Chapter 3. How Did This Happen?
Introduction
The most obvious question facing an industry built on core assumptions of intrinsic software value is: how did this happen? How did an asset that has generated trillions in profits become gradually devalued? The answer to that question is complicated, but the evidence has been there for some time.
The Challenge of Competing with Free
One of the most obvious factors acting as a brake on software pricing has been the wider availability of open source software. As the Encyclopedia Britannica discovered with Wikipedia, it is difficult to compete with free, even in cases where the premium product is technically superior or differentiated in a meaningful way. Likewise, proprietary software vendors have been forced to adapt to a library of open source alternatives growing by the hour.
Organizations seeking to commercialize open source software realized this, of course, and deliberately incorporated it as part of their market approach. In a 2013 piece on Pando Daily, venture capitalist Danny Rimer quotes then-MySQL CEO Mårten Mickos as saying, “The relational database market is a $9 billion a year market. I want to shrink it to $3 billion and take a third of the market.” While MySQL may not have succeeded in shrinking the market to three billion, it is interesting to note that growing usage of MySQL was concurrent with a declining ability of Oracle to sell new licenses. Which may explain both why Sun valued MySQL at one third of a $3 billion dollar ...
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