In the recent times we have seen a considerable development in the Open Source Software, it has transformed from oddity to a major business model.2 It has become a major interest for the software industry as well as economic theory. It has been often considered as the producer of higher quality services as compared to the proprietary development, wherein major players prefer open source strategy and where they publish the sources of the programs instead of keeping it for themselves as opposed to the case in a proprietary model.3

A software program usually consists of two main codes -‘Source Code’ and ‘Object Code’. Source code is written in computer programming language such as BASIC, FORTRAN etc. that can be read and understood by only trained personnel in computer programming. In order to use the software code in a computer the source code needs to be converted to object code which consists of bits, and such conversion is done by way of a software program called “Compiler”. In order to upgrade or modify the software, changes have to be made to the source code and not object code. Therefore, access to source code is an important issue in drafting of software licenses. Thus, accessibility to the source code is a major difference between open source software and proprietary software.

In 1984 Richard Stallman developed the ‘free software’- software which could be copied by others and made changes too as they pleased. ‘Open source software can be defined as software distributed under a licensing agreement which allows the source code (computer code) to be shared, viewed and modified by other users and organizations’.4 The open source software contains certain criteria such as:

  1. Free Distribution Rights
  2. Access to Source Code
  3. Permission to modify
  4. Distribute Modifications
  5. Forbidding Modifications against persons, groups, fields of endeavor.5

Proprietary software on the other hand in its mass distribution reserves all rights to the author except a license to run the software on the purchaser’s computer6. Herein, the software developers attempt to prevent outsiders from gaining access to their source code, this in order to protect the sole right of the proprietor to add features or correct defects. The licensor issues licenses to the users who are willing to use the proprietary software in order to prohibit the users from modifying, copying or redistributing the software to other users. This strategy creates a ‘lock in’ effect where the user is forced to purchase the upgrades solely from the proprietor or abandon the product entirely.

The major goal of the OSS is to support a process of the community or shared development and evolution of software. This enables the higher quality of software quickly and encourages participation in the community in the software environment7. The open source computer programs have become increasingly common and widely used even at companies such as IBM, Hewlett Packard that are known for distributing proprietary software. One of the most widely known open source projects is the UNIX kernel work alike commonly known as GNU/LINUX8.


Releasing the object code without the source code is one of the major characteristics of proprietary software as compared to the OSS. This is one of the major technical differences between the two. Much number of arrangements can be made between the vendor and customer in dealing with proprietary software, for example the user might be permitted to see the source code and make changes but not to distribute those changes to others, thereby reserving the right of the proprietor. In response to the OSS movement the proprietary software makers have attempted to allow users to some extent of adapting the proprietary software to their own uses by accessing and altering the software’s source code for example Microsoft’s ‘Shared Source Initiative’ (SSI)9.

Whereas OSS on the other hand propagates the releasing of the source code in the public domain in order to work upon it and make the changes available to others thereby removing any sort of restrictions upon its usage. As defined by Richard Stallman that Free Software is not free until the source code is not included with the object code10. He further stated that one can charge for particular software as long as the source code is provided along with a specific bundle of rights with the software such as redistribution of the changes and further right to copy it.

Furthermore, the usability of OSS is often criticized as it is not usually reviewed by the experts and therefore does not cater to the majority of users. Due to the lack of technical expertise the ability to fix errors become comparatively lesser as compared to the Proprietary software11. There even exists a lack of documentation as seen with respect to proprietary software wherein inhibit learning is more prominent, therefore, the OSS users end up learning and gaining inputs from the alternatives such as online communities or so and basically relying on the documents. This forms another critical difference between the two.

The developments made in the software in case of OSS are made by the users themselves, they are the innovators as well as the users therefore, and question of ill target is completely removed. Whereas on the other hand in case of proprietary software, the developers are not users and therefore are not aware of which functionality is required to be improved first and therefore is usually ill-targeted. Therefore, developments added to open-source software are considerably more efficient for a given level of adoption than for proprietary software12.

Under OSS the improved versions are delivered regularly as contrary to the proprietary software. Herein the successive versions are released at regular intervals along with minor improvements and correct bugs. But under the proprietary model the improved versions are released only from time to time so that the users are obliged to buy the newer versions in regular intervals in order to use the software, as the free bugs are very rare as the producers prefer to wait for the improvements to be sufficient and then release it for a price13.

Furthermore, the open source development tends to attract various skilled workers due to its open organizational structure whereby more developers contribute to a piece of OSS than that of proprietary software. The proprietary technology mainly depends on research and development (R&D) investments which are often not up to the mark as it diminishes the efforts for a monopolist14. Therefore, as a consequence the OSS is more efficient as compared to the proprietary software. OSS enables innovation by providing users with freedom and flexibility to adapt the software suit without any restriction15, but

however, the innovation may or may not be available to other users as many may not wish to share it in the community which again becomes a major deterrent to the innovation of the software.

Another major difference between OSS and proprietary software is with respect to security. Proprietary software as is targeted towards majority users is developed and processed in a controlled environment by a specific team having common objective. The source is edited and viewed by the specific team itself and is further heavily audited.

Therefore, the risk of the software being infiltrated by bugs and viruses are less likely. Whereas, on the other hand OSS is often viewed as unsecure because not all such software have been developed in a controlled environment. The development process in the OSS often lack continuity and common object as there are numerous individuals along with other big players making changes to the software without any communication between the developers. It is also not reviewed or validated prior use, therefore, having high risks of being infested with bugs and viruses such as Trojans etc.

Therefore, open source software and proprietary software are highly different form each other on various grounds such as technical, developmental, security, cost, innovation etc. The difference in the two also lies in the form of licenses and not only source code16.


Recent years have seen a striking success of OSS as it allows the software developers to use shared source codes and correct errors as well as further redistribute such source codes. One of the most famous and successful open source software projects is Linux, which has been able to command a part of the market share within the server operating system market, the market share is likely to increase further in future. Amazon reported that adopting open source software has reduced 25 percent of its technology expenses thereby making it more viable as compared to that of the usage of proprietary software17. Open source software with the given advantages has a high possibility of having future dominance over proprietary software.

It has often been contended by the critics that a open source software is more efficient in nature as compared to a proprietary software. Herein the developers are users who make changes and reforms to the software on regular intervals and make such versions and updates available to all as compared to that of the proprietary software.

When it comes to innovation, it is higher in the OSS as compared to proprietary software. In OSS many individuals are working side by side in the further innovation and development of the software as compared to the proprietary software. With the goring and increasing development in technology it is highly important to be at par with the changing scenario and therefore, considering the innovation factor is more in OSS it is likely to be seen that in future there will be a shift from the conventional proprietary software to that of the open source software.

It is already seen that many firms and companies such as IBM, Hewlett Packard are already dealing with the open source software at the present and it is likely to spread to other firms as well. Therefore, the day is not far enough wherein the software industry will see a major change in its application of free software in major as compared to that of the proprietary software.

In our opinion the fact that there exists an option of source codes being open to the users has the ability to overcome the standards set by the proprietary software and builds its own niche in the software environment. Thus, concluding by saying there has been a shift from the Proprietary Software model to the open source software model and it is here to stay but one major question which arises now is –whether the proprietary software producers will be able to cope up with the challenges poised against them by the OSS and will they be able to compete with the OSS?