What really grabbed my attention is his comment that savings in sales & marketing could be closer to 75 percent. This is huge!!!
I was skeptical on how much core R&D leverage can be expected from an Open Source community. Larry's comment that there is little community leverage developing the core of the app addresses my question. It makes sense that the leverage tends to come from testing, bug fixes and interface/integration code. I would add internationalization to the mix as well.
The biggest benefit on the R&D side is the reduction in time to market. Companies with offshore development models have been able to squeeze out a lot of their R&D costs, however, the big drawback with offshore development is the long turnaround times. Startups using Open Source components have been able to quickly pull together applications (using onshore or offshore resources) in a much shorter timeframe. Given the pace at which innovation is occuring today, i think the reduced time to market benefit makes the Open Source model a natural fit for many startups.
I'll be tracking Larry's next piece on "The Next Wave of Open Source, why the application market is ripe for open source offerings - and which applications will gain traction the fastest." I'm really looking forward to his next article.
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