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how much of a flattener open´source becomes。
Microsoft's first point is�察�How do you push innovation forward if everyone is working
for free and giving away their work�拭�Yes�察�says Microsoft�察�it all sounds nice and chummy
that we all just get together online and write free software by the people and for
the people。 But if innovators are not going to be rewarded for their innovations�察�
the incentive for path´breaking innovation will dry up and so will the money for the
really deep R & D that is required to drive progress in this increasingly complex
field。 The fact that Microsoft created the standard PC operating system that won out
in the marketplace�察�it argues�察�produced the bankroll that allowed Microsoft to spend
billions of dollars on R & D to develop Microsoft Office�察�a whole suite of applications
that it can now sell for a little over 100。
;Microsoft would admit that there are number of aspects of the open´source movement
that are intriguing�察�particularly around the scale�察�community collaboration�察�and
communication aspects�察─�said Craig Mundie�察�the Microsoft chief technology officer。
;But we fundamentally believe in a commercial software industry�察�and some variants
of the open´source model attack the economic model that allows companies to build
businesses in software。 The virtuous cycle of innovation�察�reward�察�reinvestment�察�and
more innovation is what has driven all big breakthroughs in our industry。 The software
business as we have known it is a scale economic busi´
ness。 You spend a ton of money up front to develop a software product�察�and then the
marginal cost of producing each one is very small�察�but if you sell a lot of them�察�
you make back your investment and then plow profits back into developing the next
generation。 But when you insist that you cannot charge for software�察�you can only
give it away�察�you take the software business away from being a scale economic
business。;
Added Bill Gates�察 �You need capitalism ��to drive innovation。�А�To have ��a movement�А�
that says innovation does not deserve an economic reward is contrary to where the
world is going。 When I talk to the Chinese�察�they dream of starting a company。 They
are not thinking�察�'I will be a barber during the day and do free software at night。'。 。 。
When you have a security crisis in your ��software�А�system�察�you don't want to say�察�
'Where is the guy at the barbershop��';
As wemove into this flat world�察�and you have this massive Web´enabled global workforce�察�
with all these collaborative tools��there will be no project too small for some members
of this workforce to take on�察�or copy�察�or modify´for free。 Someone out there will
be trying to produce the free versions of every kind of software or drug or music。
;So how will products retain their value�拭─�asked Mundie。 ;And if companies cannot
derive fair value from their products�察�will innovation move forward in this area�察�
or others�察�at the speed that it could or should�拭─�Can we always count on a
self´organizing open´source movement to come together to drive things forward for
free�拭�
It seems to me that we are too early in the history of the flattening of the world
to answer these questions。 But they will need answers�察�and not just for Microsoft。
So far´and maybe this is part of the long´term answer´Microsoft has been able to count
on the fact that the only thing more expensive than commercial software is free
software。 Few big companies can simply download Linux off the Web and expect it to
work for all their tasks。 A lot of design and systems engineering needs to go around
it and on top of it to tailor it to a company's specific needs�察�especially for
sophisticated�察�large´scale�察�mission´critical operations。 So when you add up all the
costs of adapting the Linux operating system to the needs of your company and its
specific hardware platform and applica102
tions�察�Microsoft argues�察�it can end up costing as much as or more than Windows。
The second issue Microsoft raises about this whole open´source movement has to do
with how we keep track of who owns which piece of any innovation in a flat world�察�
where some is generated for free and others build on it for profit。 Will Chinese
programmers really respect the rules of the Free Software Foundation�拭�Who will govern
all this�拭�
;Once you start to socialize the global population on the idea that software or any
other innovation is supposed to be free�察�a lot of people will not distinguish between
free software�察�free pharmaceuticals�察�free music�察�or free patents on car designs�察─�
argued Mundie。 There is some truth to this。 I work for a newspaper�察�that is where
my paycheck comes from。 But I believe that all online newspapers should be free�察�and
on principle I refuse to pay for an online subscription to The Wall Street Journal。
I have not read the paper copy of The New York Times regularly for two years。 I read
it only online。 But what if my daughters' generation�察�which is being raised to think
that newspapers are something to be accessed online for free�察�grows up and refuses
to pay for the paper editions�拭�Hmmm。 I loved Amazon。com until it started providing
a global platform that wasn't selling only my new books but also used versions。 And
I am still not sure how I feel about Amazon offering sections of this book to be browsed
online for free Mundie noted that a major American auto company recently discovered
that some Chinese firms were using new digital´scanning technology to scan an entire
car and churn out computer´aided design models of every part within a very short period
of time。 They can then feed those designs to industrial robots and in short order
produce a perfect copy of a GM car´without having to spend any money on R & D。 American
automakers never thought they had anything to worry about from wholesale cloning of
their cars�察�but in the flat world�察�given the technologies that are out there�察�that
is no longer the case。
My bottom line is this�此�Open´source is an important flattener because it makes
available for free many tools�察�from software to encyclopedias�察�that millions of people
around the world would have had to buy in order to use�察�and because open´source network
associations´with their
103
open borders and come´one´come´all approach´can challenge hierarchical structures
with a horizontal model of innovation that is clearly working in a growing number
of areas。 Apache and Linux have each helped to drive down costs of computing and
Internet usage in ways that are profoundly flattening。 This movement is not going
away。 Indeed�察�it may just be getting started´with a huge�察�growing appetite that could
apply to many industries。 As The Economist mused ��June 10�察�2004���察 �some zealots even
argue that the open´source approach represents a new�察�post´capitalist model of
production。;
That may prove true。 But if it does�察�then we have some huge global governance issues
to sort out over who owns what and how individuals and companies will profit from
their creations。
Flattener #5
Outsourcing
Y2K
India has had its ups and down since it achieved independence on August 15�察�1947�察�
but in some ways it might be remembered as the luckiest country in the history of
the late twentieth century。
Until recently�察�India was what is known in the banking world as ;the second buyer。;
You always want to be the second buyer in business´the person who buys the hotel or
the golf course or the shopping mall after the first owner has gone bankrupt and its
assets are being sold by the bank at ten cents on the dollar。 Well�察�the first buyers
of all the cable laid by all those fiber´optic cable companies´which thought they
were going to get endlessly rich in an endlessly expanding digital universe´were their
American shareholders。 When the bubble burst�察�they were left holding either worthless
or much diminished stock。 The Indians�察�in effect�察�got to be the second buyers of the
fiber´optics companies。
They didn't actually purchase the shares�察�they just benefited from the
overcapacity in fiber optics�察�which meant that they and their American clients got
to use all that cable practically for free。 This was a huge stroke of luck for India
��and to a lesser degree for China�察�the former Soviet Union�察�and Eastern Europe���察�
because what is the history of modern India�拭�In short�察�India is a country with
virtually no natural resources that got very good at doing one thing´mining the brains
of its own people by educating a relatively large slice of its elites in the sciences�察�
engineering�察�and medicine。 In 1951�察�to his enduring credit�察�Jawaharlal Nehru�察�India's
first prime minister�察�set up the first of India's seven Indian Institutes of
Technology ��IIT�� in the eastern city of Kharagpur。 In the fifty years since then�察�
hundreds of thousands of Indians have competed to gain entry and then graduate from
these IITs and their private´sector equivalents ��as well as the six Indian Institutes
of Management�察�which teach business administration��。 Given India's 1 billion´plus
population�察�this competition produces a phenomenal knowledge meritocracy。 It's like
a factory�察�churning out and exporting some of the most gifted engineering�察�computer
science�察�and software talent on the globe。
This�察�alas�察�was one of the few things India did right。 Because its often dysfunctional
political system�察�coupled with Nehru's preference for pro´Soviet�察�Socialist
economics�察�ensured that up until the mid´1990s India could not provide good jobs for
most of those talented engineers。 So America got to be the second buyer of India's
brainpower� �If you were a smart�察�educated Indian�察�the only way you could fulfill your
potential was by leaving the country and�察�ideally�察�going to America�察�where some
twenty´five thousand graduates of India's top engineering schools have settled since
1953�察�greatly enriching America's knowledge pool thanks to their education�察�which
was subsidized by Indian taxpayers。
;The IITs became islands of excellence by not allowing the general debasement of the
Indian system to lower their exactingstandards�察─�noted The Wall StreetJournal ��April
16�察�2003��。 ;You couldn't bribe your way