The free beer movement

Is open source software appealing just because it’s free? In my experience, the typical developer rarely delves into the source code of the infrastructure they use. Rather, they use open source software because they can download it and start legally using it immediately in a production environment, and because it’s often better than other alternatives.
Recent events point to a new trend among proprietary software vendors offering free software in an effort to better compete with open source alternatives.

Example 1: FLEX SDK released for free
FLEX is under competitive pressure from Laszlo Systems, as well as the newfound popularity of AJAX. Adobe management has rightly decided that the important thing is to get the technology into the hands of as many developers as possible, rather than continuing to “skim” the market.
Example 2: VMWare server released for free
VMWare is the dominant virtualization software, but faces new threats on the Windows front (from Microsoft) and on Linux (from open-source competitor XenSource).
The software being offered in both cases is mature, enterprise technology, with full license to use it in a production environment (not just test or develop with it). This is not “kneecapped crippleware”, a trial download, or a teaser. This is full-blown enterprise technology.
Watching the marketplace respond to these offerings will tell us a lot about whether open source is appealing just because it is good (and free as in beer), or if the free (as in freedom) aspect of open source software is equally important.
The free speech aspect of open source has important business benefits: it limits your worst-case scenario as a technology consumer. If the vendor goes out of business or becomes uncooperative, you can always choose to customize the source to your own needs. This is not an option with proprietary software.
On the other hand, even popular open-source software often has a lot of rough edges, spotty documentation, and quirky behavior. Solving these kinds of problems in a free product may well be enough to help a company command a dominating position, even in a software market that is trending towards commoditization. These companies seem to be making the decision that if you’re going to be commoditized by open source, you might as well do it yourself and keep the market-share!
How will companies make money with free beer software? The same way that open-source software companies do: with support and consulting. Many argue that the benefits of open-source software come from reduced marketing costs, rather than reduced development cost.
Free software has many of the same effects on reducing marketing costs: sales can be handled by secretaries answering phones, rather than enterprise sales sharks. It’ll be interesting to see if this works…finally the big companies are making a real effort to be price competitive against open-source alternatives. Will the marketplace respond? And can this model work with the higher cost structures that proprietary software vendors have? We certainly are living in interesting times.