Briefly, OSS/FS programs are programs whose licenses give users the freedom to run the program for any purpose, to study and modify the program, and to redistribute copies of either the original or modified program (without having to pay royalties to previous developers). 
The above quotation summarizes the guiding principles of FOSS – the freedom to use, understand, modify and distribute software. Seemingly a simple matter, today, these principles can have a profound impact on the economics and dynamics of the software industry.
The proprietary software industry as we know it today considers the source code of their software to be a trade secret and their primary driver of profit. Their customers do not purchase the software but instead purchase the license or right to use the software, in ways that are tightly controlled by the software producer. This software cannot be modified by the user should the need arise. Modifications and improvements can be made only by the software producer and these often come at an additional cost to customers.
In this industry, software is rarely shared and competitors often reinvent the wheel, re-implementing functionality that their competitors have already implemented. Often this re-implementation is done in incompatible ways to ensure that their users experience a high switching cost. In mature software sectors, the cost of re-implementing existing functionality can make the barriers to entry high, greatly reducing competition. For example, the cost to re-implement an equivalent of Sun's Solaris operating system would be prohibitively high.
With its fundamental freedoms, FOSS is a dramatic departure from the current proprietary software model. Since its source code is easily shared, FOSS is a global public resource that anyone can make use of, learn from and improve. Regardless of where it was first produced, the global community at large can take advantage of this knowledge resource and benefit from it.
It is also important to note that FOSS is more than just software or a software development method. It is also a self-sustaining community of diverse individuals who have contributed their time, energy and knowledge to the creation of a global resource. Often vocal, strongly opinionated and technically savvy, this community can powerfully contribute towards harnessing the benefits of ICT and FOSS for development.
Ownership of FOSSEdit
It is a common misconception that FOSS applications are not owned by anyone or that FOSS is anti-copyright. In reality, almost all FOSS applications are copyrighted by their respective authors (except for the few that are deliberately placed in the public domain by the authors). However, these authors have used liberal licenses that allow anyone to use their work with limited restrictions.
The copyright holders still have full rights to their work, including the right to sell their work or re-license it under another license. There are several companies successfully utilizing this business model.
A good introductory article on the legal basis of FOSS can be found at: http://www.groklaw.net/article.php?story=2004040421042728
It is not possible to adequately cover every detail of FOSS in this primer. For further information, please refer to the first primer in this series, Free/Open Source Software: A General Introduction. It can be downloaded from:
- Wheeler, David, “Why OSS/FS? Look at the Numbers!” [home page online]; available from http://www.dwheeler.com/oss_fs_why.html ; Internet; accessed on November 7, 2003.