While some of the features of the free software model are not innovative from a classical perspective, as we saw above, those that motivate a change in market perspective are.
To analyse in detail the differentiation introduced by the free software model compared to other traditional models, we will need to assess the aspects of production and the creation of value and knowledge underpinning the model.
In his article Open Source Paradigm Shift, Tim O'Reilly identifies these and other features of free software that are differentiating and which create a competitive advantage that can be exploited for profit. The following paragraphs will briefly outline some of his findings.
Recommended website
T. O'Reilly(2004). Open Source Paradigm Shift.
(http://www.oreillynet.com/pub/a/oreilly/tim/articles/paradigmshift_0504.html).
Change
Free software has deeply transformed the structure of the benchmark market, often with implications extending beyond those imagined by its creators.
These changes are based on product quality, lower production costs and the use of standards, in addition to differentiation in marketing, distribution and logistics.
Software as a commodity
In a context of permanent standardised communications such as the current one, all communication applications are interchangeable (a web browser, for example). In other words, the use of standards means that software can be considered a commodity.
Hence, when the revenue-generating potential of an application is diminished because of the commoditisation process, a new market will emerge for proprietary products, especially if they exploit the global communications network.
Moreover, free software remains a viable model for companies providing services, although we cannot expect similar profit margins to those of the modern software giants.
Network collaboration
The culture of software sharing has grown since its origins at the same pace as the Internet, whose participatory architecture is present in virtually all of its functionalities.
Free software is the natural language of the networked community, resulting in a style of collaboration and participation unique to its members. This collaboration is critical to the success and differentiation of leading Internet applications, since it has highlighted the importance of treating users as co-developers of the software.
Customisation and software as a service
Nowadays, we are used to considering applications as artefacts rather than static processes. Programs require engineering for their creation but the dynamic languages that allow for the cohesion of components (such as data management scripts) offer the perspective of a dynamic and evolving process of the application.
Many of the services offered on-line (such as search engines) require constant revisions and updates in order to perform their functions properly. This generates a new business paradigm for computers and information technology in general, and for the exploitation of software as a service in particular.
The Internet operating system
We can consider the Internet as a single virtual computer that builds an operating system from the connection of several small pieces and allows anybody to participate in the creation of value.
The values of the free software user community are important to the paradigm as they promote the spirit of seeking out and sharing knowledge.
The commoditising of technology is part of the process that allows the industry to move forward to create more value for everybody. For industry, it is essential to strike a balance that will create more value than that obtained with individual participants.