The threat of new entrants when using open-source software as a core asset of your business

Android, the operating system used by Google in its mobile devices, is distributed under several open source licenses. This essentially means that anyone, be an individual or company, can download the source and build their own version of Android if the have the technical skills to do so.

From a business strategy point of view, one could think that using open-source software as part of your competitive advantage lowers the barrier to new entrants. I think this is not always the case.

The threat of new entrants using Android to compete with Google is real, as Amazon proved when launching the Kindle Fire{: target="blank'} on September 2011. The Kindle Fire uses a modified version of Android that replaces Google's application store with the Amazon Appstore, essentially cutting Google out of the revenue stream1.

As John Siracusa explains in his article Code hard or go home, building the expertise necessary to fork and maintain their own version of such a huge software as Android would take any company years of effort and lots of resources. That's why Samsung, despite its impressive market share, licenses the operating system for their phones and tablets from Google rather than develop its own.

The barrier to entrance of open-source software is not it being open or closed, but its complexity and size. In the case of Android, its size and complexity effectively keeps out most of the could-be competitors.

  1. More recently, on April 2013, Facebook launched Facebook Home. Home is a free application for Android smartphones that replaces Google's default homescreen and applications with Facebook's own version, routing the user interaction with its phone through Facebook. 
android, open-source, threat-of-new-entrants

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