Business Models in the Software Market and the Italian Firms' Involvement in Open Source Activities

Abstract

Open Source software, developed by a community of mostly volunteers programmers and available on the web free of charge, offers important opportunities to software firms. The availability of such free productive factor, in fact, cuts the development costs and, consequently, lowers the barriers to entry in the new markets segments. Thus it may represents an advantage both for new firms entering a new market, and for incumbents diversifying their offer. However, the empirical evidence shows that - except for some important multinationals - Italian incumbents are not intensively involved in the open source phenomenon. In order to explore the reasons behind the limited participation of Italian firms in the new open source market, ISAE carried out a Survey, on a sample of about 200 firms. The analysis of the survey data shows that the limited diffusion of open source software depends mostly on some features of the incumbents' business models. In details, the probability to carry out open source activities increases if the incumbent supplies products for the website development. Those products, in fact, are usually well-known among customers; furthermore, complementary resources - that ease the use of the open source products - are commonly available for this class of software. Moreover, the analysis shows than the usual trend in entering in the open source market diminishes if the incumbent targets customers using only Windows systems. Such customers, in fact, could have to face elevate switching costs due to the necessity of learning how to deal with the new tools; finally, the enterprise that mainly addresses these customers could not have adequate know-how to gain profit from the open software.