Jeff Nolan points to this HBSWK article on the research on Microsoft Vs.Linux winning chances for leadership.
Most research to date into the OSS movement has focused on the organization and management issues surrounding OSS.Ghemawat and Casadesus-Masanell chose to explore the fundamental competitive dynamics question: Will OSS ever displace traditional software from its market leadership position?. Excerpts with edits and comments:
Ultimately, the authors believe, neither side is likely to be forced from the battlefield—Microsoft has too much market share and OSS offers too many benefits for users. But there are strategies each can use successfully against the other, as they detail in this e-mail interview.One main advantage of open source software is that because users can modify the code directly (as they encounter problems or have new ideas on how to improve it), the development cycle is significantly shorter. Proponents of OSS claim that if this demand-side learning (as we call it) is sufficiently strong, OSS will oust traditional software. In addition, software engineers claim that the better architecture of most OSS projects make them a potentially superior product, adding to the probability of success.However, OSS has disadvantages too. Most importantly, it comes from behind in terms of market share (installed base). The value of an operating system depends critically on the number of users, traditional software has an advantage. Clearly, a larger installed base implies that there will be stronger direct and indirect network effects, and this will enhance the value of the operating system to current and potential users. In addition, a larger installed base also implies that there will be more feedback on bugs and more suggestions for new features.
The main result of the analysis is that in the absence of cost asymmetries and as long as Windows has a first-mover advantage (a larger installed base at time zero), Linux never displaces Windows of its leadership position. This result holds true regardless of the strength of Linux's demand-side learning. Furthermore, the result persists regardless of the intrinsically better design and potential differential value of Linux. In other words, harnessing demand-side learning more efficiently is not sufficient for Linux to win the competitive battle against Windows.
However added research suggests that because OSS implies lower profits for Microsoft, the larger the cost differences are between Linux and Windows, the less able Microsoft is to guarantee the survival of Windows and from a societal point of view, the research finds while a monopoly of Linux is always preferable (from the point of view of societal welfare) to a Windows monopoly, it is ambiguous whether a duopoly Linux-Windows is better than a Windows monopoly. With a duopoly, more individuals and organizations use PCs because prices are lower, and this raises welfare. However, with a duopoly, no operating system ends up exploiting fully its potential because developers' efforts wind up divided between the two systems. However, with a monopoly, the efforts to develop new software and improve the platform are directed towards one system only and this may turn out to be better from a social welfare perspective. It is quite interesting to see an assessment that substantial interest may contiune to be seenin linucx moveent even if Microsoft sells its operating system freeA good academic research for dicussions and a good read indeed.