Matt Asay (VP New Business Development, Alfresco) recently blogged on how Microsoft would prefer commercial open source vendors didn't compete on price, but rather on "value".

Matt's response: "Why shouldn't the open-source companies competing for market share trumpet their lower-cost offerings?"

I'd take this further: yes, compete on price, deliver value to your customers, but also strive to deliver a better product than your proprietary competitors. I've participated in calls with several customers over the last week and invariably they mention being strongly motivated by KnowledgeTree's simplicity and ease of use, open source code and the product's use of PHP. Price was certainly a factor in their purchasing decision, but not the only factor and often not the primary factor.

We're about to release a new version of our Microsoft Office Add-ins (extensions to Microsoft Office applications that allow access to content within the KnowledgeTree document store). During the design of the Add-ins we spent an enormous amount of time thinking about usability. Our goal wasn't to deliver equivalent (or more) functionality to Microsoft's own Office SharePoint Server integration but at a lower price, but rather to deliver something that did the job better. The lessons we learned from the development of this tool are being progressively used throughout KnowledgeTree's new user interface, currently under development.

Updated at 9:43 AM CET with link to Matt Asay's blog post Open source gains while proprietary software declines.