Diary 2024-05-23

Piecing together the fragments that have been written here and there.

Possibility that closed source software services (the long tail) will no longer be viable (the scope of viability will narrow/vary) (this is not adequately summarized in one line).

Threat details have not yet been identified.

Threats from Above

Potential for more economies of scale on the production side if AI assistance changes the cost of software production

The effect of more data gathered from more customers is more efficient.

The effect of being able to observe more customer needs is a lower cost per need to solve.

natural monopoly

Threats from Below

Possibility to make open source activities more efficient

Individuals are empowered by AI.

Between closed-source intra-organizational development and open-source development, the inefficiency of the latter has been significant until now

The emergence of an AI "PM who understands all languages and reads all issues, pull requests and commit logs" could turn open source development efficiency into enterprise organizational development

Economies of scale: AI lowers production costs and may further favor large software companies. This will make it more difficult for smaller closed-source services to compete in the marketplace.

Importance of data: companies with more data can provide services more efficiently and thus have an easier competitive advantage.

Open Source Evolution: The empowerment of individuals through AI and more efficient project management will make open source development more competitive. As a result, competition with closed source will intensify.

Market volatility: there is a good chance that the scope of closed source services will narrow. This is especially true as AI becomes a stronger supporter of open source projects.

Overall, the evolution of AI is likely to revolutionize the software industry, potentially changing the balance between closed and open source.

Overreliance on economies of scale: While economies of scale are encouraged, not all firms necessarily benefit from them. Even small, closed-source firms may be able to remain competitive by focusing on specific niche markets.

Data collection and privacy concerns: While collecting more data can lead to greater efficiency, privacy issues and stricter data protection regulations may limit the use of data even by large firms. This may also create room for smaller closed-source firms to compete.

Limitations of Open Source: While AI can make open source development more efficient, not all projects will succeed. Open source projects often face management difficulties due to lack of resources and dispersed communities. This can sometimes give closed source an advantage in terms of reliability and support.

Market Diversity: The software market is very diverse, and not all sectors are at a disadvantage to closed source. Closed source may be preferred, especially for specialized software for enterprises or solutions that require a high level of security.

User trust and support: Closed-source software is in constant demand because of the company's support structure and reliability. When users value stable support, closed source may have an advantage.

In light of these considerations, the evolution of AI will not necessarily shrink the closed source software market entirely, and with the right strategy and finding a niche market, closed source can continue to be competitive.

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