A small company has developed a specialized product that it configures specially for each customer. New customers usually have specific requirements to be incorporated into their system, and they pay for these to be developed. The company has an opportunity to bid for a new contract, which would more than double its customer base. The new customer also wishes to have some involvement in the configuration of the system. Explain why, in these circumstances, it might be a good idea for the company owning the software to make it open source.

What will be an ideal response?

The key benefits of open source are is that it opens up development to a wide range
of developers and so accelerates the development and debugging of the product.
Doubling the customer base places immense strains on a small company of they
have to take on a lot of new staff and so going open source means that the costs of
expansion are reduced.
In this case, because the product is specialized to the needs of different
users, the company that own the software can still charge these users to make the
changes to the system. Hence the loss in revenue from selling the software is
compensated by the additional effort available to service more customers.
Furthermore, large companies are often reluctant to buy from small
companies who may go out of business, To some extent, open source provides
reassurance to customers that, even of the original owners of the software are
unavailable, they can get access to the source code and hence continue to maintain
their system.
Finally, open source may increase knowledge of the company’s product and
so attract more customers.