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There is a very nice quote by Alberto Vázquez-Figueroa (Spanish writer and inventor) which reads:

"El éxito o el fracaso de un invento no depende de a quien beneficia, sino de a quien perjudica."

Source: Wikiquote

Which translated into English means:

"The success or failure of an invention does not depend on who benefits, but on whom it harms."

I strongly agree with it.

Suppose that somewhere in the world there is a company called Acme. This company invests resources to develop and maintain a tool A that offers a certain functionality X. This tool is proprietary, and brings revenue to the company.

Imagine that a developer or a group of developers decide to build a tool B that offers the same functionality X. They decide to release this tool as open source or free software, so that everybody could benefit from it and be more productive.

(Please don't misunderstand me. I'm not talking about stealing intellectual property or anything illegal/malicious, but the total opposite.)

In this new scenario, any individual would be able to use tool B for free instead of paying for tool A. Even worse, other companies that are in direct competition with Acme could use tool B in their workflow at zero cost, and even modify the source code to include new functionality and resell it as their own product.

What would be the outcome for Acme? Would building an open source alternative like tool B put Acme at risk?

Has this ever happened in the real world?

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    Remember Nokia? Used to be the world's biggest mobile phone company? Tried to play the smartphone game with Symbian, which was proprietary, and Android basically crushed it. Now Nokia doesn't do mobile phones at all, having sold that arm to Microsoft. – MadHatter Apr 20 '17 at 7:52
  • @MadHatter Very good example. I wonder if there have been more cases like this. Thanks a lot for your contribution! – codeaviator Apr 20 '17 at 12:46
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    Except Nokia also did Maemo which was very close to pure debian linux... before Android. – ivanivan Apr 20 '17 at 18:33
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    You seem to be asking: "Can the survival of a product be endangered by a competing product, and have there been any examples where the competing product emerged from an open source software project?" – O. R. Mapper Apr 24 '17 at 21:35
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    "other companies that are in direct competition with Acme could (...) modify the source code [of tool B] to include new functionality and resell it as their own product" - if the license of tool B allows for that, kind of yes. But even then, the original parts of tool B would remain OSS and Acme could do the same (extend tool B and sell the result). – O. R. Mapper Apr 24 '17 at 21:38
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A company would be "put in risk" if it's entire offering is compromised, and it can't adapt to a changing market. This has less to do with the existence of open source alternatives to a product and more with poor management.

One could make the argument, though, that revenue loss due to open source alternatives happens all the times. Every time someone installs Linux on their home computer, that's a sale that Microsoft (or Apple) didn't make. Every time someone uses Open Office or Libre Office, that's a sale Microsoft didn't make. Every time someone chooses PostreSQL or MariaDB as their RDBMS, that's a sale that Oracle (or Microsoft) didn't make.

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Sometimes a software simply being open source doesn't destroy proprietary softwares. It's a matter of quality and​ getting productive.

If an open source alternative software can offer more useful features, then most organizations would prefer it instead of proprietary.

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