The other day, I was involved in an interesting discussion in the Joel on Softare
Business of Software forums. The original post was not happy with his Open Source competition and shared with everyone:
There are a lot of people out there who would like to startup micro isvs but they are afraid that someone would show up with some open source software which although wont be as good as the commercial one but still people will rather use that instead of paying for better quality software. After all nothing can compete with free!
Dont you think in this way open source is killing the software industry in that it discourages people from innovating and starting small businesses. Also it makes people use low quality software, since they dont want to pay for a high quality product.
If you read the whole thing, it sounds like he's in a tough position but I think he's missing a big point. The phrase is “After all nothing can compete with free!” where he demonstrates that he simply doesn't get it.
Why does Windows still exist with the availability of Linux? Why is Photoshop still around with GIMP out there? How does FogBugz still sell despite having Mantis and Bugzilla? The answer is easy… Value. As long as someone derives more Value from Option A, they're not going to switch to Option B.
Value can be hard to define. It could be as simple as more money in your pocket afterwards via lower licensing fees, it could be time saved, improved stability, compatibility with others, additonal flexibility, new functionality, better processes, and more aspects that I'm probably nowhere close to at the moment. The point is that each of your customers is going to define Value a bit differently and even then, look at it quite differently depending on their mood, their alternatives, etc, etc.
If your product doesn't solve a problem that people have, it's never going to sell. If it does effectively the same thing as the next product, you still don't stand a chance…