To open source or not….

Ashok was perturbed. In Jan 2006, an eastern European company had taken his source code, made minor changes and started selling it under an alternate brand name at a reduced price. Ashok’s company Chartengo was a pioneer in Adobe Flash based charting software that helped users create charts for data visualization. Its charts were perceptibly superior to any available on the market. The company had five employees and revenues of $500,000 in 2006. It used to offer source code with its USD 99 developer version of the product. A growing business like Chartengo was sandwiched between free libraries on the Internet and large data visualization vendors (revenues > $100 million) on the other. In between it also had to content with few hundreds of competitors. The possibility of a vendor infringing on Chartengo IP in some distant corner of the globe was high.

Chartengo did not have a legal team so they contacted a firm that specialised in copyright infringements. The firm quoted $250,000 to file a suit but there would be additional fees for court appearances. besides the unaffordable legal fees, Ashok was apprehensive about the stance an eastern European court would take in this matter. He decided to forego the legal route. He talked to development team and few experts outside. A surprise suggestion with overwhelming majority was – make your product code open source. They said open source code will make it difficult for infringers to compete. Why should customers pay for a code that is open source from the original vendor? Ashok’s team of developers was thrilled with the idea of open sourcing their code. It would accelerate innovation and save them time developing everything themselves. They felt perhaps the customers would also be happy. They could also see an opportunity for higher revenues. The open source would probably draw more customers, especially those who were sceptic of dealing with a small company like Chartengo.

Ashok had so far found it the best strategy to protect its intellectual property. He believed innovation would only happen if it could be exploited for exclusive financial benefits of the innovator. How could he even think of handing over his crown jewels to the infringers in the marketplace? The thought of handing over his IP to these hackers and letting them enter their random untested code into it thus contaminating its pure quality was appalling to Ashok. He clearly saw his competitive advantage evaporating with opening his source code. Yet, at that time, open source was rising like a tsunami? Apart from individuals hacking into your code, well-funded companies were also doing so. There was passion about open source. Even customers were enamoured by open source culture. It was turning into a religion.

The question is – what should Ashok should do?