After introducing to Free and Open Source Software (F/OSS) in the previous article, one might still wonder why corporates and governments need to adoption it or encourage its adoption.

In the book “Access to Knowledge in Egypt“, Nagla Rizk (@naglarzk) and Sherif El-Kassas dedicated a chapter to the software industry in Egypt and the role F/OSS play there. They started by highlighting that just like any other economy, there are the two opposing forces that characterise the growth of the digital economy.

Digital economy is characterised by two concurrently opposing forces: one is the creation and spread of small firms and the other is the growth and expansion of larger structures.

They then clarify how the high cost of producing new knowledge is in favour of monopolies that are built around the production of knowledge and knowledge-embedded goods. Hence, openness versus intellectual property push in one direction or the other.

OSS provides a potential for small players to engage and proliferate. At the same time, intellectual property rights allow for larger conglomerates to grow around proprietary code. This provides interesting nuances in the interplay between intellectual property and competition. Maximalist IP protection will encourage and perpetuate large monopolistic structures built around knowledge creation; flexible IP regimes will enable the creation and spread of smaller firms. Therein lies the universal tension between intellectual property and competition.

Having said that, they argued that governments in developing countries should encourage OSS in order to help small and local entities to grow.

This is highly relevant to the potential impact that OSS can have in developing countries, where a belief in this potential would necessitate attention on the part of governments to protect the infant industry.

And even if some might wonder whether developing country can afford the growing pains of creating knowledge through smaller and younger production structures, the authors compared software production in those countries now to infant industries in the past:

It is also a modified enactment of the “infant industry” argument, where economists since the early nineteenth century have argued for protection through imposing import barriers in order to allow the local infant industry to eventually “grow up,” as it develops economies of scale free from the threat of competition from the advanced imports.

They added:

Effectively, OSS remains the infant domestic industry that needs protection. In this case, protection does not refer to blocking imports by imposing tariff barriers, but rather to shielding OSS firms by freeing them from the threat of market dominance by larger business structures, which is partly due to proprietary IPR protection.

The highlighted the high potential for the software industry in Egypt, compared to any other industries for three reasons:

The software industry has been hailed as a potential engine for Egypt’s economic growth. This is partly attributed to Egypt’s human capital, given a tradition of a free system of university education where engineering schools graduate thousands of young Egyptian men and women every year. Given that the country has a population of more than 75 million people, 60% of whom are less than 25 years old, Egypt is argued, often by the government, to embody a strong potential for human capital in the software industry.

The second reason:

Egypt has historically assumed the role of a cultural leader in the region, and has been considered an especially strong center of potential creativity in the Arab software market. The Middle East market offers a strong potential for Egypt’s software industry, especially with Arabization and the increasing interest in Islamic content.

And the third reason:

From a political perspective, OSS offers another element of comparative advantage over proprietary software, namely national security. In fact, a widely accepted security norm is that openness of systems makes them more trustworthy. This is because openness enables a more thorough review and scrutiny of the inner workings of such systems, which reduces the possibility of errors or trapdoors that might compromise security.

The authors, however, argued that Egypt's main comparative advantage now lies in customising and selling added value services on top of already existing software. They believe this is more suitable to the current level of knowledge in the country now, adding that:

Egypt’s comparative advantage lies in labor-intensive services as opposed to “one-time products”

Away from governments, and how OSS is also argued to encourage innovation there, corporates should also adopt OSS. Bruce Perens categorised software (or technology in general) into differentiating, and non-differentiating.

Differentiating technology is what makes your business more desirable to your customer than your competitor's business. For example, if you visit the Amazon.com web site and look for a book, Amazon will also tell you about other books that were purchased by people who bought the book you're interested in. And often the books it suggests are interesting enough that you will buy one of those books as well. If you go to the Barnes and Noble site, they don't have that feature, and it's no surprise that Amazon sells more books online. So, for Amazon, the “recommendation” software is a business differentiator. Obviously, it would be a mistake to Open Source your business differentiators, because then your competitor's business might use them to become as desirable to the customer as your own business.

On the other hand there exist non-differentiating technologies:

Perhaps 90% of the software in any business is non-differentiating. Much of it is referred to as infrastructure, the base upon which differentiating technology is built. In the category of infrastructure are such things operating systems, web servers, databases, Java application servers and other middle-ware, graphical user interface desktops, and the general tools used on GUI desktops such as web browsers, email clients, spreadsheets, word processing, and presentation applications. Any software that provides differentiating value to a non-software company is built on top of one or more of those infrastructure components.

Keeping non-differentiating proprietary is like re-inventing the wheel, and corporates should understand how OSS on the other hand will help them reduce their expenses, and also end up having better infrastructure products since they will be collaborating to have better products:

It wouldn't hurt your business for your competitor to understand how every bit of your non-differentiating software works. Indeed, that competitor might be the best collaborator you could have, if the partnership is limited to working on your non-differentiating software, because their needs are most similar to yours. This fact is demonstrated every day in the Open Source world, in which HP and IBM are partners in developing software that helps sell the systems of both vendors, and they remain fierce competitors at higher levels in the software stack where differentiation between them is possible and effective.

More or less, the opinions mentioned here are meant to elaborate how OSS is better to governments and corporates from a practical point of view. However, the moral values of Free Software and people's right to knowledge and freedom to use their software however they want, should not be ignored.