Open Source: Focusing on High Cost

Why High Cost Software for Open Source?

First what is high cost?

It is irrelevant to put a dollar figure on the price of the software. What is peculiar about software cost is that in the 80's AutoCAD was seen as a cheap CAD package at $3,000. Today at nearly the same price, or even less when corrected for inflation, it is seen as an expensive package. Herein underlies the phenomenon of cheap computing technology: the cheaper and more accessible the technology is, the more empowered the users of that technology become. I believe this, more than anything, is driving Open Source software development: it is happening simply because people can.

While the perception of expensive changes with technology, the real reason that the cost of the software is irrelevant in the engineering and manufacturing world is that is negligible to the other costs of operating it.

Here is a quote from Roopinder Tara at the CAD Insider:

According to David Prawel, of LongView Advisors, who spoke at the recent COE 2007 show, the lack of interoperability costs the big manufacturers more than the total valuation of the CAD companies. One executive joked to Prawel that they should buy the CAD companies and fix the problem.

While it is impossible to calculate a figure, for a long time it has been recognized that interoperability problems are costing CAD users at least US$500,000,000 per year worldwide. More aggressive estimates are up to two billion dollars. There are a number of references discussing the interoperability issues facing the manufacturing industry.

The numbers above are just for CAD. In the manufacturing world, the whole process goes from CAD to CAM to CNC controller and everything needs to tie into and ERP system. If we look at the cost leakage on the translations and error going from proprietary CAD to proprietary CAM and the problems of posting from CAM to proprietary machine controllers, the dollars wasted are staggering.

In my opinion, the joke from the executive is exactly what the manufacturing industry should do. Pool everyone's money, hire developers and managers and create a huge Open Source project that everyone can benefit from. If companies contributed approximately what translations cost them in a year, the project could be funded with about half a billion dollars annually. On average, this would be less cost than what most pay for upgrades, subscriptions and maintenance.

While it may sound crazy at first, realize that all industries with hard products use CAD including: toys and consumer products, automotive, military, aerospace, heavy construction, machine tool, copier and printers - almost every product imaginable is designed on CAD by large and small companies. Half a billion dollars is not always expensive. The truth is that the consortium does not have to start from scratch either. The initial funding could be used to buy up a CAD company and then open source their product. The model here follows private equity takeovers. The difference is that the take over is to reap the benefits, not make a profit.