Open Source software as a Commodity? An exchange with an expert

Last week I had the following email exchange with Andy Oram, a highly respected book publisher and author at O'Reilly, specializing in Open Source technologies, and the movement in general. I initiated the exchange after a conversation with Keith Steele, who works on the Pisces project at BPA, concerning the word "Commodity", and its usage with Open Source software. I think you will find it interesting....

My initial email:

Andy

ne who is genuinely interested in Open Source software, and the movement, but comes from a Microsoft background, I have a simple question for you that hopefully you can help me with.

The dictionary defines the word, "commodity" as such:

1. Something useful that can be turned to commercial or other advantage: “Left-handed, power-hitting third basemen are a rare commodity in the big leagues” (Steve Guiremand).

2. An article of trade or commerce, especially an agricultural or mining product that can be processed and resold.

3. Advantage; benefit. Obsolete. A quantity of goods

Can you explain why this word is now accepted in the lexicon of the Open Source movement? For example, in your article, "Linux becomes a commodity at LinuxWorld" http://www.oreillynet.com/pub/wlg/3614 your first sentence reads, "Perhaps the clearest indication that operating systems are becoming a commodity".

If the modus operandi of the movement is collaboration, sharing, and free software, than why is this word, that is normally used to describe Capitalistic vehicles for wealth generation, being used in this way?

Sincerely,
Kirk Miller

Andy's Response:

That's a really great question! Thanks for writing and pointing out the
odd shift in meaning. When I look up "commoditization" on Wikipedia (a
great example of my meaning of the term, commoditizing encyclopedia
content) I get the formal definition you mentioned in your mail. But
when I look up "commodity," I see some material that supports the common
use in the open source community. Here's a relevant excerpt:

In the original and simplified sense, commodities were things of value,
of uniform quality, that were produced in large quantities by many
different producers; the items from each different producer are
considered equivalent. It is the contract and this underlying standard
that define the commodity, not any quality inherent in the product. One
can reasonably say that food commodities, for example, are defined by
the fact that they substitute for each other in recipes, and that one
can use the food without having to look at it too closely.

Wheat is an example. Wheat from many different farms is pooled.
Generally, it is all traded at the same price; wheat from Joe's farm is
not differentiated from wheat from Jane's farm. Some uniform standard of
quality must necessarily be assumed.

---

I think somebody took the original meaning (which you laid out in your
email) and took a bit of a flight of fancy to come up with the more
controversial meaning.

Open source didn't start it. For a long time I've heard phrases such as,
"IBM-compatible PCs became a commodity." That is, all companies were
pretty much the same and it didn't matter to consumers where they
bought, except for subtle differences in support. And that was credited
with making Microsoft software so valuable, and making it the focus of
changes in the computer field.

And I've heard it said that this kind of "commoditization" of the PC
lowered the prices so much that for the first time, a few years ago, the
price of the software became significant. So companies started to wonder
how they could cut down software license fees--perhaps a boost to open
source.

So, in short, the term seems to have been jerked around a lot to point
to a socio-economic phenomenon. I think the phenomenon is real, but it
might be too bad that a good term had to be reused to describe it.

My Response:

Andy

or the quick and enlightening response to my inquiry.

As I looked around the net some more I came across an article that described software "Commoditization" in a similar way.

Here's the relevant excerpt:
Open source is helping turn significant chunks of the IT infrastructure into commodities by offering alternatives to proprietary software. (See "Enterprise Ready," left, for a list of these tested open-source applications.) This is software as corn or wheat. As the products become indistinguishable, buyers will choose the cheapest, most reliable supplier they can find-and it's hard to beat open source on price.

That makes sense, but I think the term is misleading for the following reason: Some software is surely heading for, or has already become, homogenous.. or, "indistinguishable" from one competitor's version to the next. Web servers come readily to mind. In this respect, the excerpt's first sentence is accurate. However, further "up the stack", as I've also read recently, referring to the applications that reside on top of "Commoditized" software, it seems to me that the tools and applications will always remain far too specific in what they are doing, and what problems that are resolving, to become generic. In this sense, proprietary vendors will probably always remain one step (or more) ahead of the process of commoditizing that, perhaps, will continue to take place.

Andy's last response:

I agree with you that it's much harder to marshal a lot of volunteers
(or willing vendors) in narrow, specialized spaces. What I wonder is
whether innovation can take place in open source too. On small things,
the proprietary vendors seem to take the lead and do a better job. But
on world-changing ideas such as the Internet and the Web, open source
was there first.

Andy

My final response:

The question I have is how far "up the stack" can "Commodified Software" get?

It seems to me that the more Commodification takes place in software, the better case Open Source advocates can make to the business community that Open Source software makes economic sense to adopt. However, I fear that, in the attempt to relegate an ever-increasing range of applications as "homogenized.. Commoditized" with the goal of expanding the presence of Open Source, what could lose out is functional innovation...what is also known as strategic advantage that makes one product shine when compared to its cousins. Ultimately, even if Open Source wins out in the end, the compromises that victory required might have deleterious effects to the entire industry.

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