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Good Job.
Enigma, you point out evidence of a creative destruction cycle, or one in process, but not one that has fully manifested or proven itself. Too many things are still measured by their potential or proof of concept (lower margins in Linux development), but not by market share or revenue (the actual impact on the market).
Noel you are missing the whole point of creative destruction. I don't think you really understand the process. It was underlined for me in a first year design studio, when the assignment was given to design a can opener. Everybody worked pretty hard and built very elegant can openers. Some of them even worked really well. The professor than took out a can with a pull tab, and showed how all of our designs had been made obsolete.
Or said very simply by Saudi Arabia's OPEC rep: The Stone Age did not end because they ran out of stones.
The same point I had made re: OS space in Tim's Post ("Open Source as a Perpetual Motion Machine").
Microsoft however has about 61,000 employees, and reportedly about 41,000 are involved on the development of Windows Workstation and Server.
When a company can compete in an R&D; intensive field, dramatically lowering the barriers to entry, and produce a better product with about 1% of the work force of its competitor, I have to ask:
If that isn't Creative Destruction than what is?
" ...the powerful lever that in the long run expands output and brings down prices is in any case made of other stuff."
Yes, made of other stuff..
So, Noel, still waiting for an answer to the above point...
Part of the appeal of open-source software is that you CAN heavily modify it. How much Apache code is in the custom Web servers that Google, Amazon and Yahoo run? I suspect quite a bit.
>> The market niches served by Apache and MySQL aren't financially attractive to capitalist entities; mostly we're talking about hobbyists who, if they ran commercial code at all, would most likely have stolen it.
This is utterly ridiculous, and I can't believe I'm hearing it from a tech-savvy individual in 2006. Tons of companies run both Apache and MySQL. Why not? They're both free, and they work. Also, in the case of MySQL, the software is produced by a capitalist entity, and has been since its inception.
It is the hallmark of creative destruction that many previously monetized products (or even entire industrial sectors) are made obsolete. In this case that's exactly what open source is in fact doing to shrink wrapped software.
The market niches served by Apache and MySQL aren't financially attractive to capitalist entities; mostly we're talking about hobbyists who, if they ran commercial code at all, would most likely have stolen it.
Noel, this argumant is not coherent. Apache a niche product? Yes, Toyota is a niche car.
Tim:
Excellent post. I like especially how it exposes the anti-FOSS camp as essentially anti-market.
I'm always happy about lower prices. What I'm concerned about is lower quality. So your FOSS pals can do their thing, and then I'll invest. Right? Isn't that how markets work? Remember the market?
Yes, thanks Enigma for putting words into my mouth. I know you are questioning the foundations of your creative destruction at this moment. I would recommend Dostoyevysky's Notes From the Underground. Duhh.
$15M was not the cost to him for making an OS. It was the integration cost of existing components. The real cost is more sobering:
I like Ubuntu, but let's not get all fanboiish about it. It required a lot of effort to write those components, and a lot of money was put into improving Linux on big hardware.
Well, getting back to the example from my design studio, I would say that the way creative destruction works is that sometimes entire market segments or industrial sectors are eliminated. Like scriveners have been. Or Drafting equipment manufacturers. Or the manufacturers of chemical film are about to become. So the whole point of creative destruction can be: there will not be anything to invest in. The sector will be eliminated.
The whole economy will benefit because, the entire economy from Pharmacuetical Manufacturers to Animation Studios to Auto Manufacturers will have to pay less for software. FOSS adoption will decrease thoroughout the entire economy the cost of producing knowledge-based products with computers.
So, FOSS will increase to value of the entire economy, but certain players, for example shrink wrap software publishers, will become much less capitalized.
$15M was not the cost to him for making an OS. It was the integration cost of existing components. The real cost is more sobering:
No, the $15 million was what it cost the Ubuntu Foundation. The fact that there is $1.9 billion dollars worth of IP issued under the GPL made that $1.9 billion dollars worth of "IP" available to Ubuntu. That's the whole point of FOSS.
Note the critical reference by Schumpeter to "new type of organization" FOSS is a new type of organization for so-called "IP"
But in capitalist reality as distinguished from its textbook picture, it is not that kind of competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization (the largest-scale unit of control for instance)-competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.
I'd also point out to MikeT that Linux already received a good-sized kick in the cajones on the desktop a few years back. It's called OSX.