Thursday, 9 July 2009

Open Source does not have market share - does not even have a market?

According to the Wikipedia definition:

"A market is any one of a variety of different systems, institutions, procedures, social relations and infrastructures whereby persons trade, and goods and services are exchanged, forming part of the economy. It is an arrangement that allows buyers and sellers to exchange things"

I'm neither economics nor market expert. But certainly that definition implies that something is exchanged, right? Then let's look up the definition of Market Share

Market share, in strategic management and marketing is, according to Carlton O'Neal, the percentage or proportion of the total available market or market segment that is being serviced by a company.

Wow, again those business words like "company", and "market" All that lead me to think about all the different measurements that are constantly trying to determine the "market share" of open source products.

First, of course, you have all the debate around which numbers are correct. Because there are as many numbers of "market share" as there are ways of measuring them. There is always a heated debate about which numbers are more accurate. Recently for example, Mozilla Firefox "share" has been seen rising quickly, to the point of being already a serious contender for Web client dominance against IE.

What bothers me is that people keep talking about usage figures as if they were "market share" But they are not. When something is essentially free, such as a Firefox download, there is no exchange of things. You just download something and install it. There is no direct exchange of anything between you and the Mozilla foundation, or Canonical, or Red Hat when you use their products.

Yes, the open source community argues correctly that there is in fact a return on that. Be it bug reports, suggestion for enhancements, code fixes , hardware or money donations, or translations, there is usually a return for the successful open source products. But note that it probably applies for the more successful ones only, and that there is no direct exchange.

The ironic situation is that those products are placed and measured against other where their usage, piracy notwithstanding, do have a market. Windows, Internet Explorer or MacOSX do cost money beyond what you're paying for your Internet bandwidth. More ironic is that, if you tried to estimate the economic value of producing things like Firefox, Red Hat or Ubuntu have, you'll probably be in the billion dollar range. Yet they don't cost you anything. And in spite of the vast majority of their users not doing any kind of contribution, direct or indirect, these things thrive and continue to grow, threating to crush their paid for alternatives.

Therefore is not correct to talk about "market share" in this situation. There is no market involved, and the same logic used by business and marketeers cannot be applied here. So please stop using the term "market share" and start using "usage stats" or something like that.

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