How to Love the [Open Source] Bomb

I am off to do moderate a panel at the Open Source Business Conference, being held in San Francisco

Panel: Embracing Commodification: Or How to Learn to Stop Worrying and Love the [Open Source] Bomb

bq. Nearly everything we buy, sell, and use is a commodity or a service wrapped around commodities. Why should software be any different?  This session first questions if open source does, in fact, impose commoditization on the software industry. Next, it reviews the results of such commoditization, and points to promising business models that capitalize on open source commoditization, rather than run from it.

* Rob Page, CEO, Zope
* Ian Murdock, Founder and Chief Strategist, Progeny; Founder, Debian
* David Anderson, CEO, Sendmail
* Anthony Awtrey, Vice President, I.D.E.A.L. Technology Corp.

My Thoughts:

Whisper commoditization, and you are bound to send a shiver down the spine of Silicon Valley executives. They may not talk about it, but it surely on their minds. And it has nothing to do with pork bellies. Commoditization threatens the very business models that have made Microsoft, Cisco, Sun Microsystems, EMC Corp., and Nokia rich beyond belief. Availability of mass-produced components like processors, hard disk drives, memory, video graphic chips, audio controllers, networking chips and silicon do-hickeys at bargain basement prices is squeezing profits and turning Silicon Valley on its head.

It has many names – depends on whom you ask. Some call it standardization; others refer to it as modularity. For some it means “death from below.” How does a company know when it is at risk of being commoditized? Merrill Lynch’s Milunovich has a surprising simple test. “Dell is the leading indicator of commoditization,” he says. Clay Christensen and Michael Raynor point out that every time there is commoditization in the value chain, the value moves somewhere else. So where is the value? I think it is in software, and my colleagues here are well equipped to deal with it.