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AU Research Report - "Open Source and the IT Trade Deficit" - by Brendan Scott, Esq.
Monday, August 09 2004 @ 03:11 AM EDT

Research Report

Open Source and the IT Trade Deficit

Brendan Scott
Open Source Law

July 2004

Web site:


In this report we look at the current consistently poor performance of Australia in the ICT industry,
as identified by analysis from the Centre for Strategic Economic Studies and note the correlation
between these poor results and the historical reliance on the incumbent, closed source, model for
the commercialisation of software. We identify one instance in which failure to move to
a functionally equivalent open source product has significant costs for Australia and, in that example,
quantify those costs at $430 million per year. This paper identifies an alternative model for ICT
commercialisation and discusses some potential impacts.

1. Summary

1.1 Key points:

(a) Failure to adopt an open source operating system costs Australia on the order of
$430 million per year, even assuming licence costs substantially below RRP and
after allowances for contributions to the local economy.

(b) If the cost of other applications were included this figure would be substantially

(c) Open source can convert Australia's current software rental trap into a capital
investment, boosting jobs and the information economy.

(d) Open source has the ability to make considerable favourable adjustments to the
balance of trade and to do so in the short term.

(e) Significant reductions in expenditure on software imports can be viably achieved by
open source substitution -- i.e., without foregoing the use of functionality as business

(f) Open source is also relevant to preserving market access for equipment
manufacturers through software embedded in equipment.

2. About Australia's IT Trade Deficit

2.1 Each year the ACS funds the production of a review of Australia's IT trade deficit. The
most recent, released in October 2003 (Australian ICT Trade Update 2003, indicates that Australia ran a $14 billion deficit in
IT trade in the most recent year (2003) and that, under the incumbent, closed source,
licensing model for software, this deficit has grown at an average rate of 7.4% per annum.

2.2 There is a an even closer correlation between the recent, dramatic, decline in Australian IT
performance in the five years following the announcement, in April 1998, by the
Government that it would extend the scope of copyright monopolies (through what was later
to be called the Digital Agenda Act) to be brought into line with US practice. 1

3. Open source on the import side

3.1 IT imports are input factors in Australian production and therefore an IT trade deficit should
not necessarily be considered to be a negative. That said, if equivalent products can be
acquired at a lower cost, Australia can have access to the same input factors without
exporting so much money from Australia. In many cases, open source provides the same
products cheaper and can reduce the cost of software importation.

3.2 Under closed source regimes Australia has no option but to export money (that is, a
component of licence fees and maintenance fees will be returned to an ultimate vendor,
typically foreign). Conversely, under open source licences Australia is free to spend the
money where it chooses - it can acquire software developed overseas but keep all of its
expenditure local.

3.3 For example, let us assume that spending on such inputs generates substantial side benefits
for the economy. Take, for example, the, admittedly highly unlikely, scenario where every
$1 spent on specific products generates a different amount, such as $8, in the local economy.
Reworded, these figures can be read as implying that for every $9 spent in Australia, $1
(11%) is exported (because of repatriation of profits). Under an open source licence there is
no requirement to send money overseas as there is no vendor who can force the repatriation
of profits. This is not to say Australians can't choose to acquire services from foreign
vendors, only that they are not required to. Rather than spending nine out of every ten
dollars in Australia, under an open source regime Australians can choose to spend ten out of
every ten dollars in Australia and that this choice is independent of the software product
which is chosen.

3.4 In other words, even in the worst case scenario, the move to an open source regime provides
a potential boost of 10% to the local IT economy compared to the old, closed source, model.
We believe that the old, incumbent, model causes a number of secondary adverse effects on
the IT industry within Australia. Among those effects are:

(a) technology lock out -- the express provisions of licensing terms have the effect of
quarantining local producers from high technology, requiring them to compete for
lower skilled and lower margin niches;

(b) training lock out -- lack of access to technology results in a training deficit in the
local economy;

(c) competition effects -- the history of the software industry over the last twenty years
has been one of continually reducing diversification within product categories.
Many product categories are completely dominated by a small number of producers,
or, in some cases, a single producer. This has substantial adverse impacts on both
innovation and pricing to consumers.

3.5 It seems clear that the continued reliance on the old, incumbent model of closed source
development has resulted in substantial suppression of productive capacity within the IT
sector of the Australian economy. This is evidenced nowhere more clearly than in the
compounding and increasing IT deficit being run by Australia as reported in the ICT Trade
Update 2003 and the lack of competition evident in many important software and equipment

3.6 Given the established failures of the incumbent, closed source model, open source appears
to provide the only viable strategy for allowing the ICT sector within Australia to reach its
full potential.

4. Example --Operating System Costs

4.1 Resource NSW estimates that2:

(a) there are roughly 9 million PCs in Australia; and

(b) about 2.1 million new PCs are acquired in Australia each year (Gartner 2003 Q3
figures are 700K3, which extrapolates to 2.8 million annually).

4.2 Estimating licence fees for the operating system at $150/unit (that is, roughly the listed
OEM price for the most basic version of Windows' retail price and typical business
licences are both substantially more) this gives $315 million. Discounting these figures by
20% for the costs of supporting a local distribution chain means that there are opportunities
to save roughly $250 million per year.

4.3 Every 2 years or so part of this installed base (let's say 33% - 3 million4) is also subject to
upgrade to a new operating system (win 98-> win98SE -> win ME -> Win XP etc), at (say)
$150 in today's dollars. Divide this figure in 2 to get an annual cost of upgrading
and discount by 20% makes this figure about $180 million each year.

4.4 In other words licensing fees for the operating system alone export roughly $430 million per
year from Australia. If all application software is included, the figure increases dramatically
(typically the operating system has been used as a means of establishing and maintaining
market share, so the operating system cost is priced comparatively cheaply). Further, there
is no capital component to any of these payments
-- they are entirely rent. If Australia took
that money and used it to develop its own operating system it would be finished in a couple
of years and rental payments would stop. Australia gets nothing other than temporary use
from this anti-investment; Australia is in a rental trap.

4.5 If Australia was investing in open source development all of the money spent would be of a
capital nature due to the licensing scheme (whether or not the developers are resident in
Australia). Australians would be investing in their own future rather than in anyone else's.

5. Export side

5.1 The only area where Australia has proven export performance is in services. This is the
perfect area for open source to play a pivotal role.

5.2 The key difference between open source licensing and the incumbent model is that the
market assumptions of the former are that there should be competition in the software
market based on services, whereas the incumbent model assumes that participation must
take place as manufacturing. In order to achieve this manufacturing model it is necessary to
artificially create product level monopolies and scarcity through legislation (as necessary
components of that model).

5.3 By adopting open source Australia would shift the majority of its software acquisitions out
of a product based market into a services based market. Open source therefore plays to
Australia's strengths and promotes competition, while neutralising its weaknesses.

5.4 It is difficult to put a price on the benefits to Australia. However, adopting open source
would permit Australia to have access to markets for software service and maintenance that
it is currently locked out of (by virtue of lock in vendors establishing distribution chains).

6. Sales Channels

6.1 One of the purposes of closed source licences is to create distribution monopolies. Open
source permits these distribution monopolies to be overturned. For example, many software
companies based in the US only offer software support from their US offices (and during
US office hours). If the software was under an open source licence Australian customers
would be free to engage local developers for support. As we discuss below, the new
monopolies added to the Copyright Act greatly reduce contestability in aftermarkets.

6.2 The old, closed source model for software assumes that software distribution takes place on
a push model, with revenue linked directly to distribution. This sets the underlying structure
for distribution channels based on push and makes channels expensive to maintain. As a
consequence access to those channels effectively comes at a percentage of the product's price.

6.3 Open source may operate in the push model, but it can also operate successfully under a pull
model, with end users acquiring the software directly from a distribution point. Under open
source models distribution can be carried out very cheaply (i.e., cost of hosting and carriage
with little or no premium). There are, for example, no licensing fees, so there are no costs
of establishing a payment infrastructure, no costs of fraud, no verification costs, no costs of
maintaining a sales process (e.g., to accept refunds or returns, or to reverse incorrect orders),
credit company charges, etc. The only costs involved are advertising costs and these often
come more cheaply as the product can speak for itself.

6.4 Open source may not completely resolve Australia's problems with access to sales channels,
however it can alleviate some of our difficulties by providing viable alternatives. These
alternatives are fundamentally superior (in that they have been gaining significant market
share over the past 5 years in competition with the old, incumbent, model) and are likely to
become mainstream in the mid term.

7. Manufacturing

7.1 While this discussion has focussed primarily on software, open source will become
increasingly relevant to the manufacturing sector in the mid to long term. Manufacturers are
actively investigating means of utilising Copyright Act provisions to anti-competitive effect.
As mentioned above, there is a clear correlation between the proposal (in 1998) to extend
monopolies under the Copyright Act and the dramatic and sustained downturn in Australia's
IT balance of trade in the five years following that announcement.

7.2 While not their original intent, the monopoly provisions in the Copyright Act give
manufacturers effective powers to control after markets which are unheard of
in other industries. For example, it is a relatively trivial thing these days to include microprocessors
on most consumables (e.g., printer cartridges). This allows a manufacturer to have their
machines query the cartridge and reject third party and after market consumables. It is not
that difficult to shield the action of those microprocessors behind a technological protection
measure, and, once they have done so, any circumvention becomes a per se infringement of
copyright. In other words, the incumbent model permits egregious anti-competitive

7.3 As such, the old model permits decades of competition theory to be overturned by
sanctioning vendor's ability to control aftermarkets in relation to their products, leading to
substantially increased prices to consumers for most goods.

7.4 If open source is used in embedded devices it will force manufacturers to remain honest.
Conversely a failure to adopt open source will further entrench the position of foreign
manufacturers and lock out Australian competitors. Open source prevents the market abuses
permitted by the incumbent model.

8. Conclusion

8.1 The clear lack of competition in key product markets and consistently and increasingly poor
ICT deficit results on an ongoing basis is evidence that Australia's historical commitment to
the old, incumbent, closed source model has resulted in a stunted ICT industry, the outputs
of which fall substantially below their real potential.

8.2 As one example, despite the availability of functionally equivalent operating systems at
greatly reduced price, the Australian economy continues to rely heavily on incumbent
products. The failure to adopt an open source operating system costs Australia roughly
$430 million per year.

8.3 The broader failure to adopt open source products has an even greater impact on the
Australian economy, through direct costs, such as licensing fees, and through indirect
effects including reduced competition, lack of access to sales channels and being forced to
compete in areas of weakness (i.e., IT-as-product models) rather than areas of strength (IT-as-
service models). The overall losses from these secondary effects is particularly difficult to
quantify, but is likely to mean that the true extent of the loss to Australia is several times
that of the component which is directly calculable.

1 “More disturbingly, locally produced ICT equipment exports grew 12% per annum over the 5 years to 1997-1998, but declined 9.5% per annum over the 5 years to 2002-2003” [emphasis in original], Houghton, J., Australian ICT Trade Update 2003, Executive Summary at page II.

2 “There are about 9.2 million computers in use in Australia, which is rated among the top ten countries in the world for per capita computer use. A further 2.1 million computers are estimated to have entered the market in 2002...” Resource NSW, SECTOR PROFILE: Computer Manufacturers/ Importers

3 See also Gartner Figures: 731,220 for 3rd Quarter 2003

4 Resource NSW estimates that roughly 3 million PCs are disposed of each year, so the 9 million installed base is more or less static, or slowly declining.


AU Research Report - "Open Source and the IT Trade Deficit" - by Brendan Scott, Esq. | 225 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections for PJ
Authored by: RedBarchetta on Monday, August 09 2004 @ 03:25 AM EDT please.

Collaborative efforts synergise.

[ Reply to This | # ]

OT, links, jokes, songs, whatever...
Authored by: RedBarchetta on Monday, August 09 2004 @ 03:27 AM EDT please.

Collaborative efforts synergise.

[ Reply to This | # ]

AU Research Report - "Open Source and the IT Trade Deficit" - by Brendan Scott, Esq.
Authored by: Anonymous on Monday, August 09 2004 @ 03:33 AM EDT
Well said Brendan.

Australia does not need the AU/US FTA

Howard (No, Not John either)

[ Reply to This | # ]

Good work, Brendan Scott & co!
Authored by: Anonymous on Monday, August 09 2004 @ 03:48 AM EDT
Excellent article. Enjoyed it.

[ Reply to This | # ]

Sources weak, but thrust good, Re: AU Research Report - "Open Source and the IT Trade Deficit"
Authored by: martimus on Monday, August 09 2004 @ 04:16 AM EDT

I could not help but notice that the sourcing for this document looks extremely weak, with only four footnotes, and only three links, one which is not active, and one which doesn't give access to the data backing up the paper. Please note the following weak argument:

3.3 For example, let us assume that spending on such inputs generates substantial side benefits for the economy. Take, for example, the, admittedly highly unlikely, scenario where every...

in this paragraph the author is making assumptions for a "scenario" that he admits is far fetched, but we need to be trying to win this issue/problem/conundrum with cold, hard facts, not suppositions. On that score, I went to the Gartner Group link and the data showed that Q3/2002 data were 617,027 and Q3/2003 were 731,220, an 18.5% year over year growth rate, which belies one of his points about the Aussie PC installed base shrinking, and he doesn't attempt to correlate any data points with the well-known seasonal nature of purchases whether governmental, corporate or back to school, so we can't know either. The rest of the document has various similar weaknesses.

On the other hand, this attempt must be made, but hopefully the future documents will be longer on cause/effect, problem/facts/recommendations, with a little less conjecture and guesstimation. For any real discussion and decision making, this thing will be picked apart by the opposition.

Sorry to rain on anyone's parade. :^(

[ Reply to This | # ]

AU Research Report - "Open Source and the IT Trade Deficit" - by Brendan Scott, Esq.
Authored by: Anonymous on Monday, August 09 2004 @ 04:24 AM EDT

This report was not funded by Microsoft... or was it?


[ Reply to This | # ]

You Aussies are too hard on yourselves!
Authored by: Anonymous on Monday, August 09 2004 @ 04:24 AM EDT
"The only area where Australia has proven export performance is in

Let's not overlook Olivia Newton John and didn't the BeeGees launch from there?
Your Opals are without peer although the same cannot be said for kangaroo meat.
Would you really be better off competing with China and India in the open source
software market? I don't think you should be sending your hard earned money to
Microsoft either but I'd bet there are some better solutions to boosting your
exports than FOSS.

[ Reply to This | # ]

This Report hits Home .... on Redmond ?
Authored by: Hygrocybe on Monday, August 09 2004 @ 05:11 AM EDT
For all the doubters who don't like this report (and also those who suggest that
its sources are too few) too bad !! As an Australian who is very interested in
seeing the present software monopoly in his country broken, I believe the
conclusions of the report are only too true. The facts are simply that Australia
has an extremely unhealthy dependence on proprietary software..and no prizes for
guessing which company dominates as a monopoly and whose software is taught in
schools to the detriment of all others. This ensures the monopoly continues..of

One Australian territory, the ACT, has finally broken free and is now ensuring
that open source software is considered in any future purchases; Western
Australia is running a pilot program using Linux; some independent schools are
running Linux courses, and I believe the Northern Territory uses StarOffice.
But we have yet to see a massive Australian turn around to Linux and all its
associated benefits.

We need every bit of assistance in getting Australian federal and state
governments to realise that currently they are throwing money a
solipsistic monopoly. And getting nothing but a locked-in software system in
return, with more inflated profits for .... the self-centred monopoly. And of
course, no higly trained IT programming specialists...they all live in Redmond,
don't they ?

Well done Pamela....perhaps this might make a few Australian legislators see
just what they are doing to our wonderful country - but I doubt it. It is in
the USA monopoly's favour that very few of our legislators are truly computer
literate...and even fewer would have even heard of Linux, let alone FOSS. The
last thing Australia needs is to run down the USA path of patents and copyright,
but the federal government's support for the grossly biassed terms of the FTA
seems to be doing all it can to ensure that happens.

Signed: A very concerned Australian.

Blackbutt, Australia

[ Reply to This | # ]

AU Research Report - "Open Source and the IT Trade Deficit" - by Brendan Scott, Esq.
Authored by: Anonymous on Monday, August 09 2004 @ 05:28 AM EDT
Several of the assumptions made are flawed. For instance the listed OEM price
may be $150, but there's no way anyone but the smallest OEM's actually pay $150
per copy of Windows. Half that is likely closer to the truth.

Also, assuming an upgrade cycle of 2 years is unrealistic. There are still
companies running DOS, Windows 3.1, 3.11, 95, 98, NT 3.51 etc. out there.
Obviously these companies haven't been upgrading every two years.

These flaws are important, because a lot of people WILL be aware of the
realities of both of them: A larger company may sometimes be able to purchase
even retail copies of Windows below $150 and will certainly know their own
upgrade cycles, and they're unlikely to be as low as two years.


[ Reply to This | # ]

Barriers to Entry
Authored by: PeteS on Monday, August 09 2004 @ 06:31 AM EDT
Not mentioned was barriers to entry in the market for individuals (which can be
the genesis of new companies) and companies. This is an issue that has
historically generated a great deal of friction.

As an example, let us look at the effective cost of entry to the programming
market for Windows (any flavour) vs. any Open source. Note I am referring not
merely to the OS, but applications.

Cost of computing equipment (relatively low, effectively the same for both

Cost of the OS. The base cost of Open source is zero (apart from the network
cost, which is equal for both models). Windows OS license fees (because you have
to have every single one of them) can cause a dramatic increase in costs.

Cost of the Development system.
Open source is, once again, free (one may choose to buy support, but is not
required to).
For Windows, this is the cost of a permanent subscription to the MSDN system
(MicroSoft Developer Network). It is not possible to do serious Windows
programming without this tool.Well, it is possible, but exceedingly difficult,
raising the labor side of the equation.
Costs range up to ~$3k per annum for a single MSDN subscription. The cost is
higher if you have to write device drivers (you then need the MS DDK [Device
Driver Kit] and usually some third party software because the DDK is woefully

When these costs are borne by a small business, it claims a great deal of money
for the Windows development model that could otherwise be used for the company

This barrier to entry reduces the number of companies willing to engage in
software development. (Basic economics).

These costs are quantifiable (although I have not specifically quantified them
here) and the numbers for an entire sector (whether in Australia or elsewhere)
can be truly staggering.

Food for thought?


Today's subliminal thought is:

[ Reply to This | # ]

AU Research Report - "Open Source and the IT Trade Deficit" - by Brendan Scott, Esq.
Authored by: OliverTownshend on Monday, August 09 2004 @ 09:02 AM EDT
Errors in the report.

2) The ICT Deficit

The ICT Deficit is irrelevant. The overall deficit is what is important in a
market economy. The Australian economy is a diversified economy, and trades in
a multitude of goods. To focus on only sector at the expense of others is a
waste of resources. To quote Stephen Kirchner

"Australia’s status as a net consumer rather than producer of ICT has just
spared it from a severe global economic downturn or that the decline in prices
for ICT goods is underpinning a reversal in what had previously been a secular
decline in Australia’s terms of trade. In other words, Australia’s national
income is increasing due to the decline in prices of ICT goods that Australia
consumes heavily and is fortunate enough not to produce. Australia’s stunning
economic performance of the last decade owes much to the market-oriented pursuit
of its comparative advantage and spurning this sort of cargo-cultism, so popular
in management education circles."

3 Open Source on the import side

Brendan correctly recognises that expenditure on a product is not necessarily a
negative. However, he assumes perfectly substitutability between products. It
may be easy enough to assume that in macro terms Windows = Linux, or that
StarOffice = Office, but can the same be said of many custom software packages,
eg MySQL<Oracle, Something=SAP? =Quicken? =MYOB?

Secondly he fails to measure productivity. Whilst we can hold the conservative
view that only a small portion of an imported good goes overseas, he makes no
attempt to measure the productivity gains of software. Am I more productive
using proprietary software than open-source? What is the value of software
driven by the profit motive rather the open source altruism model? If I pay for
a good and it comes with a support right and a legal liability for provision of
services, am I better off than if I download the software for free?

Thirdly there is the unfortunate point that Open Source software supplied for
free has no measurable effect in current Economic models. Selling Windows at a
$10 profit will add $10 to the GDP. Using Linux will have no measurable direct
economic effect, in fact it will reduce the GDP by $10. This is similar to the
problem of conservationists trying to measure the value of old growth forests,
or clean air, or economists trying to measure the value of household services.
This means that there is no measurable value to the current use of Open Source
in Australia (which does happen), and makes it difficult to say whether Closed
Source is in fact the incumbent model, or is under challenge to some
unmeasurable degree.

4) Operating System Costs

The Rental trap is not a trap. If an individual can spend a sum on something
and achieve a greater return in another area their standard of living improves.
This is called economic advantage and is the basis for modern trade and economy.

5) Export market

Somehow we can decrease our ICT imports by using Open Source, but increase our
ICT exports by providing Open Source services. Our current ICT imports must
include services from overseas, and our ICT exports must include services
provided for closed source software. It follows that an adjustment to the mix
of open/closed software in use in Australia would have almost no effect
whatsoever on the difference between the value of services imported and

6. Sales Channels

No attempt is made to ascribe an economic value to paid support and warranties.
Whilst Open Source is provided for free, it is not provided with guaranteed
support and warranties. If your Open source software does not work, you need to
provide someone willing to support you. And you have no one to sue for economic
loss. This economic difference must be considered when accepting that open
source is "free", it is not costless.

Additionally, As noted in 6.4, the old model of sales channel is being phased
out in favour of the newer direct channels (i.e that advocated by In both the open and closed source models. In
other words, the adjustment is happening regardless of the model.

7. Manufacturing

This seems more an argument against strengthening Copyright and Patent laws than
the use of closed source. In fact, if one accepts the initial premise that
tightened Copyright laws directly correlates to the increased ICT deficit, then
the simplest solution to the deficit is to reverse copyright laws tightening.

8. Conclusions

The author takes a mercantilist view of economics, a view discredited over 200
years ago. Only costs are measured, and benefits are ignored. The fact that an
industry in a country is not dominant does not indicate a negative, merely an
economic choice. Continued low inflation and unemployment within Australia , a
high standard of living and good results at the Olympics and in the Cricket and
Rugby indicates a vibrant economy. This does not fit with the moribund 'one
industry' economy described in the report.

[ Reply to This | # ]

Is it just me or is Australia Awesome?
Authored by: Matt C on Monday, August 09 2004 @ 09:23 AM EDT
It seems like every time I turn around someone in Australia is doing something
cool with/for/about FOSS. Anyone who's lived or worked there, please confirm or
deny this suspicion.

This is a real and practical question: I'm thinking of moving there when the IP
situation gets unbearable in the US (sometime in 2005, maybe 2006). Also was
thinking Switzerland maybe.

Any pointers?

[ Reply to This | # ]

AU Research Report - "Open Source and the IT Trade Deficit" - by Brendan Scott, Esq.
Authored by: Anonymous on Monday, August 09 2004 @ 11:37 AM EDT
But it is a lot better than the situation in the US. I can say that. No RIAA (yet), no SCO suing everyone, no software patents (yet), no aggressive M$ marketing and/or FUD (yet), a reasonable leader (until October?) and no big monopolies trying to dominate the whole country. FOSS publicity is good, but scarce.

Not true.

No RIAA: There is, it's called ARIA. There were afew high profile cases of kids on uni networks getting busted for sharing mp3s. last year. They were given non-custodial sentences and the police and ARIA complained that it would not have a sufficient deterrent effect. (cannot be bothered to find the links atm). It was also covered in TripleJ (radio station's) current affairs program.

Reasonable Leader: you mean the possible war criminal who LIED to the Australian public on multiple occasions?

Open Source in Schools: When I was at Queensland University of Technology, their student IT faculty's information server ran GNU/Linux, and they do base alot of their teaching on Linux. BUT they have a technology agreement with M$, and the Dean is a big, big, big .NET man. He's one of the compiler research people doing work for M$ and .NET. I've seen a shift towards M$ technologies during the time I was there. They now have specific web services courses that focus exclusively on M$ tech, but their introductory web services courses is taught on Linux using Perl/cgi as the development language. They also have some good guys working on functional languages their intro algorithms and compiler tech course uses Haskell as the teaching language (how cool is that).

[ Reply to This | # ]

OT: poor SCO, litigation takes toll on bottom line
Authored by: DannyB on Monday, August 09 2004 @ 12:56 PM EDT
I would have posted this in the OT thread, but the OT thread states that it is only for jokes, songs, etc., but not for relevant SCO off topic posts.

SCO Litigation Takes Its Toll on Bottom Line

Poor SCO. My heart bleeds for them.

The price of freedom is eternal litigation.

[ Reply to This | # ]

FOSS easing proprietary
Authored by: Anonymous on Monday, August 09 2004 @ 11:04 PM EDT
One thing that I never think is emphasized enough in discussions similar to this
one is the benefits that common open-source systems can have on small-scale
development (proprietary or not). In short: being able to look at the source in
detail can often help understand how the system works and how to integrate into
it. This in turn lowers the barrier of entry to software development and
encourages small firms to produce shrinkwrapped and custom programs.

In long:

A common exercise for introductory programmers is to write out the steps
required to make breakfast in the morning: e.g. put bread in toaster, press
handle down, wait for pop, remove toast. To drive home the complexity of a real
program, now imagine including instructions for abnormal conditions: e.g.
toaster is broken, bread catches on fire, power is out.

Software, effectively sequences of instructions for a computer, is neither
created nor run in a vacuum. Everything that we think of a program as doing is
really a result of its interaction with other parts of the system. The other
parts of this interaction must behave in a predictable fashion for the program
to perform its task.

When developing in a closed-source system (e.g. for Microsoft Windows), it is
necessary to rely on available documentation to predict how the system will
behave. Creating and maintaining documentation is extremely hard, so there are
often areas where it is unclear, misunderstood, or incorrect. The developers are
then left experimenting to infer the correct behavior. When the source is
available, the documentation can be supplemented by reading and testing relevent
portions of the system directly.

This advantage and easing the burden of producing detailed documentation, are a
major reason that source licenses exist for some proprietary products (Windows
CE Shared Source, and the relevent EULA, being a particularly entertaining
example). Open Source licenses, by definition, make the source available in a
usable form and in its entirety, often at zero cost.

Having started professional development work as an individual and worked for a
variety of small firms, I have a certain bias. Having encountered numerous
problems in closed-source systems that would have been trivial to solve in an
open-source environment makes me very glad to be back in research.

Chris Wolfe

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Novell file for dismissal (again)
Authored by: Anonymous on Tuesday, August 10 2004 @ 01:02 AM EDT

There is a copy (I assume accurate) of Novell's answer to SCO's amended

Novell argue for dismissal with prejudice on the grounds of privilege and lack
of malice


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This article made me remember...
Authored by: Anonymous on Tuesday, August 10 2004 @ 01:46 AM EDT
a radio ad I heard (actually several times recently) challenging businesses to
make sure their licenses are current. Two IT guys are discussing how one of
them turned his employer into the (I can't remember the agency - the one funded
by M$ to beat non-complying companies into submission - remember the guitar
company *my memory is going* that fell afoul of the 'agency' and switched to
Linux as a result. Certainly calls into question M$'s marketing plan - eh,
Bill) and he kept his job because the first IT guy called unanimously. What
about disgruntled former employees. Anyway the upshot of this post is that
companies are faced with the same situation as Australia (on a smaller scale);
pay Bill's tribute or face the consequences. I hope that Australia manages to
throw out Windoze and the companies will do the same. I switched to Linux four
or five weeks ago. Love it. Won't go back!

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AU Research Report - "Open Source and the IT Trade Deficit" - by Brendan Scott, Esq.
Authored by: moggie on Tuesday, August 10 2004 @ 04:06 AM EDT
It's hard to effectively parody something which is itself very close to parody.

I wonder whether SCO feel they got value for money with this booking? The
speech was mainly about Rob Enderle. I picture the audience shifting uneasily
in their seats, thinking "who is this strange guy, and why is he telling us
about his personal problems?". I think he blew it: even the most blinkered
SCO supporter would have found that speech unsatisfactory.

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