The Business Case for Tech Companies to Open Source Their Code

It is a common misconception that tech companies keep their code private to maintain a competitive advantage. However, there are several compelling reasons why opening source code can be beneficial.

Why Open Source?

Smart companies aim to commoditize their products and their complements. By commoditizing their products, they can reduce the perceived value of these products, which in turn makes their complementary products (like services, hardware, or software solutions) more valuable.

For example, when a company develops a standard for a particular technology or system, it can be incredibly beneficial to make that standard open source. This approach encourages widespread adoption and interoperability. Companies can benefit from this scenario when the standard becomes a de facto industry norm. Making the source code freely available helps ensure that everyone can implement the standard, fostering a broader ecosystem of compatible solutions.

Historical Perspective

I vividly remember a scenario from the 1980s where I developed a standard for recording oil well logging information. Our customers struggled with the complexity of decoding this information. I then developed a software implementation using Fortran, a programming language popular at the time. The challenge was convincing my company to make the source code available for free to our customers. Today, the business case for open-sourcing code is much more compelling.

Cost Sharing and Community Contribution

One of the key advantages of open-sourcing code is cost sharing. By making the source code available to anyone, companies can extend their development efforts beyond their own teams. This democratization of development allows others to contribute bug fixes and improvements, ultimately leading to a more robust and reliable product.

Consider the case of Red Hat, a company that started by offering support contracts on Linux (which is open-source software). This model allows them to maintain control over their products while inviting contributions from the broader community. Companies can offer specialized support contracts and still benefit from the collective enhancements provided by the community.

Application-Specific Considerations

Not all tech companies are created equal, and the open-source strategy can vary depending on the nature of the business. Small companies often rely on open-source GPL code to spread their development costs and invite contributions. However, large tech companies may have different needs.

Open-Source Web Development

In the realm of web development, the frontend is largely open-source. Users can easily inspect the code and even "steal" design elements using tools like Chrome DevTools. The backend, on the other hand, is a different story. For highly sensitive applications, such as Google's internal projects, much of the code remains closed-source.

Desktop and Mobile Applications

Desktop and mobile applications often benefit from open-source licenses, but they also face the risk of reverse engineering if the source code is not available. For startups, guarding their "secret formula" is crucial, but large tech companies have different dynamics. Their core brand and customer base are well-established, making the focus more on innovation and community engagement.

Conclusion

The decision to open source code is not solely about maintaining a competitive advantage but rather about fostering a broader ecosystem, reducing costs, and engaging with a vibrant community. While some code remains proprietary, particularly in areas with strategic value, the benefits of open sourcing often outweigh the risks, especially for established tech companies.

Ultimately, tech companies should evaluate their specific circumstances and goals before deciding whether to open source their code. By doing so, they can tap into a collaborative and innovation-oriented community, potentially leading to more robust and innovative products in the long run.