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Open Source-onomics: Examining some pseudo-economic arguments about Open Source

The following are some of the false statements put forth and my arguments refuting them.

"The poor performance of Linux stocks proves that Linux is a failure"

What's the relationship between the performance of Linux stocks and Linux's own prospects of success? When stocks of companies like Red Hat and VA Linux Systems skyrocketed in the wake of their IPOs, it was taken as an indication that Linux had arrived. Linux advocates said nothing to counter the impression. In fact, many enthusiastically used the stock market to show their peers that Linux was to be taken seriously. Now that the same stocks are trading far below those prices, does it indicate that the Linux shine has worn off? Look at the number of Linux companies in the doldrums that have laid off employees or closed down operations. Looks like Linux too is another one of those great ideas that failed to deliver on its promises. Think its time to go back to software and companies that are more firmly grounded in economic realities, right?

Well, first of all, Linux is quite independent of Linux companies in a way that the market has never seen before. The fortunes of operating system and company are usually heavily intertwined--Windows means Microsoft, Netware means Novell, OS/390 means IBM and so on. But that's simply not the case with Linux. If Novell closes down, that pretty much means the end of Netware, unless another company sees fit to buy the product and keep it alive (On the other hand, Microsoft may simply choose to buy Netware and kill it!). Such things can't happen to Linux. As an Open Source operating system, Linux is Teflon-coated against the commercial failures of the companies that try to build business models around it. Commercial entities are Johnny-come-lately to Linux anyway. Linux managed without them for years, and will continue to exist even when they all disappear. In fact, companies that claim to support Linux are wrong -- Linux supports them!

"Open Source is not economically viable"

OK, so Linux as a technical product may continue to exist, but if companies cannot make money from it (as is seemingly evidenced by the woes of the Linux companies today), then it's another great technical success that is a commercial failure. History is littered with such examples. Now here's an argument even Open Source sympathisers have trouble with--the assumption that money must be made for Open Source to succeed. However, the argument is incomplete because it chooses to concentrate on the supply side alone, without regard to the demand.