[rayiner]

> Many, many people create businesses out of open source technologies.

Many people use open source technologies to sell some other product. That's different from being in the business of building and selling an open source product.

Say you invent a new kind of power amplifier. You open source it, and don't patent it. You start selling the chips, and some Korean company immediately copies it and undercuts you on price. So what's your business model now?

[logfromblammo]

That could happen even if you did patent it.

Say you invent a new kind of power amplifier. You spend 3 years securing a patent and bringing the product to market. You discover that some Korean company copied the reference implementation found in your patent application. You also discover that the Chinese manufacturer you licensed to produce your product has been running ghost shifts to make low-quality knockoffs. Bunnie dips the chips in fuming nitric acid and posts the photos to the web. You sue to enforce your patent and discover that the best you can do is to prevent x% of the knockoffs from entering the US as discrete parts in containerized shipping through the largest ports. Your amp design somehow shows up in dozens of low-end consumer products anyway. You silently rage into your ramen noodles, and your lawyer stops answering your phone calls the same day.

You focus on support services, quality assurance, and brand identity. You seize the center of the market by determining what the product is. Notice how well ARM does without a chip fab. Why do companies pay for ARM licenses (oops, licences--they're a UK company), when they could make OpenCores chips? Because the other chips are not ARM chips. They might not use the ARM instruction set. They aren't the same as what's in your iPad. When people lack the ability to fully comprehend what it is they are buying, they invariably rely at least partially upon brand reputation. Defending your trademark is far more important in this context than defending a patent.

[rayiner]

People don't buy ARM cores because of the trademark or support services. They do it because key implementation techniques for the ARM instruction set are patented, and the high-performance softcores are protected by copyright: http://semiaccurate.com/2013/08/07/a-long-look-at-how-arm-li.... Yes, they support it just like any company supports their products, but it's not a "free product, pay for support" play like RedHat.

[logfromblammo]

People don't buy iPads because of the ARM chips. But if the alternative is a Xiangdi Industries "10 Tablet" with a zhMIPS CPU and a not-entirely-unlike-Android OS, the lack of any familiar brand names may influence the consumer to just pay more for the sure thing (to them).

(I made those names up. Any similarity to actual brands is entirely coincidental.)

In any case, I was not trying to say that ARM cores are free to use. I was comparing their business to open hardware, and pointing out that people often prefer to pay for the ability to not delve too deeply into the details of what they are buying.

[comex]

The ARM case does seem to be working out fairly well for most involved. On the other hand, look at x86. While of course competing with Intel would be hard under any circumstances, I bet the market for x86 processors (compatible with x86 software) would be more competitive if ISA patent licenses weren't limited to a certain few grandfathered-in companies.

[rhino369]

You can also sue anyone using the power amplifier in any product sold in the USA.

I don't know why you use ARM as an example. I don't see how ARM would survive in a patent free country. In fact it's probably example 1A of why patents are useful device.

Why would Apple pay ARM if they were totally free to use it.

[logn]

Many times the product being sold is so closely related to the actual open source software that they're indistinguishable. For instance, buying RedHat (support). Other times, you're buying the software, under a commercial license. And maybe the most common is, buying the software as a hosted service. In all these cases it's hard to undercut (and offer more value) than the company who has the most expertise and generally copy rights.

However, your example is hardware and I don't know enough to comment on that.