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Abstract: Technology platforms, such as Microsoft Windows, are the hubs of technology industries. We develop a framework to characterize the optimal two-sided pricing strategy of a platform firm, that is, the pricing strategy towards the direct users of the platform as well as towards firms offering applications that are complementary to the platform. We compare industry structures based on a proprietary platform (such as Windows) with those based on an open-source platform (such as Linux) and analyze the structure of competition and industry implications in terms of pricing, sales, profitability, and social welfare. We find that, when the platform is proprietary, the equilibrium prices for the platform, the applications, and the platform access fee for applications may be below marginal cost, and we characterize demand conditions that lead to this. The proprietary applications sector of an industry based on an open source platform may be more profitable than the total profits of a proprietary platform industry. When users have a strong preference for application variety, the total profits of the proprietary industry are larger than the total profits of an industry based on an open source platform. The variety of applications is larger when the platform is open source. When a system based on an open source platform with an independent proprietary application competes with a proprietary system, the proprietary system is likely to dominate the open source platform industry both in terms of market share and profitability. This may explain the dominance of Microsoft in the market for PC operating systems.
networks, network effects, network externalities, complements, systems, open source software, technology platforms, software industry structure
Abstract: This paper analyzes and compares the investment incentives of platform and application developers for Linux and Windows. We find that the level of investment in applications is larger when the operating system is open source rather than proprietary. The comparison of the levels of investment in the operating systems depends, among others, on reputation effects and the number of developers. The paper also develops a short case study comparing Windows and Linux and identifies new directions for open source software research.
Abstract: The emergence of open source and Linux has burdened IT managers with the challenge of whether, when, and in what applications to adopt open source software in their firms. We characterize the conditions under which enterprises adopt open source software. We show that adoption depends crucially on network effects, the fit of software with the range of applications used by each firm, and the IT capabilities of a firm. Our model predicts that most firms will adopt a heterogeneous IT architecture that consists of open source and proprietary software. The equilibrium adoption is often socially inefficient. This is the first paper in the open source literature to model the enterprise adoption of open source.
Open source software, Linux, IT management, IT architecture, IT capabilities, technology adoption
Abstract: The paper analyzes and compares the investment incentives of platform and application developers for Linux and Windows. We find that the level of investment in applications is larger when the operating system is open source rather than proprietary. The comparison of the levels of investment in the operating systems depends, among others, on reputation effects and the number of developers. The paper also develops a short case study comparing Windows and Linux and identifies new directions for open source software research.
open source software, operating systems, technology platforms, Linux, innovation incentives
Abstract: This paper articulates a network approach to knowledge processes and information systems in organizations. It proposes that cross-business-unit knowledge processes and the learning role of information systems are embedded within a network of relationships that link business units. Exploratory evidence from a large telecommunications firm shows that relationships have strategic learning option value. Learning processes are often informal and emergent thus information systems should provide a flexible infrastructure enabling the evolution of learning processes. The paper identifies important feedback loops that can be leveraged by knowledge managers, who should be seen as cultivators of knowledge processes, rather than omnipotent planners and designers.
This is an exploratory empirical study exploring the dynamic interplay of network structure, knowledge processes and Information Technology in a global telecommunications firm. It provides evidence that the network of relationships ('social network') affects both knowledge processes and the value of IT in the firm in a complex dynamic interaction characterized by path-dependency and process co-evolution. The social network has strategic learning option value moderated by trust, as investment in a network link provides the right to future learning benefits. Many knowledge processes are informal and emergent, thus firms need IT that provides a flexible informal learning infrastructure. Examples include wikis and open source collaboration platforms.
networks, social network, network structure, strategic learning options, knowledge management, information systems, organizational learning, telecommunications, feedback loops, dynamic systems, wiki, open source
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