Open collaborative design/Isn't this design by committee?

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It has been said that a camel is a horse designed by committee... Won't this system produce herds of camels?

No, because there is no single 'conclusion' that a design has to arrive at. As with software, it might be that the original design is carried out by a single motivated indivual or a small group of people with a common purpose and shared vision. Additionally the design can be evolved in multiple directions if interested parties with conflicting ideas desire it. Plenty of fine horses have been created within the open-source software world and it will be the same with design and engineering.