Review of: the Quantifying the Value of Open Source Hardware Development

He presents three different equations to evaluate the value of an open source hardware project and several ways to extrapolate into long term predictions. He then shows how to use these as a case study on open hardware, a syringe pump. In the end he predicted the value of the pump to be between 240k to 800,000k.

Who: Joshua M. Pearce, Phd, professor of material and computer engineering at Michigan Tech University.

What: An academic paper making the economic case for investing in Free and Open Source Hardware (FOSH). Pearce, J.M. (2015) Quantifying the Value of Open Source Hardware Development. Modern Economy, 6, 1-11. http://dx.doi.org/10.4236/me.2015.61001

Where: Available on the RIT BizLeg website.

When: December 2014

The Good

• More technical, economic exploration of the implication of FOSH (and FOSS) work is important, so that we have more material to argue with.

• The analysis in the advantages and disadvantages section is a great summary of the paper.

• I like that the conclusion makes such a strong statement about the value of Open Source. Though I’m not qualified to comment on the quality of the methodology.

The Bad

• As he mentions on page 2, the data for turning a download into a product and just the idea of tracking downloads in itself is really and impossible task, with the ubiquity of P2P distribution (especially in technical communities) and the amount of downloads that just don’t result in anything being actually made. This isn’t a bad thing, in fact it’s one of the things that makes this so exciting. However, it does limit the usefulness of his equations, since at their foundation they rely on this data (littered throughout at P).

• I also have a bit of a problem with macroeconomics that focuses on trying to deterministically measure things like ‘value to society’. That’s not to say we can’t model these processes to some degree of accuracy, but at the very least these require actual data to train a stochastic process on. Anything else is too brittle to be of much use.

• I think some graphs would help demonstrate the conclusion, especially with the extrapolated dataset.

Questions

• This is published in the Modern Economy is an economics journal, but it’s unclear to me how respected it is in the economics community. Its Google Impact Factor is 0.57 and is aimed at short reports on preliminary data, but not yet complete research. So, I would like to know how complete does Pearce think this research and what do people from the economics field think about it?

• With value ranges from 200k to 800,000k how useful are these calculations in practice?

• Are these deterministic equations commonly used for prediction in macroeconomics?

Final Thoughts

A technical (and it is very technical) look at the economics of FOSH, it breaks new, necessary ground in the field.

Rating 0.7