That became clear to me upon reading Matt Asay's description of what Harvard and Stanford are telling students about "how to beat open source."
What is described by Haim Mendelson (right) and Deishin Lee (now at Harvard) is a variation on strategies Microsoft and Apple are already deploying (with limited success) against Linux and Google, respectively.
Get to market first, build your ecosystem, segment the market...I have seen this movie before. Several times.
This strategy has allowed a few very large companies to remain closed-source and compete with open source start-ups. But when even the smarties at Cisco are looking to open source for growth the handwriting is on the wall.
What the Mendelson-Lee paper shows is that business schools (like journalism schools) work at the behest of those businesses which pay the bills. And those businesses are frightened of open source.
Mendelson and Lee have done their best but Mendelson's own conclusion is the bottom line:
Even if consumers do not end up adopting the free product, it can act as a credible threat to the commercial firm, forcing it to both lower prices and invest more in product innovation.
One final irony. Mendelson's chair is sponsored by Kleiner Perkins, the venture capitalists. No one knows more how tough open source is to contain, and the need to go with its flow, than the folks on Sand Hill Road.