They think they'll get paid more because of IP that'll give them a monopoly if they hit the lock-in jackpot and one or two of the many competitors does get paid in that way, while the others fail. Remove the IP and you remove the lottery-style incentive structure and then you'll see investment in the smaller, but still commercially relevant returns available from building on open systems. (This is similar to massive investment in minor, but patentable, changes to existing drugs rather than investment in novel, but less profitable drugs).
There are a ton of "smaller but commercially relevant" companies that sell closed software products too, and would not be able to do so, or would be hampered, without some form of intellectual property.
I'm a bit at a loss as to how many people on a site dedicated, in part, to startups, which for most of us are based on information goods (software) would blithely throw out the baby with the bathwater in terms of IP. Take a good, hard look at the current system and fix major portions of it? Sure. Eliminate it entirely? Probably a bad idea.
