Author of the Open Source definition Bruce Perens. courtesy: perens.com

Perens, a founder of the open source movement, is the author of the Open Source Definition and co-founder of the Open Source Initiative.   Before becoming involved in Open Source he was a computer graphics expert who spent 12 years at Pixar Animation Studios.

Unlike GNU creator Richard Stallman, Perens believes that Free Software, and non-free retail software can co-exist.  Perens’ software universe consists of Three Paradigms: Traditional Retail Software like most proprietary programs released by Microsoft, Contract / In-House Development Software, developed by private companies and individuals, and open source.

According to Perens in the Traditional Retail Software model 10% of money spent on software goes toward actual product development.  The rest of the cost of the software subsidizes advertising, retail floor space and cost of related business. Perens asserts that in order for a software product to be successful in this paradigm it must appeal to the masses otherwise it will not be profitable.  For certain types of products like TurboTax, the Traditional Software Model is an appropriate business model.  Nearly everyone files taxes, so the product appeals to the masses.  Additionally users need yearly updates based on extensive professional tax law knowledge.

The Contract / In-House Development Model is, according to Perens, useful in cases where a company is looking for a specific advantage over its competition.   His example is Amazon.com’s interest matching suggestions for shoppers.  When searching for a product, the Web site suggests other products based on information collected on buying trends.  The program that collects, analyzes and makes these “smart” suggestions is what Perens calls ”differentiating software.” Amazon doesn't make money off the sale of this suggestion software; it makes money off of the sale of merchandise as a result of shoppers using the software.  “(Amazon’s interest matching software) lives in the cost center while the sale of books is Amazon’s profit center,” said Perens in an interview.

This software gives Amazon.com a competitive advantage, something that they are not willing to share with their competitors.

Open source’s primary advantage, according to Perens, is the development model’s advantage in creating non-differentiating software like a computer’s operating system and basic functions like word processing, email and Web browsing.  By distributing these types of programs as open source it is possible to share the cost and risk of development among many parties.  Perens argues that the benefit of open source is that anyone who is interested in the software can participate in enhancing it, sharing the overhead of software development and saving costs all around.

Open source software, according to Perens, should not be expected to make money for a company and is not an ideal model to for the creation of software to be sold for a profit. In his model, companies who wish to make a profit from development should be focused on creating customized business solutions or highly specialized products such as TurboTax.

Bruce Perens is a leader in the Free Software and Open Source communities.  He has worked on numerous projects to promote open source software in business including the Open Source Definition and the Bruce Perens’ Open Source Series books, which were released under an open source license.  He is currently on the board of directors of Open Source Risk Management, which offers insurance plans to protect corporate Linux users from potential liability as a result of SCO lawsuits.