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Commercializing Open Source Software
CowboyRobot writes "Michael Karels, system architect for BSD 4.3 and 4.4, has an article on ACM Queue about the challenges in trying to make money from open source software. From the article: 'As users of the software, open source contributors have certain common interests in making the software stable and usable.' but 'When additions require modifications to the base system, there may be resistance to incorporating the changes.'"
I believe in open source (or at least want to). But I think money rules in this world. If you look at other forms of Media and Art, giving stuff away won't get movies like Matrix made.
This is not to say that there are not many, many very good independent films. I'm just saying that maybe Linux and other Open Source projects are trying to hard to get the wrong market.
With "limited" resources a focus should be made to take the server market from M$, drop the GUI crap, Linux WON'T win on the desktop (at least not yet). But can easily win on the server.
Michigan Photography
I think your product is a good example of why ESR "forked" free software into Open Source(tm) software.
In the pragmatic world of business some code is more valuable closed and some is more valuable open. At the moment your code is more valuable to you closed so you can sell it and make a living directly from your work.
There will come a time, however, when if you are going to continue to make a living by peddling your own code you are going to have to produce more product.
If that product builds upon and enhances what you have already done Andromeda may actually be more valuable to you open.
Wisdom lies in accurately determining when that line is crossed.
KFG
You've hit the proverbial nail on the head there turnstyle, old pal.
Customers are *cheap* !
They want everything you can throw at them for free, but are unwilling to pay (even modest amounts) for support or customization.
Yeah! We all know they *should* pay for support and custom code, but get real.
I have tried this route, honestly. But I fail to see how it can ever work out financially - unless you are blessed with dealing with somewhat different customers from my own (SME thru corporate).
If you have made this concept work, then please, for the love of Mike, explain to the rest of how you did it.
And now repeat after me:
- There is no Open Source business model!
- There is no Open Source business model!
- There is no Open Source business model!
The fact is, most support is of the getting-started variety. Do you expect those people to pay for support *before* they have their software working? Or do you help them get set up for free, after which they have little need for support?
And if somebody writes to ask: "hey, quick question" Do you reply, sorry, but that'll be $5 first.
Here's what I do: Bitty Browser & Andromeda
Red Hat makes it's money from support from Corporations, it may have trouble turning a profit right now, but when the marketshare expands even more, then I don't think they have much trouble. Red Hat has a good buissness model, their pricing scheme maybe a little shaky but I think it will change. Perhaps what they should do, is have releases every two years instead of one, support both releases, then in another two years drop support for the old one. That way you'll get a good four years out of a product. I'm not a market expert, but I could work. Its better than a one-year product life.
It's kind of like giving your music away for free, and making your money on tour and through merchandising No. It's kind of like giving everything away for free, and making nothing!
Why?
If you were blocking sigs, you wouldn't have to read this.
I have been successfully running my own Free Software Business for the past 2 1/2 years. Every quater I hit or exceed my targets, and comfortably in profit - might not be rich but certainly have perfectly viable long term business.
My company provides consultancy, support and training ontop of the open source project I lead. The key to success is that the project competes well in terms of functionality and robustness with equivilant commericial products, and that you provide the services that the market requires ontop of that product.
FSB's really are little different than conventional companies, if you provide and product or service that the market want at a price that is reasonable for the customer, yet profitable to provide, then you're in business. It really is very simple. Robert Osfield.
On the other hand he can't just go on selling Andromeda forever. If it's really valuable (in the useful sense) he will eventually have competitors ( some of them open source) and the field will be comodetized.
It's happening right now in the office suite field and stand alone word processors are a dime a dozen.
If you stay just ahead of the curve and become the open source "alternative" yourself you retain all the customer good will to your own company.
Do not discount the financial value of good will. When a small business is sold this item often constitutes the majority of the selling price.
The catch is that it's a capital investment that doesn't return immediate cashflow, so it often gets either overlooked or outright discounted.
In my business ( which is instore) my most valuable asset is being able to greet my customers by name, not the stuff I have to sell them. The second I stop doing that I stop selling stuff.
There's no way I can quantify that on a balance sheet though.
Wal-Mart vaguely understands this, that's why they maintain a creepy semblence of the practice.
The trick is to maintain a personal relationship with your customers even when you get big, without doing it in a bizarre and creepy-crawly way like Wal-Mart.
In the software field one way to do that is opening the source of your older product, thus maintaining the relationship and the ability to sell them your newer product.
KFG
Well it depends on what the software is and what it does. OK sure a spreadsheet should be easy to use and not require much support. Unless you are talking about custom macros or whatever. But say a large scale database will need support and custom work.
The thing is that it is posible to get a company to spend money to improve a piece of infrastructre like the linux kernel or mysql if they need that for other things. But only once the thing is getting to the point where it is basicly usable. While DEC had 2-3 people working on linux way back when no major players put big money into linux until it was rather robust already.
As for support cygnus did a lot of support for GCC, mostly in the form of ports and optimization for specific chips and so on. And made good money doing it.
Erlang Developer and podcaster
Funny, and a good point.
I had assumed that a project like MySQL could pay it's own way, but I don't know if they are. If even hugely popular projects can't make it, then that doesn't bode well for small-time OS coders that hope to earn a living from their efforts...
Here's what I do: Bitty Browser & Andromeda
What if that software you designed to make your business more efficent is released open source, and your competitors start using it. If you depend on that software as a competitive advantage, then you'd be stupid to give it away to your competitors. But unless you patent the underlying business methods implemented in your software this isn't much of a competitive advantage in the first place. I would certainly hope in your example that your senior managers have something better up their sleeve than your software, since it would be relatively easy for your competitors to hire developers that are as good as you are (or maybe they'd just hire you outright, after all, you have experience).
I do not have a signature
All software is more valuable when Open Source, however it may not be more valuable *to its author*.
-- Ed Avis ed@membled.com
Duty? Fuck that. Nazi Germany was full of "duty" and look where that got us. The "PATRIOT" act is full of duty and look where we're headed. I'd prefer people to keep their idealogies OUT of my software and trying to impose some sort of "civic duty" upon users of OSS software would be disasterous. A lot of people (including myself) work on OSS because we enjoy it, not because we feel a commitment to any sort of movement or to any sort of "duty".
/* this is my mother fucking contribution to your mother fucking project */ to the code. Think I'll get CVS commit access?
If people started making it a DUTY to contribute back to an OSS product, I'll just start adding
Also, what happens when the software does everything I need and I don't need to contribute? And what do you mean by contributing?
Finally, do you really think Enron (or any major international corporation) gives a flying FUCK about their "civic duty"?
If you were me, you'd be good lookin'. - six string samurai
The change you affect by passing on money is the marginalization of your voice. If instead you took that money and gave all of it to support some cause that you may believe in, you'd be affecting a lot more change.
And by devaluing things others charge for, you may indeed make it harder for the establishment to compete, but you also make it harder for independents too.
Here's what I do: Bitty Browser & Andromeda
But the author likes to eat; and therein lies the dilema.
We do not reward people for contributions to society ( or I'd be a happy a little camper churning out books for Project Gutenberg), we make our respective livings filching money from each other's pockets.
Socialism does not change this, unfortunately. It merely changes the pecking order and rules for doing the filching.
"Grant writer" has become a profession.
KFG
They don't pay for anything they can get for free.
I make money, not on support, but on development of extensions to some very specialized software which is the "best of breed" in its limited area. My customers aren't traditionel end-users, but either research institutions or consulting businesses who use my software for projects for their clients.
There are plenty of free-software business models, and the article does a good job of summrizing them, but there is no business model (based on free software or not) that guarentee you money.
For an honest busniness to be succesful you need to provide your customers with a value that is worth the price, the price need to be lower than what your competition can offer, and your customers need to be aware of both those facts. If that is true, your business will thrive, if not, forget it. Whether it is based on free software ot not is irrelevant.
I think you don't get the corporate culture. You may give away your work with good spirit, but when a publicly-traded multi-national corporation like IBM gives away work, it's as a result of a complex set of business decisions.
In the case of IBM, it's most likely part of a larger anti-Microsoft startegy.
If you believe that IBM is sharing code from some sort of sense of civic good will, you're mistaken...
Here's what I do: Bitty Browser & Andromeda
It's funny reading some of the /. readers ... you'd think that nothing but the GPL exists.
Case in point. Apple is making money off of FreeBSD's technology. And likewise, some of the FreeBSD folks are making money by working for Apple.
Granted, it took a long while and a lot of hard work for that sort of arrangement to happen -- but it shows what CAN happen... and if you can live through the lean years, there is light at the end of the tunnel.
Try sticking by what you believe in, what makes your conscience rest easy, instead of being a money grubbing whore.
I totally agree with the value of good will and that it accounts for the biggest part of a SMB being bought. Goodwill is often included in balance sheets so the stock price isn't solely based on sales revenue and physical assets. However, I have problems with the following point ...
If you stay just ahead of the curve and become the open source "alternative" yourself you retain all the customer good will to your own company.
I don't care about being the open source alternative myself since I can't sell my software like I used to (it's now open source, everyone will be able to download it from anyone who got the source and placed it on their server). Make money selling support and docs? you won't live off of this.
Selling open source products might become profitable only if you only have to cover a small portion of the development cost. That's the case for high profile projects and Linux distributions are close to this situation. However, if your software has only 4 coders and you're the only full-time coder, there is no benefit in open-sourcing it if your objective is living off of this. Find one or 2 coders you get along with very well, make them partners so you don't have to pay them. Your project evolves and you can keep selling more and more and you share the revenues with you partners.
I think you don't get the gift culture. IBM use the little coder's code, the little coder use IBM code, everybody is happy about it ! That's the point of open-Source : sharing. It goes both way.
That hasn't worked in 90% of the cases. In most cases, the company contributes some software, the OSS community uses it for free, all the time bragging about how the company should be grateful to them, the company starts to lose money and they come out with a non-free special edition, the OSS community gets bitter and puts out a 100% free version, and the company goes out of business.
As for IBM, they are not the first to try to ride the OSS bucking bronco. We shall see what there attitude is in a few years. This article (well page 7 at least) reminded me of the infamous Netscape list of business cases that was posted to
-a
I think art makes the world a better place, and I think that the people making it should benefit.
For that matter, I'd also prefer to see artists getting more of the pie, rather than less.
Here's what I do: Bitty Browser & Andromeda
Why?
Corporations do lots of things all of the time to make themselves look less like the greedy, blood-sucking, economic parasites they are :-) - Just kidding.
Actually, corporations are run by people, some of whom like to think that they do more than provide a value neutral link in the economic chain. It makes them more productive and likely to join the company in the first place if they think that an organization is doing things out of a "sense of civic good will". In addition, all companies products are purchased by people, some of whom like to think that they do more than provide a value neutral link in the economic chain. It makes them more likely to buy from the company in the first place if they think that an organization is doing things out of a "sense of civic good will". Corporations are among our country's largest charitable givers. They wouldn't be donating this money if they did not see a benefit. This "sense of civic good will" may not come from the company itself (corporations are, of course, artificial entities), but I do believe that there are people within these companies that support and provide resources in the name of "civic good will".
To suggest that this type of support does not flow to technical communities, as well, would be quite improper - elsewise how do you explain corporate support of organizations like the ACM and IEEE? In the end, the company and its employees do get rewards from their "sense of civic good will". And this is why the company does it.
Of course, that it also plants a boot in the face of Microsoft doesn't hurt either :-)...
That is all.