The Customization Economy
The next step beyond servicing existing software is the creation of new applications to solve outstanding problems. This may be in the form of hardware devices that come preconfigured for a particular need. Or it may be through employees or consultants who configure and enhance software for particular needs.
In a world dominated by a single vendor, there are limits to the innovations a new product can provide because of high prices, too few features, too many features, logo requirements, etc. Many interesting new applications are suddenly possible when these shackles are removed. You just need freedom to customize.
Hardware preloads and bundles are some of the most compelling uses of free software, because the cost of developing or enhancing free software for the machine can be included in the price of the hardware.
One example is the Cobalt Qube This is a space-age blue 18.4×18.4×19.7cm server appliance running Linux on a RISC processor. It is a general purpose workgroup server for e-mail, Web, etc. Having full access to the Linux source code gave Cobalt the capability to fully customize the software for this uniquely simple but very powerful hardware platform. (See “Cobalt Qube Microserver” by Ralph Sims, October 1998.)
Another is the Snap! network storage server from Meridian Data (http://www.meridian-data.com/). It’s a fixed-function server appliance that shares disk space on the network. It is built from custom hardware combined with open-source software. Consumers don’t need to know it uses free software; they just need to know what it does. Customers expect the price of network storage to scale with the price of disk storage, so the hardware and software costs of using a proprietary software system could have greatly reduced the attractiveness of the product.
Obviously, one big advantage is having no per-device software royalty. This is particularly true for price-sensitive, high-volume products. In a few years, we may find dozens of companies embedding open-source operating systems and applications on millions of small, fixed-function hardware devices.
Beyond hardware devices, there is a need to customize and adapt software applications to the exact business processes and needs of an organization.
This always requires some custom work. Most medium and large organizations have a crew of IT professionals whose job is to customize hardware and software to make the business run more smoothly. These professionals like to start with the most functional products possible and customize from there. This has meant proprietary software in most cases.
Recently, open-source software has achieved levels of functionality that match proprietary software in many cases and has the advantage of not being tied to one vendor for support or product updates.
Rather quickly, it may become cost-effective to customize free software, rather than pay for thousands of licenses of commercial software on which to build. This shift in the market will require a growing number of professionals who specialize in open-source software.
This is perhaps best reflected in the salaries of IT Professionals. A 1998 salary survey of 7189 professionals asked which operating system they primarily used. Of those who reported Linux as their primary OS, their salary was $61,027 US vs. an overall average of $60,991. Linux salaries had increased 16.5% from the previous year, representing the fastest salary increase of any system (source: Sans Institute).
In-house staff is not the only option. Again, because of the freedom to inspect and study the software down to the lowest levels, a competitive industry is able to grow to serve whatever needs arise. The resulting alternative to in-house staff is a competitive market of independent consultants.
When the cost of the software goes to zero, the value is in customizing for specific problems. Consultants already make their living providing these per-hour or per-project services. Open Source is not a sacrifice; it is an opportunity.
One example is comprehensive support. Most business want a single point of contact to take full responsibility for getting a project done. With closed source, contractors are at the mercy of bugs and limitations in the operating systems and applications they purchase. In effect, they cannot guarantee success. They do not have full control of the technology.
With Open Source, they have complete access to solve every problem, no matter what level or layer it occurs in. A small company with a skilled force of engineers can provide a level of comprehensive application-to-operating system service that only IBM or HP or Sun can provide today, and probably at much lower prices.
To get an understanding of the size and health of the Open Source consulting market, those registered in the Linux Consultants HOWTO were surveyed. They were asked the following questions:
- How many consultants at your company are involved with Open Source work?
- Approximately how much money did your company (or yourself, if independent) earn in 1998 on Open Source-related work? (Convert to US dollars)
- In 1999, based on numbers from recent months, how much do you expect this to increase/decrease? (as a percentage)
- In 1999, do you believe it is possible to make a living doing Open Source consulting work? (yes/no)
This is a very diverse group of VARs, integrators and consultants. Over 50% are from outside the U.S., where the cost of living may sometimes be lower. In most cases, open-source work is just a piece of the total business. While this is certainly not a scientifically rigorous study, it does give some flavor of the market.