Open source ponderings

Hi Reikiman,

In general most folks that make money in the open source software world is through offering services rather than the product. For (a purposefully oversimplified) example Red Hat makes money by charging for support contracts for Linux software. They still give the software away for free (which they have to do to remain within the licensing contract for Linux).

So, I think the question for an open source physical product is essentially the same. Can you run a business based on the "value add" of services and support - rather than the money that would have traditionally been made from the product itself. When asking "can you run a business" one has to decide whether the up-front costs can be recovered - as well as ongoing costs (of production, service and support). So, if your gizmo is expensive to design and build the first one then chances are you'd be better off closed-source at least until you feel you've recouped your costs, you could open-source then. However, just like with software, an open source physical product will mature more quickly - so there's an advantage to open-sourcing that might actually reduce development time and cost. Also, if you go open you can share those up front costs with a wide group of people.

I think you could make an "open" business model work for specialty products that require service and support. However, if the widget being made is going to sell thousands of units and can be mass manufactured in a low cost country then I think you need to go with the traditional "closed" model. That's my 2 cents worth!

I'm currently taking advantage of open sourced physical designs with my Meyer Water Fuel Cell. I'm also toying with a design for a home-based "algae photo-bio-reactor" (which I dub the Algae Fuel Cell or AFC - bad description but it sounds good!). If I get anywhere with the AFC then I'll open source it.

Good luck with your "EV gizmo"! My feeling is that you should go "open"... (remember it's not the idea that's worth anything, it's the idea PLUS the execution)

If someone (or a community like V) invents a gizmo or a whole lot of them that help save our bums whilst we learn how to manage a planet, then what does it matter who produces it?
The sooner the idea gets snatched up, the better!
How about a world in which you can develop a good idea online, then buy the product shortly thereafter from the producer who is most capable of making it? Say, after a week or so?

And is it wrong to assume that whilst someone is "secretly" working on something, that it might be invented and patented in the meantime by someone else? And then it is lost to the open source approach for a while! Maybe big oil or some other rich entity buys it and blocks it from being used then...

Further, and this is more of a question than a statement, would publicly announcing and developing designs not make it impossible to patent and lock them up? As in: "No you cannot patent this because it has been publicly discussed and the information / design now belongs to anyone who wants it!" ??

Mr. Mik

Your R&D costs will be low if it's made for free by the open source community. You have to make money doing something the consumers don't want to do themselves, like building processors. Or something the open source community doesn't do much of like hardware or customer service. I love my sun SPARCstation5.

What about the opensource beer? It works because people don't want the hassle of brewing and bottling their own and tastes great.

Some people think patents encourage people to make innovations since having a monopoly on it for some time can be very profitable. The tradeoff is society is better off if those patents were free for anyone to use. In a society where more and more salaries get paid by intellectual property revenues, it is risky to experiment to see what effect it would have on innovation and society if we had no intellectual property laws. It's that fear of the unknown that keeps the status quo.

--Jeff

If I had a million bucks...

One of the projects I'd like to spearhead is paying Fechter to put together a schematic and a $20 DVD on how to solder together an open source controller, meybe 3 different configurations? E-bike, e-scoot, e-moto.

I see controllers being a bottleneck in the near future. I could put together a Peltzer E-bike with an industrial DC motor, but China will have controllers back-ordered when a crisis hits, and quality will be spotty (as always)

It's kind of a puzzle how to make money when your customers can build their very own instance of the gizmo.

Can I build my own Refrigerator, TV, cell phone, car, etc? People pay a manufacturer for goods because they don't have the skills, equipment or time to do it themselves - i.e the principle of comparative advantage - not for the "intellectual property" content.

Maybe I'm old-fashioned, but I really get a laugh, and someshivers, over this duscussion. In the old days all electronic goods came with schematic so the user could fix it if necessary. And somehow, the manufacturer didn't worry about it being copied - as you had a jump start in the initial startup costs and presumably a quality and brand-recognition advantage. There were no such thing as non-disclosure agreements.

At any rate, you can always legally build a copy a patented gadget for personal, non commercial use - or at any rate you aren't going to get caught very easily.

If I had a million bucks...

I'd buy you John Merrick's remains, all them crazy elephant bones
or perhaps...
A green dress, but not a real green dress that's cruel

(Sorry, couldn't resist!)

Jeff "I've got a honking great workstation" Sparc5 - that's a very good description of the issue. I suspect, you're like me and would like to see patent laws at least "eased" if not outright abandoned but we both see the potential for chaos while the system corrects itself to a new norm...

Anyway - reikiman - tell us your gizmo (we won't tell anyone else ;-) )

I think the Open Source business model is that as the lead on the project, and the guy who provided the idea get to write THE book on the product and easily finds a willing publisher and everyone buys it because it is the definitive book from the genuine guy. Your technical tips, newsletter, maintenance kit, and updated schematics --or those authorized by you are sought after--regardless of who else makes the product or writes books (unless their books are more up to date, more user-friendly, and more accurate) . This allows you to be compensated for your contribution. Companies will care about your endorsement, and you get all the interviews with the marketing people.

You also get to participate in offshoot products that rely on your product or idea because people want to say that the original guy advised them on how best to integrate their whirlygig with your ingenius farbelkev.

On the other hand, you could be well underway with the Open Source farbelkev project, and some company that may have purchased the intellectual property rights on farbelkev years ago and socked them away, may send you a cease and desist letter and shutdown your website and confiscate your emails.

With software, it is pretty easy to start an Open Source project because you don't have to pay a lawyer to do a patent search. With software, nobody gets to "patent" an idea--they can only "copyright" the look and feel (API), and the actual source code in much the same way you copyright a book (with the exception of algorithms like the infamous pkzip/gif license). You can copy an idea a million times with a million software projects and never have identical code. But if you are building a hub motor or something of that nature, it will work on some established principle and will have features that correspond to someone's description of a particular configuration and you could easily be covered in legal goo.

It turns out what I mentioned above about society gauging the risks of a society void of patents vs what we have now has a name.

It's called the Ellsberg Paradox, which says we prefer measurable risk to immeasurable uncertainty.

You see it a lot in life:

After 9/11, over a million people changed their holiday travel plans to avoid flying, causing 1,000 auto fatalities that wouldn't have occurred had they flown.

After Three Mile Island and Chernobyl, people fear nuclear power plants. So instead we got a over reliance on fossil fuels.

France doesn't fear nuclear energy. Eighty percent of their power comes from it. Their society has a much greater fear of free trade, thus erect many barriers and subsidize uncompetitive industries. If a country didn't have those protections, people would have to find a new job doing something they can be competitive in. Young adults would feel the pressure to finish college to obtain job security and a comfortable salary.

If Boeing keeps their designs secret to prevent their engineering investment from being duplicated, the French government sends in their spies to discover it on behalf of EADS. Some allies they turned out to be.

When considering the choice of going "iron-clad patent, and sue all competitors" or dive into open source, it may be worthwhile to ponder the VHS/Betamax wars.

Sony patented the "Betamax" Video Cassette Recorder (VCR), and JVC patented the "VHS" VCR. From a distance the tapes looked identical, but neither tape would play in the others machine. Both began negotiating with other electronics appliance firms to form partnerships.

For a couple of years, video rental stores had to stock movies in both formats.

Sony Betamax arguably had a higher quality signal, and demanded a higher licensing fee from the "five tigers". When it became obvious that Panasonic couldn't outspend Sony and was losing, they announced they would license the VHS format for some token fee (I think it was $1/machine).

There was a boom of Chinese/Korean production in the VHS format, and consumers were suddenly faced with a choice of a $600 Betamax, or a $300 VHS with more features. Now you can get a $65 VHS at Wally-World.

The same thing just happened with Sony's Blu-Ray (high-definition) DVD, and Toshiba's HD-DVD.

One of the things that IMHO boosted Linux, is when Microsoft was putting the squeeze on China for using so many pirate copies of every new Windows OS, and China began embracing Linux. This was at a time when China wished to avoid the "appearance" of trade problems.

Microsoft can afford to have full-time lawyers on staff, and their bullying may have had a short term benefit, but in the long term "shot themselves in the foot", "threw the baby out with the bathwater", (insert metaphor here),...

I think some important things to consider might be:

A. How easy is it to copy my new product?
B. If copied, am I able to sue, and would I actually try to?

A lot of anti-virus programs were given away for free, and once customers were familiar and comfortable with the interface, the monthly updates were sold for a small fee.

I believe that open source can only work if the cost to manufacture and distribute a product is close to zero. If your product is a design, maybe it would work. There aren't that many people that want to build their own widget though when then can buy the same wiget from a company. If your product is physical and has manufacturing costs associated with it, then you need to charge customers for it, and you probably also need some IP protection. As an inventor, I would not spend my time and dollars developing a product if I knew that any interested party could swoop in and take my designs without any chance of legal repercussions. Getting a patent is expensive, and defending it can be even more expensive. But I think that most american companies (not all) will honor your patent if you have one; they may try to engineer around it though, so you need a well written patent. Also, if you want to license your idea to a company to collect royalties, most companies want to see that you have applied for a patent before they even want to look at your idea.

If you're serious about making it a product, I recommend the book The Inventors Bible which will help you walk through the various options (but not open source model . . .).

Why is it that Microsoft and not Apple became top OS dog? I'm no expert, but just about everyone tells me it's because IBM allowed clones to be made. Would the internet ever have taken off if you were limited to one type of browser, running on one type of operating system? Funny, I don't think Apple learned its lesson, only they make iPhones, the Apple might sell hundreds of times more copies of their OS if they let in clones, it might be even more popular if it wasn't required that Apple bless the software for it to run on the phone. I know it's not that simple, bad software in control of your phone could be disastrous, but microsoft doesn't require software to have their approval on every Windows Mobile phone, or symbian or all the others.