Bill Gates, on his recent trip to India, announced the donation of Windows software for Indian Government applications. This donation has been the occasion for an expansion of the debate on the advantages of open source versus proprietary software. It has also been the occasion of discussion of the role of such donations in securing the market for Microsoft proprietary software.

I just want to add a thought on how countries might analyze the issues relevant to the decision between open source and commercial software aquisition.

There is the issue of the cost of developing the software, packaging it, and distributing it. What we might term the “economic” cost is the value of all the resources that go into this effort. The “financial” cost might be the money that an organization puts into this effort. They are generally different. The economic costs to a nation in the development of open source software may be hard to determine, since many people and organizations may provide in-kind resources to the effort. The costs are easier to measure if a firm carries out all of these functions, as firms developing commercial software do. One should not necessarily infer that the economic costs are less for open source than for commercial software. We, as a society, have been learning how to manage software development in formal organizations for decades, and it certainly seems possible that that process uses less manpower and less of other inputs than the informal processes that are involved in the production and distribution of open source software. One may also consider the scalability of open source software development; while there are important examples of such development that have been efficient, would open source approaches be efficient if used much more extensively? Indeed, would we have the same level of software innovation without profit motivation, or would we have more innovation based on more collaborative institutions, with other than monitary rewards for success (such as seems to occur in the physical sciences)?

I wonder about the software distribution costs. I suspect that firms spend more on marketing commercial software than the developers do on “marketing” open source software. Economics would suggest that the added marketing may be socially beneficial, resulting in greater consumer benefits. Could governments that choose to utilize open source software inadvertently reduce their nation’s benefit from new software because they make the market “unattractive”, and less investment in dissemination is made than would be optimal? If so, should the government add the costs of itself marketing software to the general public to its budget to make up for the “negative externality” of its software acquisition policy?

More generally, the reason we buy computers and software is to allow us to do things better and/or more efficiently. The question of whether open source or commercial software best contributes to these end objectives seems the most pertinent. I suspect that the answer will depend on the software and application, and that societies learn to make reasonably good decisions on such matters. Today open source software is dominant in areas such as Internet servers, while commercial software is dominant in other “commodity” applications such as word processing or spreadsheets. However, some economic analysis of the social and economic costs of software policies might be helpful in confirming the desirability of the current pattern, and in modifying the patterns of use of open source and commercial software as circumstances change.