Date: Thu, 19 Apr 2001 23:11:49 +0000 (GMT) From: Terry Lambert <tlambert@primenet.com> To: mwm@mired.org (Mike Meyer) Cc: brett@lariat.org (Brett Glass), mwm@mired.org (Mike Meyer), dan@langille.org, freebsd-chat@FreeBSD.ORG Subject: Re: Stallman now claims authorship of Linux Message-ID: <200104192311.QAA22635@usr01.primenet.com> In-Reply-To: <15071.19757.648512.704094@guru.mired.org> from "Mike Meyer" at Apr 19, 2001 03:40:13 PM
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> That only applies to companies that can't see beyond the "product" > model for revenue streams. Company A pays R&D costs out of pocket for one year to develop a product P, which it releases under GPL. Total developement costs are $1,000,000,000. The total market for product P is $10,000,000,000. If company A sells all copies of product P, their gross profit is $9,000,000,000. The total number of units of product P which are sold is 100,000, which gives a unit price of $100: $90 gross profit +$10 amortized R&D costs ---- $100 unit cost Company B buys one copy of product P, and demands the source code. They search and replace "Company A" with "Company B", and replease product P'. Total developement costs are $10,000. $90 gross profit $.10 amortized R&D costs ------ $90.10 unit cost Assume that the gross profit turns into net profit the same way in both companies. Company B can undercut the price of the product by a staggering $9.89, and still make a $.01 per unit profit -- $1000. Further, they can screw over companies A', A'', A''', etc., the same way, to make a total overall profit. Under no circumstances can the per unit revenue for company A _ever_ drop below $9.90 per unit, since it would then be impossible to recover R&D costs, and then it's off to bankruptcy court for company A. --- Meet Joe Consumer; his purchase decision making process is: BUY(COST(P) > COST(P') ? P' : P) How do you expect comapny A to stay in business? What? By forming an R&D consortium with company B and all current and future possible competitors in perpetuity, to share developement costs, and make the money off support contracts? What about company Q, who comes along after the R&D is done, and says "Hey! This looks like a big market! Why don't I just demand the code under the GPL, and then make my money without paying the consortium R&D costs? I'll be able to undercut the prices that the consortium members ar charging!". Fantasy: Can't we all just get along? Reality: There will always be a company Q. --- I know: we just won't fund R&D. Terry Lambert terry@lambert.org --- Any opinions in this posting are my own and not those of my present or previous employers. To Unsubscribe: send mail to majordomo@FreeBSD.org with "unsubscribe freebsd-chat" in the body of the message
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