TITLE:
Quantifying the Value of Open Source Hard-ware Development
AUTHORS:
Joshua M. Pearce
KEYWORDS:
Open Hardware, Free and Open Source Software, Positive Externalities, Value, Valuation
JOURNAL NAME:
Modern Economy,
Vol.6 No.1,
January
12,
2015
ABSTRACT: With the maturation of digital manufacturing technologies like 3-D
printing, a new paradigm is emerging of distributed manufacturing in both
scientific equipment and consumer goods. Hardware released under free licenses
is known as free and open source hardware (FOSH). The availability of these
FOSH designs has a large value to those with access to digital manufacturing methods
and particularly for scientists with needs for highly-customized low-volume
production products. It is challenging to use traditional funding models to
support the necessary investment of resources in FOSH development because of
the difficulty in quantifying the value of the result. In order to overcome
that challenge and harvest the current opportunity in both low-cost scientific
equipment and consumer products, this article evaluates the following methods
to quantify the value of FOSH design including: 1) downloaded substitution
valuation; 2) avoided reproduction valuation and 3) market savings valuation
along with additional benefits related to market expansion, scientific
innovation acceleration, educational enhancement and medical care improvement.
The strengths and weaknesses of these methods are analyzed and the results show
that the methods are relatively straight-forward to institute, based on
reliable freely-available data, and that they minimize assumptions. A case
study of a syringe pump with numerous scientific and medical applications is
presented. The results found millions of dollars of economic value from a
relatively simple scientific device being released under open-licenses
representing orders of magnitude increase in value from conventional
proprietary development. The inescapable conclusion of this study is that FOSH
development should be funded by organizations interested in maximizing return
on public investments particularly in technologies associated with science,
medicine and education.