Developing proprietary or open source technology: Learning from five case studies

Companies in high technology area either have to lead and set the industry standard, or quickly follow the prevalent, or risk becoming obsolete. Learnings from this paper are following: First, the Innovators tend to develop proprietary technology to take advantage of first to market and the late entrants try to make up by developing open source technology. However the proprietary strategy is not always successful in launching improved substitute owing to the network effect and switching cost and the market may favor an inferior product. Second, the elite products are generally produced under proprietary technology, whereas broad base products are aimed by open Source. Third, with time the proprietary systems are found expensive to maintain, and are made open to sustain. Fourth, proprietary technology aims for vertically integrated supply chain leading to full ownership of upstream and downstream supply components. Finally the long term strategy calls for open source for greater market size.