The Open Source World Is Worth Billions

The Linux Foundation released a white paper titled “A $5 Billion Value: Estimating the Total Development Cost of Linux Foundation’s Collaborative Projects”

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The Open Source World Is Worth Billions

The Linux Foundation released a white paper titled “A $5 Billion Value: Estimating the Total Development Cost of Linux Foundation’s Collaborative Projects,” which estimates the value of the open source Linux code (and its collaborations) to be worth US$5 billion.

Open source has come a long way in recent times. Since 2008, the organization has injected new innovative standards into the technology market.

The latest paper, published on September 30, is co-authored by Linux Software Engineer, Jeff Licquia, and Chief Marketing Officer, Amanda McPherson. It analyzes this propagation of open source projects and focuses in on the monetary assessment of its R&D operations. McPherson said the research became a focal point earlier this year because "over the last few years every major technology category has been taken over by open source."

The Foundation feels it's important to note the current economic value of the open-source model and that collaboration “can save the world.” Executive Director at the Linux Foundation, Jim Zemlin, said in a press release:   

“When people have the tools and connections to collaborate on a massive scale, any problem can be solved.”

Executive Director at the Linux Foundation, Jim Zemlin

There have been more than 500 businesses and countless developers involved in the Linux open source efforts, the report explains. Within the whitepaper collaborative projects such as the Cloud Foundry Foundation, DroneCode, Let’s Encrypt, and more are highlighted throughout.

Putting a price tag on open source software can be a challenge as it is free to download and use by anyone, so the review is an analyzed guess of what people “might” pay for the software. Amanda McPherson states:

“As the model for building the world’s most important technologies have evolved from the past's build vs. buy dichotomy, it is important to understand the economic value of this development model. We hope our new paper can help contribute to that understanding.”

But if Linux projects reveal a US$5 billion dollar assessment then how would the global projection be estimated? And what about other open source platforms?

Open source code has been very popular and bolstered by the likes of Elon Musk’s, Tesla Motors by releasing its patents. There are also many separate open projects that could weigh in far larger monetary value such as Apache Software and Cassandra.

In the report, Linux used a SLOCCount model released by Security and Computer Scientist, David Wheeler, who in 2002 pioneered the effort to measure the project’s value. Wheeler’s COCOMO model has proven to be a reliable source to research monetary value metrics concerning open source projects by measuring “person hours” and cost of development as some of its findings.

Many reports have shown how open source data improves economic value such as ResearchGate’s Mikko Puhakka’s article “Evaluation and Valuation of Open Source Software Companies.” But it's stated throughout his report that it's hard to use these operations as a metric of value, because they receive no revenue and have no payment recording mechanisms. Puhakka says to measure the worth of these services “many unknown factors affecting present value” must be accounted for.

The Linux Foundation report believes that its 500 collaborative startups economic value of US$5 billion would take 1,356 developers more than 30 years to create. They call this pattern “Distributed Genius” and show examples of their distribution services with organizations like AllJoyn, which network over 85 million devices within its framework. A great number of the world's largest cloud providers run on its open project Xen creating a much larger network effect.

The Linux Foundation's collaborative unions are mentioned throughout the report showing how the globe uses its system daily. And although it's not easy to measure “free” sources, the global Linux product distribution, and many other open source businesses are creating real value in this world and setting a new precedent.   

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