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Open Source vs. Proprietary Software in Practice

Posted in tech

Open source or proprietary software? Occasionally oversimplified as collaboration versus technology hoarding, this is a decision faced by many people in the tech world on a project-by-project basis.

More familiar to most, proprietary software is owned and guarded by the makers of the technology. These developers and companies work diligently to improve and protect their technology like a parent over their child. Think Windows OS, Dropbox, Adobe Suite - most commonly known pieces of software available are proprietary.

Open source projects on the other hand grants access of the source code to others, while also allowing for modifications and contributions. The most notable open source project of all-time is likely Linux, a Unix-like computer operating system. These works are typically the backbone of many great pieces of software.

You get what you pay for

Intellectual property, or IP, is a concept that gives ownership of intangible ideas, designs, or technology to individuals or corporations. It’s used so others can’t freely copy or steal technology whether already built or in the progress of being built.

Proprietary software is the lifeblood of many businesses and their valuations. Pro open source advocates believe proprietary software limits innovation, and although there are companies that hoard patents, intellectual property can actually make industries more competitive, increase overall value to customers, and drive innovation forward.

Proprietary software is oftentimes battle-tested, with companies gaining important domain expertise in efficient implementation, key issues, and more. The documentation is typically at a higher level since there is more incentive for maintenance and education.

Ultimately, institutionalizing customer support, onboarding, and maintenance allows for higher value delivered to end users.

One key problem for many open source projects is the lack of specific support. Although bugs and fixes come quick, there is no requirement for specific support in most open source communities. Open source projects typically have less structure unless owned by a large corporation and are inherently hard to maintain due to lack of institutionalized support structures.

Open source means open innovation

“A great babbling bazaar of differing agendas and approaches” is what Eric S. Raymond called Linux’s miracle-like evolution in being the greatest open source project of all-time.

Unlike proprietary software with its rigid structure and organizational boundaries, open source software creates a realm where anyone can contribute, anyone can access, and anyone can distribute as they see fit.

Discussed in The Cathedral and the Bazaar, the best software is created first by creating a community where developers can work on the programs they love.

This is a critical component that is almost always guaranteed with open source works. After all, what incentive would someone have working without pay on an open source project if not for their love of the product?

With possibly millions of people working on open source projects at any given time, faster fixes and fewer bugs are present in the most accessible projects. This can potentially save time at important junctions in development. Overall accessibility of open source projects is higher as costs remain low - that being said implementation may be more difficult.

Allowing others to build using open source projects as building blocks has led to projects on the edge of innovation. Apache, Python, and Linux are examples of open source works that are the backbone of major technology companies like Google, PayPal, Facebook and more.

Patent and technological hoarding in specific is another key detractor to intellectual property. In fact, R&D spending and VC investment in verticals where lawsuits from frequent litigators are high are down 48% and 14% respectively compared to other industries.

The effects of patent troll lawsuits on innovation

The other main issue with proprietary software is dependency and potential risk of orphaned products. Vendor lock-in is created as a byproduct of committing to proprietary software which can lead to high switching costs in the future. This decreases the malleability companies have and increases the weight of decisions when buying into services or vendors.

Furthermore, in the event that vendors abandon a project, or dissolve themselves, users must now carry an orphaned product without support in the future.

Shanzhai: A case study

After watching Shenzhen: The Silicon Valley of Hardware by Wired UK, it made me think about Shanzhai and how a territory of counterfeit hardware can be such a breeding ground for innovation. Within their own ecosystem, they’re able to collaborate and innovate with one another expanding overall value - made possible by their open source knowledge network.

In the West however, collaboration is oftentimes a byproduct of agreements transactional in nature. By viewing things as non-zero sum with other vendors, those in Shanzhai are able to escape the prisoner’s dilemma of product innovation within their ecosystem.

Shanzhai is a special case that is only successful in a vacuum.

Those being copied are the pareto inefficient parties involved and if this happened at scale, these companies would stop innovating thus making everyone worse off.

This works best as a smaller secondary market where regional price elasticity is high and embedded cultural norms drive collaboration and non-zero sum thinking.

A final thought

Patents and IP serve a purpose - people should be rewarded for their ideas and have incentive to innovate. If everything was open source, this would not be the case.

However, by focusing on revenues and competitiveness, companies are now more prone to aggressive patent and copyright enforcements which hinders the community’s ability to develop open source software.

Ultimately, the decision of open source versus proprietary should be discussed on a case-by-case basis based on the industry and project. There should, however, be penalties for hoarding patents and preventing innovation.

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