tech’s customer base is “extremely happy with the code,” thanks to the company’s careful approach to recruiting and retaining its high-skill employee base. Fleury insists that employees are JBoss’s greatest asset as well: “I treat my elite developers like royalty. I overpay them. I cover my lead developers in stock. Many of them walk around with an executive package, which is rarely the case, if ever, in traditional software companies.”

This focus on hiring the best programmers results in a quality of code that is at least commensurate with that of proprietary development while maintaining the benefit of “mass innovation” [ 4] shared by all OSS products. Similarly, the support and education offered by OSSg2 companies meet industry expectations because of the quality of the personnel.

Ecosystem. There is an encompassing ecosystem that evolves around OSSg2 companies that typically includes all the entities that gain from the OSSg2 companies’ presence in the market (support services, authors, educators, publishers, partners, user communities, and so forth). This translates into multiple Web sites, email lists, newsgroups, conferences, and published materials providing up-to-date information about OSSg2 products and their applications. OSSg2 companies typically benefit greatly from their ecosystem without much strain on their resources. Mårten Mickos, CEO of MySQL, emphasizes that MySQL tries, with minimum involvement, to make its ecosystem thrive: “We try to be open about our intentions so it’s easy for others to plan their business and their life around us. We try to move the obstacles of getting our product, distributing our product, using our product. […] We just make sure the friction is as low as possible.”

Potential OSSg2 customers can download and test a complete software product extensively before making an adoption decision. Because the ecosystem provides an effective pre-sales support apparatus, potential customers receive a significant advantage in the form of trialability that is limited neither in time nor functionality.

The ecosystem can also provide for an efficient, external quality-assurance mechanism above and beyond what may be carried out in-house, as Mickos points out: “When we release a new version, within 24 hours 35,000 people have downloaded and tested it. That’s fantastic. Not even Microsoft has 35,000 QA

engineers. […] Just based on statistics, we know that there are enough people out there who certainly test all relevant features, without our specific instruction” [ 7].

The OSSg2 model thus has a significant advantage in leveraging an important ecosystem that is willing to work on its behalf.

How OSSg2 Addresses Risks. OSSg2 has an adroit answer to dealing with the major risks facing all software firms. Every firm faces three strategic risks: demand, efficiency, and innovation [ 2].

Demand risk and pricing strategy. Wal-Mart and Dell have altered the structure of the retailing and computer industries through their low-cost strategies. Similarly, OSSg2 firms push the cost of software acquisition to the lower limit. Assuming requirements are met by an OSSg2 product, cost-driven IS departments will be attracted by zero acquisition costs. Extensive trialability, discussed earlier, also contributes to mitigate demand risk. For OSSg2 firms, as with both Wal-Mart and Dell, revenue losses from low-cost strategies are largely offset by increased operational efficiencies.

Efficiency risk and the Internet. OSSg2 firms gain from efficiencies associated with their Internet-based infrastructures. Many employees work remotely, software is downloaded rather than packaged and distributed physically, and high trialability obviates many traditional marketing costs. Consequently, OSSg2 firms tend to have a lower cost structure than traditional firms and thus enjoy efficiency differentials over proprietary software competitors.

Innovation risk and open source. When code is open, many coders can inspect it, and faults often will be detected more rapidly than when only a handful review it. Furthermore, those who can see the code can suggest improvements and submit code changes. As with all OSS communities, the developers and supporting community members for OSSg2 projects are drawn from all areas of the world, an immense talent pool from which OSSg2 community members can be recruited on the basis of talent and contribution, unfettered by physical location. This ready supply of programmers ensures innovative ideas can be contributed to the OSSg2 community from both traditional sources and sources previously untapped by traditional software firms. This phenomenon directly attacks innovation risk.

CONCLUSION

The open source movement is challenging the status quo in the software marketplace. Open source programs have moved beyond the desktops of code hackers and are now in production in a growing number of corporate IS departments. OSS is ampli-