Open-source Research, Based On The Enterprise Network Externalities

The rapid development of information technology and internet greatly facilitate the Open Source movement in the last few years. As the most controversial phenomena in software field, open source software (OSS) has received more and more attention. We can see OSS among servers (Apache), mail management system (Sendmail), and operation system (Linux), even explorer (Mozilla). Meanwhile, some companies are beginning to permit others to use their own technologies, such as IBM, Intel, and Nokia. Why these open source software are allowed to be used for free while so many enterprises are trying hard to control and protect their technology standards? What is the motivation to provide open products for free? How does it affect the market competition? What is the role of network externality in this environment?First, this paper uses a model based on game theory to discuss a software company's open source strategy which comes out the result that in network economy environment, open source has become an important business strategy to deter the drastic innovations brought by the entrants. And the factors concerning with the opening source strategy are analyzed by using the case of Sun Company.Then, this paper introduces the open degree variable to discuss the incumbent's open degree strategy. The analysis shows that when facing the entrant with strong innovation capability, the leading company will tend to choose the open source strategy. Moreover, the more the source is opened, the higher the profit will be.At last, this paper changes the study perspective from one-sided enterprise to bilateral platform and analyzes the optimal bilateral pricing structure of monopoly platform in the first. Then the paper proposed a two-phased incumbent-entrant game theory model. Assuming the incumbent has some two-sided installment bases in the first phase, this paper focuses on the competition between the incumbent and the entrant in the second phase. The conclusion shows the reasons why the entrant chooses the differentiation strategy. Also, this paper explains the reasons Linux chose open source strategy.