Oliver Alexy of Technische Universitat Munchen (TUM) Business School has written an interesting paper titled "Putting a Value on Openness: The Effect of Product Source Code Releases on the Market Value of Firms." The research traces the impact of open source on company market valuations from January 1, 1999, to April 30, 2007. The research is hampered somewhat by a lack of private-company data, but it still offers up some useful conclusions.
Alexy tracks open source through the pre-bubble era (mostly hype leading to outsized but highly transitory investor returns) to today, where open source is becoming the de facto way of building software businesses. You can see the rise, then fall, and subsequent rise in the graphic at right.
Along the way, he suggests, investors have grown wiser as to what kind of open-source business models make sense.
Intriguingly, the early bible for would-be open-source capitalists (Martin Fink's The Business and Economics of Linux and Open Source) turns out to have offered up mostly wrong advice, so far as investment returns go. Using open source as a competitive weapon to batter competitors yields paltry returns, according to Alexy:… Read more