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					Economics of Free and Open
Source in Thailand
เศรษฐศาสตร์ซอฟต์แวร์เสรีและโอเพนซอร์สใน
ประเทศไทย
                             โดย
                        กานต์ ยืนยง
        โครงการเศรษฐศาสตร์ธุรกิจ มหาวิทยาลัยธรรมศาสตร์
Contents
 Study’s structure
 Chapter 1 : Introduction
 Chapter 2 : History & Development
  and Literature review
Study’s structure
Chapter 1 : Introduction
 An important of the study
 Objectives
 Scope
 Source of information
 Methodology
 Benefits
Source: รายงานการพัฒนาขีดความสามารถในการแข่งขันของไทย NESDB (กลุ่มอุตสาหกรรมซอฟต์แวร์)
Source: รายงานการพัฒนาขีดความสามารถในการแข่งขันของไทย NESDB (กลุ่มอุตสาหกรรมซอฟต์แวร์)
Source: รายงานการพัฒนาขีดความสามารถในการแข่งขันของไทย NESDB (กลุ่มอุตสาหกรรมซอฟต์แวร์)
          Source: NetCraft http://news.netcraft.com/archives/web_server_survey.html



Rising of FOSS worldwide
Rising of FOSS worldwide
Objectives of the study
   To apply economic theory in order to
    explain :
       • Why FOSS work and exists
       • How can FIRM involve in FOSS
 To study and compare a development of
  FOSS between Thailand and Foreign
 To study a direction to develop FOSS
  industry in Thailand, both Gov’s policy
  and Firm’s strategy
Scope
   A development of FOSS, with
    influences people both in
    government agency, firm and private,
    during 1999 – present.
Source of information
 Secondary data via publish materials
  ie. Journal, magazine, newspaper,
  etc.
 A survey and interview.
Methodology
 Quantitative approach
 Qualitative approach
 Descriptive approach
    • A comparison between fact from survey and
      theorem prediction.
Benefits
 Government : Get a basic idea and
  knowledge in conducting a policy.
 Firm : Get a basic idea and
  knowledge in order to set its
  strategy.
 Researcher : Get a basic literature, in
  order to improve a better knowledge.
Chapter 2 : History & Development
and Literature review
 Meaning of FOSS
 History and development
 Definition
 Economics theory to explain FOSS
 Literature review
Meaning of FOSS
 Free software with available source
  code.
 Community is significant.
 Success or failure of the software
  depend on community activeness.
History & Development
 Birth of Unix era
 BSD era
 Linus Torvalds and Linux
 Open Source era
 Community role
 Software in different form
 Community’s character
   Community’s character




Source : Open Source : Beyond the Fairy tales โดย Richard P. Gabriel และ Ron Goldman
Community’s character
   Available of source code
   Distribution of owner and control
   Scarcity of money, B/W and computer
    power but not man power
   Limited lock-in
   Software is not perfect;Tolerable
   Open KPI
   Professional attention
   Elegance code
   Ignorance of unskilled users
Definition of FOSS
 Open Source Initiative : Focus on
  collaboration and openness
 Free Software Foundation : Focus on
  Freedom
Economics Theory
 Near zero marginal cost
 Network externalities
 Critical mass
 Public goods & Free-riding
           Near zero marginal cost




Source : Microeconomics : Paul Krugman และ Robin Wills ,2004
Network externalities
 More users create more benefits.
  Consider Fax, Telephone and Mobile.
 On software :
    • Pool of experienced users and developer
    • More application available
           Critical mass




Source : Microeconomics : Paul Krugman และ Robin Wills ,2004
           Public goods & Free-riding




Source: R.van Wendel de Joode et al. 2003
Literature review
   Explain why hacker produce public goods.
    R. van Wendel de Joode et al. (2003)
   Empirical study. Gosh, Rishab Aiyer et al.
    (2002)
   Balance between community and firm. R.
    van Wendel de Joode et al. (2003)
   Limitation in developing country.
    Weerawarana, Sanjiva and Weeratunga,
    Jivaka (2004)
   Core Literature. Bessen, James (2004)
Why hacker produce public goods

 Low contribution cost; internet
  infrastructure.
 Intangible benefits:
    • Direct needs
    • Fun
    • Reputation
           Empirical study




Source : Free/Libre and Open Source Software : A developer survey โดย Rishab Aiyer Gosh et al. (2002)
Balancing : Firm force
 Patents
 Hire core developer
 Free-riding
 Commercialization
Balancing : Community force
 Law approach : GPL, no prove in
  court yet.
 Non law approach :
    •   Beachheads
    •   Boycott
    •   Competition development
    •   Power play
    •   Release early, release frequently
Limitation on developing country
 Problem in IP enforcement
 Lack of low cost and efficient
  internet infrastructure
 Low education infrastructure
 Freedom to access information
 Lack of English language
  understanding
 Lack of high skill developer pool
Core Literature : Firm involvement
 Open Source Software: Free Provision of
  Complex Public Goods. Bessen, James
  (2004).
 Based on model of innovations : Agion &
  Tiroles (1994)
 Which based on :
     • Foundation of incomplete contracts ; Hart & Moore
       (1999)
     • Complexity and renegotiation : A foundation for
       incomplete contracts ; Segal (1999)
     • A recent development as theory of incomplete
       contracts , pioneer by Oliver Hart
     • Branch of contract theory and information
       economics
Assumption about software
   Software is a complex goods.
       • m features product, use or not use generate 2m
         different use-product.
       • Testing, Debugging and maintenance account for
         82% of the cost of software.
       • Complexity-related cost also limit the ability of
         packaged software to meet all consumer needs.
         Some turn to custom programming or self develop.
   Contract issue:
       • To write a contract to cover all features equal write
         the code itself.
       • Incomplete contract : certain “transaction costs”
         prevent some aspects of the future trade from being
         contracted ex ante (renegotiation in ex post).
Self development vs. 1 on 1 contract

                 Sell code
   Developer                      Customer
                   invest




                 Customer

               Self development
Pre-package software

                                         Choice 1 : Customer get prepackage
        Customer Customer

   Customer                                 Choice 2 : Customer self develop
                             Developer
      Customer
             Customer Sell package                       Firm optimum price



                                                       Profit of software firm
Proprietary extension : API


                                          Customer
Developer                                  Pre package
                       API
            develop
                               Sell    Customer
                                      Pre package
                      Customer
                 Pre package
Free/Open Source


                         Customer
 Get source m* feature
                          Develop m*+1 feature and contribute back


Pool of FOSS developer and source
Conclusion
   FOSS is a Prepackage’s complement, not
    a direct competition.
   FOSS is suitable for skilled customer ,
    which is niche market.
   Prepackage will focus to unskilled
    customer, which is mass market.
   Prepackage should decrease price; API
    won’t exist.
   FOSS increase social welfare.

				
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posted:3/5/2010
language:Thai
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