Businesses Can Win The Competition With Open-Source Technology

How can a business compete with a free product? It's not easy, and it's more than just a theoretical question. U.S. newspapers are finding it difficult to compete with free news and the commentary of bloggers and other internet sources. And in the software world, the rise of open source products, which are available for free on the internet, is reshaping the technology industry. One solution: "Divide and conquer," says Haim Mendelson, the Kleiner Perkins Caufield and Byers Professor in the Graduate School of Business. Commercial firms, he says, have three levers to gain competitive advantage when they compete with a free product: Timing, product features, and the skillful use of network effects across market segments.