I'm reading through Si Chen's excellent paper called "An Economic Model of Open Source Software Adoption." I got lost in the calculations Si uses, but the conclusion hit home:
[T]he hurdle for adoption of open source software is a function of the relative feature sets, size of user base, scalability of features, and profit margin of competing commercial products. Where existing commercial products enjoy a large user base, can address a high portion of user needs out-of-the-box, and the profit margins of the vendor are reasonable, open source software must offer comparable or better features to gain mass adoption. If, on the other hand, user needs are highly heterogeneous, the commercial product's vendor has excessive profit margins, or where the software is fundamentally not scalable, then an open source product with significantly lower feature sets could gain mass adoption.
These conditions suggest that open source and commercial software models may be well adapted to separate niches of the software industry. Open source software may fundamentally be more suitable for software whose features are not scalable, whereas commercial software may be better suited for mass market software with highly homogeneous user requirements and features.… Read more