Vendor Accent

The co-existence of open source and commercial software in emerging markets

The coexistence and availability of both open source and commercial solutions will thus ensure competition in the market, and this will force software vendors to become more responsive to consumer needs. By Goh Seow Hiong

In the world we know today, computers are so integrated with our lives that they have become indispensable. And as helpless as we are without computers, the machines are useless without software inside to drive them.

As the software industry matures each year, the debate on the virtues of open source software products versus their commercial counterparts rages on. From virtual chat-rooms to business publications, the discussion continues with advocates championing the respective software models they stand behind.

In recent years, Asian governments in emerging markets have taken an active interest in open source software with the view that its use would address various issues in their domestic markets. Such issues include the need to address the ubiquitous software piracy problem, coping with the widening digital divide, as well as developing indigenous software industries which are independent of foreign sources. However, the solution to achieving all the above is not as clear-cut as placing preference on a software model.

Although many have cited the cost of commercial software as the basis for software piracy, it would be naïve to hold the two in direct correlation. The most pirated software products, such as anti-virus and other utility software, are often among the least expensive on the market. Even free downloadable software can often be found in retail pirate outlets. In reality, software requires research and development for productivity improvements, and this comes at a cost.

The common misconception about open source solutions is that they can be copied and distributed legally and at no cost, and in so doing, piracy is eliminated. A user’s reliance on an open source operating system, for example, does not mean that he will forego the use of commercial applications on that operating system. These applications, in turn, must continue to be protected against piracy. Governments should direct efforts on consumer education, promoting the respect of intellectual property in general, as opposed to supporting a mode of software licensing.

Governments in developing countries have also seen the need to bridge the widening digital divide by making low-cost personal computers easily available to low income families. These can be offered with optional pre-installed open source software to lower the initial cost of technology ownership for targeted families. Commercial software vendors have also made localised-functionality versions of their software available at similarly low costs.

Of greater importance is the government’s need to have in place a comprehensive program that will equip families with the necessary information and software literacy skills to use the technology efficiently. It is vital that governments make adequate and appropriate content and applications (like suitable e-government services) available for public use, and through reliable connectivity. Commercial companies are also doing their part in providing literacy and skills training in developing countries to develop the pool of in-country expertise. In so doing, technology can then become a true enabler for those who have access, bridging the digital divide.

When considering open source software, governments often deliberate on what they can do for their respective domestic markets. Some have viewed the successful penetration of foreign developers negatively, and thus have considered procurement preference policies in favour of local companies. They welcome the availability of source code from open source solutions as a way to jumpstart their domestic industry, as local players can make use of existing code to develop and build their own software solutions for their markets.

Governments ultimately need to understand the upstream and downstream effects of their choices in formulating policies. Although the ultimate aim is to cultivate the local software industry and help their domestic companies become leaders in their chosen fields, there needs to be a holistic underlying economic strategy behind the push to develop their domestic markets.
While the abovementioned considerations are important issues to be addressed in a market, there are also obvious reasons why open source and commercial software solutions should coexist in emerging markets. Companies in economies that are not subject to the discipline of market forces have less incentive to maintain cost-efficiency. The coexistence and availability of both open source and commercial solutions will thus ensure competition in the market, and this will force software vendors to become more responsive to consumer needs.

Government procurement preference policies are an unrealistic solution. Software should be chosen based on its merits—functionality, performance, security as well as value. Open source and commercial solutions are commonly used in the same environment, and often in a complementary fashion. Regulations to prohibit either may merely stifle the domestic industry rather than cultivate growth. A healthy competitive environment with both types of solutions will bring about an improvement in innovation for both products and services, increasing market efficiency and widening consumer choice.

At the end of the day, there is no end-all and cure-all solution to address the challenges faced in developing markets. Understanding the complexities involved may place us in a better position to understand the effectiveness of strategies that are being considered by various governments around Asia.

Goh Seow Hiong is the Director of Softw are Policy for Asia of the Business Software Alliance (www.bsa.org).
shgoh@bsa.org