Software-intensive businesses have two kinds of software: differentiating software that makes their business look better than their competitor’s business, and non-differentiating software that is essential to operate the business but doesn’t make their store significantly more attractive to their customers. The “recommendation” software of Amazon.com, which suggests books that customers with similar interests have purchased, makes their web store different from that of other book sellers. Obviously, Amazon must have total ownership of that software, so that they can keep it from falling into the hands of their competitors. Otherwise, they’d lose their business differentiation. But Amazon’s customers don’t care whether Amazon uses Microsoft Word or OpenOffice to write letters. That’s non-differentiating software. At least 95% of the software used by a business is non-differentiating.
Question: can you have a business that uses non-differentiating software to achieve differentiating results … simply because of an imbalance of information in the marketplace? If so, how long can that last?
In other words: can a clueful company that uses a lot of open source software, say, out-compete a non-clueful company that pays through the nose for all its software.
I wonder how much of an advantage open source knowledge can be in business these days.