Open Source in the Share of Wallet Wars
On their blogs, Matt Asay and Savio Rodrigues are discussing whether IBM is using open source to diminish competitor margins. I think it is obvious that IBM does this, most notably with its Linux engagement, which is squarely directed against Microsoft (Windows). It is what I call a war over the customer’s share of wallet, and open source plays a major role. The graph below shows how it works.
By “share of wallet” I mean the amount (percentage) of a customer’s IT budget that a vendor can get. Any IT user buys multiple different components, for example, operating system, productivity tools, or business applications, but ideally they only buy one of a given type. They only want one database, not many. So each IT vendor has two types of competitors: those that directly compete with their products, and those that offer ancillary products. Your direct competitors you can take on through better sales or service or product.
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