Another take on the financial value of open source


The “real” value of open source in financial terms has been one of my favourite arguments, and I had the opportunity to research in this area for a long time, thanks to our work for the customers for which we provide consulting on OSS business models. I recently found a new post on this by Bruno Von Rotz, with some preliminary conclusions like “total value of USD 100 to 150 billion.. I would assume that some of it comes from enterprises and large organizations, but this is probably max 20-30% of it.”

I would like to provide first of all a validation of the first part, and a comment on the second. As for the software market, Gartner published in 2006 a very well done study on OSS in the context of the overall software market, and among the various results there is one that I found quite interesting:

Myth8a

Considering the fact that some parallel data points (like results from the OECD estimates on software market) more or less confirm the predictions from Gartner, we can say that OSS has a financial value of 120B$ now, and will reach 150B$ in 2010, perfectly in line with the predictions from Bruno.

What I am not convinced is the calculation of the share 0f voluntary contributions Vs. company contributions. If Gartner data is accurate (and I believe that this is the case) we can expect that companies should contribute between 40% and 50% of value to a project; and this is somewhat consistent with projects like Linux or Eclipse where there is a large ecosystem, not only of adopters but of commercial companies working on top, and where company contributions are in that range. In this sense, I believe the 20%-30% percentage mentioned by Bruno to be too restrictive; the problem is that measuring code is not the only way to measure contributions. I use frequently this as an example:

“In the year 2000, fifty outside contributors to Open Cascade provided various kinds of assistance: transferring software to other systems (IRIX 64 bits, Alpha OSF), correcting defects (memory leaks…) and translating the tutorial into Spanish, etc. Currently, there are seventy active contributors and the objective is to reach one hundred. These outside contributions are significant. Open Cascade estimates that they represent about 20 % of the value of the software.”

Do these contributions appear as source code? No, exactly as localization efforts for OpenOffice or KDE do not appear in source code metrics. My belief is that the value of OSS right now is even much larger than 120B$, and that we have simply no way to measure this “hidden” value- but it’s there.

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