Open source software, Microsoft Strategy and the dynamics of multi-sided platforms.

You cannot beat FREE!… The Free Software movement shook the foundation of the software industry and posed a serious challenge to the very essence of capitalism in this industry. It forced vendors to offer “basic” versions of their software as an open-source, free license entry point alternative.

Microsoft is one of those vendors. Two of the severely under-advertised are two Microsoft programs for Students and Start-ups to get full version software is DreamSpark and BizSpark. It works like this: If you are a student and your school has an agreement with Microsoft, you can get a lot of free Microsoft software ranging from Visual Studio Pro to Server 2012 R2 and SQL Server 2012, Operating Systems and a load of other goodies to get you on your way to develop software for the traditional desktop, cloud, App Stores (both Windows and Mobile)…

The process is very simple. Just get to the dreamspark.com site and check if your institution has a participant agreement in place and you are set to go. DreamSpark works in a similar fashion, however, it is geared towards start-ups with a preset revenue limit and a number of developers. The cost is a few hundred dollars. This is kind of Microsoft’s strategy to influence the incubation phase of a business in an attempt to try and steer them clear of the LAMP stack.

This phenomena is not new. Most people are unaware of lowering of market entry cost by any software vendor is a very well-known strategy in any multi-sided platform business model. It is very well studied and researched in the gaming industry where the entry cost of game developers is heavily subsidized by the gaming/software platform company or sometimes the reverse is true. Of course, the subsidy is supported indirectly by the customer who always ends up being the party who ends up paying for the cost of the subsidy given to the game/software developers.

Depending on what side of the platform you are on, having a strategy is very important especially if you can pool your industry peers together to garner some buying/negotiating power. Sometimes though, being the customer is most disadvantageous position in the multi-sided platform game. Gaming companies have been lowering entry costs steadily for the past few years and if you are a product manager, there are quite a few lessons to be applied from such industry as well as a the open-source/license movement to move your wares… TBC

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