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The Downward Spiral Of Linuxcare?
starvo pointed us to a ZD Net story about the recent trouble at LinuxCare. It's got a fair amount of details about all the problems that led to both the CEO & CIO jumping. Linuxcare has been pretty mysterious about the whole thing, so it's nice to finally get some meat to chew on... the article is relatively fair.
I have been thinking about the current marketing paradigm amongst OSS companies which is making software a commodity and then charging for support. The more I think about it, the more uncomfortable I feel. According to Open Source main proponent, ESR, Open Source is a superior engineering model than Closed Source and hence Open Source Software should be more reliable and stable than most Closed Source Software. This means that Open Source Software should need less support than Closed Source software. The upshot of this is that Open Source companies will never be as attractive to investors as closed source companies because closed source companies will always have larger profit margins, for instance, MSFT charges exorbitantly for it's software as well as for support (which is necessary with MSFT shitty software) while Red Hat charges only for support (which isn't necessary with a clueful admin or if one just reads USENET). Obviously even if they were the same size and sold the same amount of software MSFT would make more money and hence be more attractive to investors than RHAT which would eventually MSFT would grow larger than Red Hat. IMHO the recent downturn in Linux stocks seems to be based on this kind of reasoning especially since Linux stocks really became hot when it seemed like MSFT was not going to avoid being found guilty by the DOJ.
For the above reasons I have very little faith in any Linux company or other OSS pure-play ever becoming a very dominant company or even surviving for very long. The MSFT Halloween documents got it right when they regarded the commoditization of software as a death knell. VA Linux has found this out the hard way, what it sells is a commodity (a free OS and PC hardware) and now that other PC makers (who have more money, better distribution channels, more marketers, etc) now sell Linux boxes it turns out that VA Linux can't sell more boxes than anyone except Fujitsu Siemens. Now back to OSS companies before I drift way offtopic, companies that sell commodity software aimed at a market of experts then expect to sell support need to have a large source of income in the first place to create a large, well developed support network. Unfortunately, since their only source of revenue is from support but yet has to pay for both development costs and support the chances of such infrastructure being put in place is slim.
To make money from Open Source and become a successful company, a business needs to rely on more sources of income than support for software that is better engineered than its counterparts. Multiple revenue streams are required or else it is all for naught.