Personally, I feel that we worry way too much about keeping our source code top-secret. One reason people think source code is valuable is because "the resulting product is valuable, so therefore the source code is even more valuable, right?" ... well, no. The product is valuable because of the thousands of small decisions you made as you were developing the product. The source code is just the manifestation of those decisions. In other words, the product is valuable because of its design, not because of the source code that describes that design. Just because someone has access to a product's source code doesn't mean they can make valuable decisions about it. And if they can't do that, then they can't "steal" your hard work by building on top of it and selling it. They just don't have the domain experience to do that. Plus, they would always be slightly behind you in terms of development, because you're constantly adding new features and fixing bugs.

I'm actually toying with the idea of shipping the source code to my first game when I release it. The game will be pretty large-scale (it's 3D, as just one example) so the game engine's source code could potentially be very valuable. However, I feel that I shouldn't necessarily keep it closed-source, because the profits from actually selling the game would far outweigh profits from licensing the engine, so it wouldn't be tactically wise to spend time on trying to license the code. Therefore, the closed-source model doesn't really provide a competitive advantage, so why not open-source it?

A potential problem with "open source on launch" is that someone could immediately clone the product and sell it for less. Except they can't. In the case of my game, I'm going to copyright all of the art assets and other game data. To clone the game, they would need to copy and redistribute that game data, which is illegal, which means I could sue them and shut them down. It would be an annoyance, but it doesn't make sense for them to do that anyway, so I doubt many people will try.

Also, piracy isn't a problem for the "open source on launch" model. In the case of desktop products, releasing the source code would allow pirates to easily circumvent any copy protection embedded in your code. But the thing is, it's easy to crack a closed-source program's copy protection anyway. It won't cause additional people to pirate your desktop product. And if your product is server-side, then by definition it can't be pirated.

Lastly, consider this. If it's harmful to open source a propriety application, then there should be examples which support that conclusion. However, can you find just one example of a company that failed or was harmed because they open-sourced their application? Id Software has released the source code to many of their games (Doom, Quake 1, 2, and 3, etc). Quake 3 generated over a billion dollars in revenue, and yet its source code is free to all. And it's very unlikely that Id was hurt by that decision.

It seems like source code protection is one of those logical fallacies that's easy for most people to believe, as long as they don't think about it too much. (Like "the world seems flat, so therefore it must be flat".)