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

Comment by Dale on December 1, 2009 at 7:25pm
I think Chris wants to write another book, and wants material, and he should....

I can see the logic of Krzysztof's points about maybe reducing demand for commercial products. 'heck, you mean I can do this for $25, let's get started. why shell out so much for one of these, when I can just do a little soldering.'

(quite a few commercial autopilot type of products available I see now, thanks to the google ads on diydrones, seems I never found as many when I looked before. me, I click em everytime!)

But I don't think it would be that significant on the receiving end of commercial products. I think that in this case, the spending is coming from customers who don't quite fit into the commercial products, and it's a new part of the market. (maybe it's a fat tail in this case, not a skinny tail...)

My case for example: I want to do something that I'm not sure how to do but need/want to learn, and quite likely is not already available in the commercial products. and I'm on the bottom of the budget end. sure I could get a commercial one and could afford, but really what I need is something open, so I can do what I want. Really doubt I could get any special obscure changes made, and super doubt I'd get source for anything. I'm a low budget customer, not sure they can support me. If ArduP/IMU was not available, I'd be attempting to make myself which I'm sure would not be so far along. Or using the other open ones. I think I'm a new market, not really compatible with the commercial products.

And another example, I want to have baro like SCP1000 and that Krzysztof has offered as a commercial solution in between GPS. so I bought for 50 the breakout board, instead of slightly more for the commercial one, and 'figure out' how for myself the SPI, really more just copy and learn, many examples including one on diydrone how to do, and RTFM on SPI and SCP1000. because I want the open code, don't think the other code is available. I feel there's more value in having the code be open. It's not about the money really.

So I think it's good, and like it. go linux, btw.

Moderator
Comment by Sgt Ric on December 1, 2009 at 7:59pm
@Dale, about your comment: "I think Chris wants to write another book, and wants material, and he should...."

Lets remember that Chris did not begin this discussion.

It began with an uncalled-for slap from John Suggs of UNAV.

It appears UNAV sees DIYDrones as a kind of threat to their business model.

The discussions developed from there into a look at the effects of Open Source.
Comment by Curt Olson on December 1, 2009 at 9:10pm
I'd like someone to define innovation. If someone develops an open-source program that offers similar functionality to an existing commercial program then sure, we won't accuse the open-source team of tremendous innovation. But did that commercial company offer any innovation in their product? Most things are built up incrementally. Even great ideas are often combination of existing ideas, or just a small new wrinkle on something we already knew. It seems that for any idea or product, you can go back a step and find similar things that predate it. Once in a great while someone comes up with something totally new and revolutionary out of the blue, but it's not all that often. Linux trailed unix, sure. But unix was certainly not the first operating system. The linux desktop trailed windows, but windows trailed the mac, and many of those original ideas came out of xerox.

If a tree falls in a forest, does it make a sound? Is an innovation not an innovation unless it becomes wildly popular? If something becomes wildly popular is it an innovation? I was going to suggest TeX/LaTeX as an open source innovation, but then thought that probably few here would even have heard of it, and those that had, probably don't use it or see any high value in it.

Maybe the idea of open-source software is an innovation in and of itself?

I think too often people are more worried about protecting their ideas, than they are about developing and advancing their ideas. I think this mentality hurt the Wright brothers. While they were spending all their time trying to protect their patents and their innovative ideas (with a lot of secrecy) others like Glen Curtiss (what an awsome name!) :-) were busy engineering better and better airplanes. The Wrights got left in the dust.

For me the lesson there is that you have to keep moving forward, because if you don't someone else will. Don't think you can sit on your "innovation" because it is propriety and commercial and people will just stack money on your door step. In my view it's less important if your product is open-source or proprietary, and a lot more important that you are staying ahead of the curve and pushing into new territory ... that is what is going to attract customers/users and keep people interested and loyal to you.
Comment by Zak on December 2, 2009 at 12:56am
@curt I am working with Latex and putting together a tiny mce to utilize its functionality.

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Comment by Sami Finnila on December 2, 2009 at 4:37am
Just replying to the original blog post:

I think that one important point for the open source was forgotten from the blog post (regarding the claim that open source will, in general, lessen the amount of innovation):

Open source will let more people to innovate to more projects: if we talk about developing some product, say a bucket, for example, and a company is developing this bucket, the company will keep the developement (and possible new innovations) to itself and only the employees of the company are in a position to take part in the innovating. Now let's assume that a guy working in another company making spoons has a briliant new invention regarding buckets (i.e. a new innovation). This guy working in the spoon factory will probably never see his innovation in the buckets of the bucket company because it simply doesn't make sense for him to just give up the invetion for others to make money out of it. You might say that the guy with the new invetion should found a bucket company of his own but let's face it; if you don't invent something similar to gun powder in signifigance you're probably not going to, for monetary as well as personal reasons, found your own company. In the open source side of things anyone can take part in the developement (innovation) of a open source project and the innovations also can spread from project to project since they're not patented.

Bottom line: Companies with strict control over their intellectual rights etc. will reserve the "right to innovate" to a small group of people and thus we will see, in some cases atleast, fewer innovations in the end products these said companies than in the end products of a company that embraces open source business model.

As for why we're having this discussion in the first place: I understand that some people don't like the fact that their "private right to innovate" has been taken from them; I'd be pretty pissed too if someone else made my work for half the price and better. ... and on the other hand there are some places where open source simply doesn't fit so I quess it's a matter of balance between the two extremes we're trying to get to here: open source vs. closed source. But saying that open source does more harm than it does good is a straight forward lie, IMO.
Comment by bGatti on December 2, 2009 at 12:19pm
@Sami - yours is an excellent point well put.
I'm not sure anyone said Open Source did harm. I'm not sure innovation is the only good. Reducing cost, level the field, democratizing the benefits of technology may all be goods unrelated to innovation.

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