Couple of months back, as part of their curriculum, a B-School students came to me to comment on this case study. What I loved about it is its relevance to the contemporary business scenarios being faced by many power houses. Here it goes…
Problem: Ammo Up, an extremely popular electronic-music game, is the brainchild of AMPS’ cherished programmers, who now spend their time trying to keep customers dazzled with upgrades. AMPS are a Silicon Valley startup with revenues of over $550 million in the last financial year. Ammo Up is zany, button-filled modified gaming console that connects to your computer and lets anyone make interesting games and sounds. The CEO of AMPS Inc. has never heard or believed in open source.
The CEO recently got a chance to visit a trade show and found an open-source start-up called Open Areana, which copied the basic idea of Ammo Up but wrote its own open-source code for it. Their tag line was “Fight the Power”.”Aren’t we suing you?” were the first words out of the CEO’s mouth to the open-source guys.
As the CEO’s quest continued, she began to worry that in many people’s eyes her company was being seen as the overly powerful corporate enemy with an iron grip on its Intellectual Property (IP). She was worried over how her developers would react. She feared that they would desert her if she opened up all of their code to the community. At the same time, these same developers were ragged from trying to get out the next release. But then again, she wondered if perhaps the open-source model would make their lives a little easier?
A few days later, executives from AMPS found a YouTube video of a bunch of people playing games on competing devices that were much more sophisticated and cooler than those from AMPS. The video suggested that they were open-source competitors who had not only copied the idea of the original AMPS’ device but had also improved them in ways the firm never even contemplated, leaving the executives stunned.
Ques 1. Should AMPS float with the rising tide and join the open-source community?
Comment: Google, it’s launch of chrome, used to simple tag word “future proof”, which its been using for quite some time, and displaying as part of its inherent philosophy. They say, by making chrome an open platform, they’ve already made it future proof, meaning the product will not have to fight to keep abreast with the world. Rather, it’s the world that will use the product to define GenNext. U have enough examples across the board (I speak of only internet industry here since that’s the domain I deal with) to show that they r doing nothing new. A simple example of how open source has crushed IPs is the battle between firefox and internet explorer. Microsoft is a case of a classic business powerhouse keeping a tab on everything it does, obfuscating / locking its legacy behind iron doors. But that’s typically because the DNA of the company comes from a time when the intellectual property was the key to throne, like the Arthur’s Excalibur. And that’s what everyone fought for – Xerox to Apple, Apple to MS.. it was an era of bolts and chains.
Times have changed. Welcome to the free world when it’s not the propriety nokia software that wins, but the IPhone, Andriod’s of the world with their development platforms to launch new applications. Facebook and its “Applications” have triggered the internet history’s biggest wave of social networking revolution. So all I can say is, you can run but you can never hide, simply because if it’s about You against the World – you better be prepared for a long n gory battle.
Ques 2. If yes, How could the company make money without its Intellectual Property?
Comment: The key here would be balance. You don’t need to be an “Open Source” like the GNU license thing. Rather, what you would want to do is to build out a platform, which helps support applications from developers from across the world. You do not need to open up your legacy code and have the world rip it apart. What you should do is provide an open source platform, a plug and play feature enabler which can socket into your legacy and help the developers make gaming their own thing. Monetization can still happen from the more sophisticated products you develop with your team, on the same platform and also from revenue share with the open source developers. You could charge through license fee per usage of the platform, but that would need some serious research into consumer behavior since things like these result in untimely demises (like the 2000 .com bubble burst when a lot of free service providers tried to charge and eventually closed down, usa.net email service being one such notable case). So the bottom line is, its easier said than done, but you will have to go with the flow and find a money making spot there in middle of it all. Unless you have a product which can stand the test of time (like the ms office, which has weathered open office and Google spreadsheet attacks by constant evolution, at least till now), you need to go with the current or get ready for a shock treatment.
Post contributed by
Pankaj Vermani
