Software economics (Score 1)

Quick analysis: The marginal cost of software is zero, therefore, price should be zero since price equals MC. Many people, unfortunately, have trouble understanding this.

Embedded Linux is a good idea, since instead of selling MC=0 software, you are selling MC>0 hardsoftware glop. Microsoft has this idea down pat with its OEM deals.

Selling software with a support/licensing model means that I (the customer) am paying R&D costs for R&D that I might not necessarily want. Also, I can free-ride on other people paying the R&D. I will pay this if I have to, but basically, it's subsidization or extortion (take your choice of words). I don't like its long-term prospects.

Now I haven't put too much thought into this, but I think the membership model is the way to go (think golf course, gym). Membership benefits could include employee workshops/lessons, IT analyses, configured hardware (like a web cache server), communications training, etc. I would much rather pay this variable cost than anything else.