Phipps was speaking at the iX2005 business IT conference held here this week.
He noted that it has become difficult to put a price on software because applications now run "anywhere". Users can also no longer be defined based on the traditional way of counting the number of machines in a company, he added.
Another concept that is becoming obsolete is closed-door innovation, he said. "You can't hire all the smart people (in the industry). Sometimes, the smart people are elsewhere," Phipps said. He explained that in today's massively-connected society, where the Internet is ubiquitous, "open source is the base for innovation" and the key to switch from being a technology follower to leader.
He pointed to the tab browsing function in open-source Web browser Firefox, which was later adopted by Microsoft, as an example of how open-source innovation can beat the big guns.
"Innovation no longer happens in corporations… it increasingly happens everywhere," he added.
According to Phipps, who also goes by the title "chief open source officer", the two golden rules in open-source development and deployment are: collaborate with the experts, and compete and innovate using the common code.
The circle of developers continuously taps on the common code to generate wealth, thus enriching the code in the process. Phipps coins this, "connected capitalism".
It offers companies the flexibility to "choose again", and promises quality because skills are no longer constrained by geography, he explained.