This Business Week article, Peer Innovation and Production discusses the value of opensouce software and how large companies such as IBM whose business models initially revolved around proprietary software are now using the wisdom of crowds as initially experimented with Linux. Many non-software companies are looking at this idea of harnessing peer production as a way of achieving growth, innovation, and profit. As related to the network diagrams in class, instead of a top down hierarchical structure, nodes far from the center become more powerful as they are allowed to edit and build upon the software. In effect better utilizing the knowledge of people who do not even work for IBM.

IBM by helping to develop Linux instead of its own software has been able save close to $900 million per year. By using “self-organizing webs of independent contributors” IBM was in effect outsourcing some of the production costs to the community at large. The article lists www.marketocracy.com, www.zopa.com, and www.threadless.com as companies which revolve around the same usage of the collective knowledge of a network. Even though Linux software is free, sales of complementary hardware, software, and services will reach $37 billion annually by 2008 at IBM. In effect, IBM is utilizing the knowledge of weak ties to improve Linux. With a minimal investment and royalty-free access to their software patents, IBM has created a link to the Linux community and is gaining both complementary business and the collective knowledge of Linux developers.