Facebook's "Open Compute Project" Will "Commoditize" Data Center Facilities

Open source projects almost always represents an effort to take something that is essential for a business and reduce its cost of acquisition. In other words, a firm benefits if it can bring much more competition to the businesses that supply its inputs. Firms try not to do this with respect to the core values companies believe they bring to the market. Open source tends to level the playing field while marginalizing competitive advantages others might have had.

Microsoft commoditized PC hardware because its software needed a home. Companies that contribute heavily to open-source, such as modern-day IBM, commoditize software because they sell consulting and support services.

Google commoditizes applications, platforms, and web technologies because it needs places to put its ads and people to see them. (Google also tries to commoditize anything required to get online: web browsers, DNS, and in some cases, even internet connectivity.)

Apple commoditizes apps to make iPhones and iPads more attractive. That's why telecom and other capacity and access executives hate the notion of "dumb pipe" so much. It is essentially an effort by other players in the ecosystem to reduce network services to a commodity.

Marco.org - Facebook's Open Compute Project