Why Companies Use Open Source

This week’s discussion focused on how companies use open source and why they actively participate in producing it.

Previously, I thought companies mainly used open source because it is free. However, the lecture changed my understanding. Today, companies use open source more for strategic reasons, such as avoiding vendor lock-in, accelerating development, and attracting talent.

Instead of building everything from scratch, companies can reuse existing infrastructure and focus on what makes them unique. This makes open source more of a strategic tool rather than just a cost-saving option.

Open Source is Not a Business Model

One idea that stood out to me is that open source itself is not a business model.

Even though the code is free, companies still make money by building services around it. For example, companies can sell support, offer hosted services (SaaS), or provide enterprise features on top of an open core.

This helped me understand that open source and profit are not contradictory. Instead, open source can actually enable sustainable business models.

Commodity vs Differentiation

The most interesting concept for me is the idea of “commodity vs differentiation.”

Companies no longer compete on basic infrastructure like operating systems, protocols, or data formats. These are considered “commodity layers.” Instead, they collaborate on these layers through open source.

At the same time, companies compete on the “differentiation layer,” such as user experience, product design, and algorithms.

This explains why companies are willing to contribute to open source. By sharing the cost of building common infrastructure, they can focus more resources on innovation.

Why Companies Participate in Open Source

This also answers a question I had before: why would companies contribute to open source instead of just using it?

From this week’s discussion, I think there are several reasons.

First, contributing allows companies to influence the direction of the project. Instead of depending on others, they can shape the tools they rely on.

Second, it reduces development costs. If multiple companies work on the same infrastructure, they do not need to duplicate effort.

Third, it helps build industry standards. This improves interoperability and makes it easier for systems to work together.

Connecting to My Experience

This idea actually relates to my own experience with pandas.

When I contributed to pandas, I was working on a small documentation issue. But now I realize that even small contributions are part of a much larger system. Many contributors together help maintain and improve a shared “commodity layer.”

At the same time, companies that use pandas are not competing on the library itself, but on what they build using it.

Thoughts on Open Source and Industry

This week made me realize that open source is not just a development model, but also an industry strategy.

Different companies can collaborate on shared infrastructure, while still competing in the market. This balance between collaboration and competition is something I did not fully understand before.

It also changed how I think about the future. In areas like finance or real estate, I can imagine companies sharing core systems (such as data standards or blockchain infrastructure), while competing on financial products and services.

Overall, this week helped me see open source from a broader perspective, not just as code, but as a system that shapes how industries collaborate and compete.