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False Positives Adventures in Technology, SciFi and Culture from Toronto

Saturday, July 23, 2005

Using Arbitrage on the Price of Software

Via the Big Slash, comes Calculating the True Price of Software, which applies arbitrage - looking for price differences between two things that ought to be exactly the same - to warranties and - more to the point - software, and software maintenance.

the conclusions are interesting :

a) that the free and open source software folk have stumbled across the financial engineering insight that a significant portion of the value of software is the embedded "derivatives"--options or warrants--on future maintenance and enhancement.

b) the major difference in worldview between open source advocates and proprietary software license advocates is explainable as a differing opinion on the correct value of the volatility of maintenance and upgrade pricing.

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