Linux Adoption in the Public Sector An Economic Analysis

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Linux Adoption in the Public Sector An Economic
Analysis

• Hal R. Varian
• Carl Shapiro
• UC Berkeley
• http//www.sims.berkeley.edu/hal

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Definitions

• Open source v commercial software
• Source code freely available
• Open interface v proprietary interface
• Interface completely documented and freely usable
• Programmer interface, user interface, document
  interface
• Generally open source software has open
  interfaces proprietary software may or may not
  have open interfaces

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Economics of open source

• Many motivations to write
• Scratching an itch, demonstrating skill,
  generosity, throw it over the fence, etc.
• Money to be made by
• Consulting, support and related services,
  creating distributions, providers of complements
• Biggest danger
• Splintering a la Unix
• Examples GNU Emacs, Xemacs

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Examples of open source

• Linux and BSD
• 18 million Linux users?
• 4 of desktop for Linux?
• Amazon, Google, Yahoo
• All use Linux or BSD as servers
• Apache web server
• Netcraft 60 market share

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Factors influencing OSS adoption

• Total cost of ownership
• Most studies find 10-15 difference
• Purchase price system administrators
• In LDCs, former may dominate latter
• Switching costs
• Much higher with proprietary interfaces
• Vendors will try to exploit switching costs

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Switching costs and hold up

• Vendors always want to promise openness, but then
  not deliver
• Give away version n, charge what market will bear
  for version n1
• How can a software vendor commit not to exploit
  customer in future?
• Answer true open interface and/or open source

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Microsofts dilemma

• Why should the Chinese government allow users to
  take the first shot of a very expensive drug?
• Now network effects are relatively small, so why
  not choose the system with low switching costs
  and build your own network?
• How can Microsoft commit to refraining from
  future exploitation?
• Possible strategies
• Tolerate/encourage piracy
• EU mandated open interfaces
• Problems spill over to existing markets

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OSS software quality

• Reliability
• higher stability is very important
• Maintainability
• Linux ASCII files v Microsoft registry
• Usability
• User testing is expensive, but interfaces can be
  copied
• Security
• Hardened Linux
• Flexibility
• Smaller, larger, harder, secure, localized

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Open source licenses

• Many different licenses (BSD, Netscape, etc.)
• GNU Public License
• Copyleft provision
• If you modify and distribute open source software
  outside your organization, you must include the
  source code
• Only applies under these narrow conditions

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Economic development

• Building a network
• Watch out for lock-in
• Favor open interfaces when possible
• Educating a workforce
• Open source important in education
• Imagine trying to train mechanics if they
  couldnt see real engines

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Economic effects