Thinking like a subcontractor

Many industries are organized so that a small group of companies controls the “product” and sit on top of a pyramid of subcontractors who provide parts and labor. It’s natural for companies at the top of the chain to prefer this scheme since from the top you can squeeze of BOM (Bill of Materials ) costs and essentially move profit margin to your side. All the talk about the “value line” in the Free Software world is just an alternative formulation of the same idea: the suppliers below the value line provide labor and compete on cost, the organizations over the value line sell products and compete, if they do, on features and brand.

2 thoughts on “Thinking like a subcontractor

  1. In Free Software, individual developers also have their own brand names, so the products work almost like “identity preserved” agricultural products, such as Angus beef, or like professional sports. When developers claim individual credit and publicize themselves, “labor” is less like a commodity.

  2. There has always been a market value in a good reputation. Don’t see how it changes anything I wrote above.

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