Software for large companies has one of the highest profit margins anywhere - typically 86% for companies like IBM and Microsoft according to a recent Bloomberg article profiling the growing battle between ibm and msft over linux and open source. IBMs services average between 23-28% while Infosys is in the 40% range.
When you look at how much large companies such as banks pay for software such as databases, email and office suites you realize that if purchasing were pooled between companies and the 86% were put into open source the final product would be as good at a fraction of the price.
For example the City of Toronto spent $86,000,000 on Oracle licenses a few years ago. If $73.6 Million were put into Postgresql development (and attracting the developers to live in Toronto) the final product would be something that is 80-90% as good as Oracle for and other cities around the country/world would benefit.
$73.6 Million buys a heck of a lot of Open Source software. $12.4 would buy more than enough development.
Posted by Anthony at March 1, 2004 12:16 PM | TrackBack