Open Access News

News from the open access movement


Monday, November 05, 2007

More on open innovation

The move toward open innovation is beginning to transform entire industries, The Economist, October 11, 2007.  (Thanks to Thiru Balasubramaniam.)  This article focuses on patents rather than copyrights, and manufacturers rather than publishers.  But how far do its insights transfer to copyrights and publishers?  Excerpt:

...[Henry] Chesbrough's two books “Open Innovation” and “Open Business Models” have popularised the notion of looking for bright ideas outside of an organisation. As the concept of open innovation has become ever more fashionable, the corporate R&D lab has become decreasingly relevant....

IBM is another iconic firm that has jumped on the open-innovation bandwagon. The once-secretive company has done a sharp U-turn and embraced Linux, an open-source software language. IBM now gushes about being part of the “open-innovation community”, yielding hundreds of software patents to the “creative commons” rather than registering them for itself. However, it also continues to take out patents at a record pace in other areas, such as advanced materials, and in the process racks up some $1 billion a year in licensing fees.

Since an army of programmers around the world work on developing Linux essentially at no cost, IBM now has an extremely cheap and robust operating system. It makes money by providing its clients with services that support the use of Linux—and charging them for it. Using open-source software saves IBM a whopping $400m a year, according to Paul Horn, until recently the firm's head of research. The company is so committed to openness that it now carries out occasional “online jam sessions” during which tens of thousands of its employees exchange ideas in a mass form of brainstorming....

[P]atents are becoming much less important nowadays than brands and the speed at which products can be got to market....

In rich countries about four-fifths of economic activity now involves services, but profit margins are eroding. [Richard Lyons] argues in a new paper that “commoditisation often occurs even faster in services than in physical products”, because innovations are easier to copy, patents can provide less protection, up-front costs are lower and product cycles are shorter....