Open source: Developing markets look for alternatives to U.S.
Rishab Ghosh, the program leader of an open-source research project at the Maastricht Economic Research Institute on Innovation and Technology in Holland, recently conducted a study that compares license fees with a country's gross domestic product per person.
The results, even after software price discounts, indicated that the cost of proprietary software for developing markets is "enormous" in terms of relative purchasing power. The price of Microsoft's Windows XP and Office XP on Amazon.com in the U.S. is equal to almost three months of GDP per capita in South Africa, and more than 16 months of GDP per capita in Vietnam. This is equivalent to charging a single-user license fee in the U.S. of $7,541 and $48,011 respectively.
Even if software is discounted to account for local pricing, it is usually still extremely expensive and there is no guarantee that this discount will be sustained in the long term, Ghosh said.
Much of the costs associated with open-source deployments in mature markets are due to the cost of replacing a system, updating related applications and retraining staff. In emerging markets, technology projects are more likely to be new installations, which means that license fee savings for open-source software make more of a difference, since updates and retraining are not an issue.
Open-source software also offers an advantage to countries through its potential to develop the local industry. This is particularly important in developing markets, which often don't have a local software industry.
"Local companies are limited in the integration and support services they can provide for proprietary software. Deep support--fixing software bugs, customizing it to user requirements, or integrating extensively with other software--requires deep access," Ghosh said recently at a free software conference in Brazil (PDF here).
The availability of software in a local language can also be a factor in the deployment and support of open-source software by governments. For example, the South African government has funded a project to translate the OpenOffice.org productivity suite into the 11 official languages of South Africa. This project is nearly completed, while rival closed-source software Microsoft Office 2003 supports only one of the official South African languages--English--according to the company's Web site.
"From an emerging markets perspective, open source is very effective at localization, while Microsoft looks at how big the market is and how strategic it is before it makes a decision," RedMonk analyst James Governor said.
Ingrid Marson of ZDNet UK reported from London.