From Codtech

Contents 1 Introduction 2 Where is Open Source Software currently used? 3 Who contributes the Open Source Software 4 Direct economic impact 5 A unique opportunity 6 FLOSS consideration within ICT policy 7 FLOSS in the world 8 External links

Introduction

The European Commission, though the European Commission’s Directorate General for Enterprise and Industry, has funded and published a new, and controversial, study on the economic impact of Open Source Software on innovation and competitiveness of the ICT sector in the EU. The results presented in this study are not less than impressive.

Free Software and Open Source Software, or collectively Free/Libre and Open Source Software (FLOSS) to put clear a confusion that sometimes arise using English where free could mean free as in freedom and also free as gratis, is the software which is available for use at no financial cost but also involves these freedoms:

1. The freedom to run the program for any purpose.
2. The freedom to study how the program works, and adapt it to your needs
3. The freedom to redistribute copies so you can help your neighbor
4. The freedom to improve the program, and release your improvements to the public, so that the whole community benefits.

On the other hand, Freeware is the software which is available for use at no financial cost, we know several examples in this category, for example Adobe Acrobat Reader that can be downloaded and used but you lack the freedoms mentioned above.

Some time ago, when I was invited to participate in the survey that originated this study, I would have never thought of these results, despite the fact that I have been involved with Open Source for more than 15 years.

To tell you how impressive this study's results are let's analyze some of the figures:

Perhaps, the most important prediction is that in Europe, Free/Libre and Open Source Software (FLOSS) related services could reach 32% of all ICT services by 2010, accounting for 4% of EU GDP.

And that firms have invested an estimated Euro 1.2 billion in developing FLOSS software that is made freely available. Such firms represent in total at least 565,000 jobs and Euro 263 billion in annual revenue.

We all know that the information economy is a large market. We may also know that including the provision of infrastructure and services for the creation, exchange and processing of information and communication services, this market is now in the range of 10% of GDP in most developed countries, and accounts for more than half of their economic growth.

In this scope, software is one of the key elements driving ICTs’ role in the economy.

But we may not know, or at least for all of us involved in this field, what may not be so evident is the impact that FLOSS is having right now in the European economy.

Where is Open Source Software currently used?

In term of market share, FLOSS applications are leading several markets.

70% of websites in the world use Open Source software called Apache, and Google runs almost entirely on Open Source. Most people are unaware that much of IBM’s commercial software has Open Source foundations and that many everyday gadgets, such as set-top TV boxes, Tivo video recorders, car satellite navigation systems, PDAs and mobile phones use the Linux Open Source operating system

FLOSS market share is higher in Europe than in the US for operating systems and PCs, followed by Asia. These market shares have seen considerable growth in the past five years.

FLOSS market penetration is also high – a large share of private and public organisations report some use of FLOSS in most application domains. In the public sector, Europe has particularly high penetration, perhaps soon to be overtaken by Asia and Latin America. In the private sector, FLOSS adoption is driven by medium- and large-sized firms.

Who contributes the Open Source Software

Not surprisingly, the study shows that almost two-thirds of FLOSS software is still written by individuals; firms contribute about 15% and other institutions another 20%. This means, that still most of the software is produced to satisfy personal needs, and undoubtedly the impact in the economy could be much higher if companies and institutions understand the role of FLOSS and contribute to projects.

Europe is the leading region in terms of globally collaborating FLOSS software developers, and leads in terms of global project leaders, followed closely by North America. Asia and Latin America face disadvantages at least partly due to language barriers, but may have an increasing share of developers active in local communities. The average income and stability of the markets is yet another reading, and individuals tend to contribute more when their personal situation is less compromised.

And finally, we can find the largest FLOSS related businesses in USA, with formidable examples as Red-Hat, SugarCRM, etc.

Direct economic impact

The existing base of quality FLOSS applications with reasonable quality control and distribution would cost firms almost Euro 12 billion to reproduce internally. This code base has been doubling every 18-24 months over the past eight years, and this growth is projected to continue for several more years.

Almost every European company can take advantage of this. There are some interesting and outstanding cases, for example, Nokia has produced its new Nokia N800 tablet programing only 1.5% of the software, the other 98.5% is Open Source Software.

You can count on a FLOSS software base that represents a lower bound of about 131,000 real person-years of effort that has been devoted exclusively by programmers. Annualised and adjusted for growth this represents at least Euro 800 million in voluntary contribution from programmers alone each year, of which nearly half are based in Europe.

Firms have invested an estimated Euro 1.2 billion in developing FLOSS software that is made freely available. Such firms represent in total at least Euro 263 billion in annual revenue. Contributing firms are from several non-IT (but often ICT intensive) sectors, and tend to have much higher revenues than non-contributing firms.

This is a real competitive advantage. And every company can take this on their side, remember the free as in FREEDOM ?

A unique opportunity

By providing a skills development environment valued by employers and retaining a greater share of value addition locally, FLOSS can encourage the creation of SMEs and jobs.

Given Europe’s historically lower ability to create new software businesses compared to the US, due to restricted venture capital and risk tolerance, the high share of European FLOSS developers provides a unique opportunity to create new software businesses and reach towards the Lisbon goals of making Europe the most competitive knowledge economy by 2010.

FLOSS consideration within ICT policy

It has been consistently proven that consideration of FLOSS within an institutional ICT policy is a key factor in ensuring value for money in ICT procurement. I have personally been involved in the design of the FLOSS policy of many companies and institutions, and my company, COD Technologies, has been instrumental in helping organisations save money through huge operational cost reduction, mainly throughout the thin client deployment and Operating Systems migration.

We have helped many important global organisations to find the most suitable FLOSS alternatives, including Deutsche Bundesbank - Germany, Garden Hotels & Apart - Spain, Celestica - Italy, BHP Billiton - U.K., Ministry of Health, Welfare and Sport - The Netherlands, etc. You can find more information and success stories at http://codtech.com

External links

Economic impact of open source software on innovation and the competitiveness of the Information and Communication Technologies (ICT) sector in the EU

http://ec.europa.eu/enterprise/ict/policy/doc/2006-11-20-flossimpact.pdf

GNU Free Software

http://www.gnu.org/philosophy/free-sw.html

COD Technologies

http://codtech.com

Success stories

http://codtech.com/wiki/index.php/Success_stories