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No one can dispute the fact that the open source movement has irrevocably changed the software landscape. The days of commercial software's monopoly are numbered as fewer customers accept and continue to pay exorbitant license and maintenance fees.

Now, more users are realizing the benefits of open source software, particularly its low cost and rapid feature development. An example is Mozilla's Firefox browser. Although its initial release was only in 2004, it is a fully developed browser with extended functionality courtesy of add-ins provided by its vast user community. As a result of this, Firefox has garnered over 22 percent of the browser market share, and it has been steadily gaining against Microsoft's proprietary Internet Explorer with no signs of abatement.

This commoditization is good news for consumers, but is it really good news for the future of innovation? Not if you listen to the leaders of some of the larger software companies, who claim that the commercial software model alone has the capacity to sustain real economic growth. As Craig Mundie, a Senior Vice President at Microsoft writes:

"When comparing the commercial software model to the open-source software model, look carefully at the business plans and licensing structures that form their foundations. This comparison leads to the conclusion that the commercial software model alone has the capacity for sustaining real economic growth."

While there is clearly an element of self interest here, from a pure revenue perspective, commercial software has vastly outperformed open source software to date. Red Hat, the largest commercial open source software company, has approximately $650M in sales, while Microsoft, the largest commercial software company, has nearly 100 times that. So, is the dawn of open source also the dusk of innovation?

The simple answer is no.

While revenue comparisons seem to indicate that closed source is the superior solution, they overlook very important distinctions, one of which is the size and state of the market. Open source software is still new to the enterprise world. With the exception of the Linux operating system, open source software has only had a significant presence in enterprise for a few years.


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