for open source are the democracy inside capitalism. The only other objection to its use is through one’s own inability to participate in the process, and that can be through a stubborn belief or ignorance.

Admin
Comment by Morli on December 1, 2009 at 5:35pm
@Zak, Interesting way of using narrow rail eg. and last para " essentially arguments against...........or ignorance" , Well said :-)
Comment by Howard Gordon on December 1, 2009 at 5:45pm
Open source hardware and software are best thought of as enabling technologies that generally leverage value-added business models. The developers of open source are compensated, more often than not, buy users of their technology who are further up the food chain. A reasonable analogy is the microprocessor - some engineers got paid for circuit design, layout, production, etc, but they generally didn't receive residuals beyond perhaps some stock options. In mass production, margins for the producers of microprocessors were not necessarily great, but look at the business that was leveraged by this technology.

Using the Ardupilot as an example, a $1 processor is leveraging the sale of a $25 board which is further leveraging the sale of $500 worth of motors, airframe, gps, sensors, etc. That's quite a multiplier. But without the processor, the entire pyramid collapses.

So when you look at open source as an enabling technology, and value everything it leverages, it is difficult to see how the macroeconomic numbers are reduced by its existence, even if there are localized disruptions.
Comment by bGatti on December 1, 2009 at 6:00pm
@Howard
Quite interesting.
In my reading of economics, the measure of a market system is efficiency rather than "macroeconomic numbers". I would agree the knock-on effects of OS is fair - less sure that the comparative effect is quite as clear.
I'm not convinced that Open Source has ever innovated. Where was Open Source ever the first version of an important innovation? Linux came after Unix, Android came after Sybian, Ardupilot after UNAV etc...

So the question has some bite; but I'm not sure innovation is why Open Source is popular. OS is popular precisely because it erodes the premium traditionally paid for innovation. The question is does the knock on benefit overcome the destroyed premiums? It's a good question, and I doubt we have the answer. Chris did perhaps as much research on this as anyone - and he's still asking the question. ;-)
Comment by Howard Gordon on December 1, 2009 at 6:36pm
Ben -

For the high profile projects, the open source projects have largely followed in the footsteps of the original commercial efforts, but there is plenty of innovation in the details and subsystems (e.g. BSD networking and TCP protocols, etc).

With smaller projects, I suspect you would find lots of innovation in open source efforts if you did an exhaustive cataloging of Source Forge or Google Code. An example that springs to mind is picoC - the embedded C interpreter we use with our robot controllers - it is an original effort that really doesn't derive from any commecial effort I can imagine. LISP, Scheme, and a variety of programming languages mainly arose out of government grants, but still went directly to the public domain. I am hard pressed to think of similar hardware examples, maybe because startup costs are higher, plus the concept of open source hardware is quite a bit newer.
Comment by Paul Mather on December 1, 2009 at 6:45pm
@bGatti, I agree. Open source probably does follow innovation more often than it leads. But is it really undermining? I don't think so. I see it as an expansion of innovation. It's a form of competition that forces the innovators to keep innovating or die.

T3
Comment by William Premerlani on December 1, 2009 at 7:20pm
Well, its beyond my pay-grade to know whether open source undermines innovation or not.

For me, open source lends it self well to teams of people who want to "do-it-yourself". The name of this site is, after all, diydrones. What I do, I do for the fun of it, so I can do what I want, when I want to, without an agenda or plan. Its what I did when I was a kid. So, I don't view what I am doing as a threat to commercial products.

But....this discussion thread reminded me of a discussion on "greed", by Milton Friedman. I think it is relevant to this discussion, but I am not sure what to conclude from it. If you have not seen it before, you should take a look and listen. Food for thought......

Bill Premerlani

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