Seven Open Source Business Strategies

Openstandards.net writes "One of /. posters' favorite discussions is the value of open source as a business model. OSDN has an article on IT Manager's Journal that highlights seven business strategies for open source. " Slashdot and ITMJ are both owned by OSDN.

Comments

One interesting thing

[Wesley Felter]

One thing I noticed about that article when reading it yesterday was that only two of those business models actually include writing open source code. This fits with my thoughts that there's plenty of money to be made from open source, but not necessarily from creating open source.

Re:One interesting thing

[fbrain]

My company implements open source solutions for a small fee, and when asked to install some OSS we always donate a percentage of the fee towards the projects we use. It would be great if everyone 'played nice' but I can't see that happening.

Re:One interesting thing

[Anonymous Coward]

Indeed you are correct. Amazon and Google are but two testaments to the idea of using open source for business purposes, and neither is exactly a "software" company.

Re:One interesting thing

[tanguyr]

Forget the money, send the patches you had to write.

Open source shouldn't have to count on people "playing nice" - it's about enlightened self interest: sharing your patches decreases your costs in the long run, because you can apply other people's patches more easily.

Convincing MBA weilding bosses of this is more than half the fight.

Re:One interesting thing

[torpor]

I think the problem is that its so difficult for 'accountants' and 'evaluators' to really put a value on any open source which a company may end up contributing to with .diffs ...

With software, there are a number of different approaches for 'valuating' a company codebase and sticking that figure in a spreadsheet along with all the company's other assets, such as account balances, etc.

With OSS though, how does that valuation occur? Its a public trust sort of scenario - as if the tax which all employees paid the government each year was 'also valuable' to the company, whose cash it was originally before payroll was paid.

OSS 'contributions' are a strange beast to an accountant, and unfortunately, many companies these days rely on valuations and assessments from 'traditional bankers' for things (such as getting loans to cover payroll, or new inventory for sales seasons, etc).

I know that EFF donations and all those 'tax-free writeoffs' are also valuable too, but these don't get thought of as 'investment return', generally. So if you put your main codebase development out into OSS, and your accountant wants to write all your primary code off as 'donations and contributions, non-return expected', then it gets a bit weird...

I think groklaw really ought to spend some time on this sort of thing; the more boring side of supporting linux/OSS on the legal fronts may well lead to a solution to this accounting dilemna, and that would surely be nice for a lot of companies that want to get into OSS ... and still keep the books in order.

Data Strategy?

[Mr. Sketch]

It was a nice read, but I was curious about one additional option, the 'Data Strategy'. This is specific to games where you may develop the engine using open source tools and release the engine as open source, but charge for all your data files the engine uses for your particular game. Or has this just not been proven as being a viable model?

Re:Data Strategy?

[A. Pizmo Clam]

This is specific to games where you may develop the engine using open source tools and release the engine as open source, but charge for all your data files the engine uses for your particular game.

Let's take a look at gaming development under the GLP. It offers an excellant case-study of how GNUlatic-ism will destory America.

1. NetHack: This game promises to connect your computer to a "net"work and expose it to "hack"ers. This is not a good model for a law-abiding company

2. Frozen Bubble: I'm not up on the street-lingo these days, but I'm 101% sure this is a drug reference; perhaps to "crystal methane" or "the acid". Do you want drug users working for your firm? Is that a way to be profitable? Also, I believe it comes from France, that notorious hangout for Maoists and ne'er-do-wells.

3. Klotski: Like many pinko names, it begins with a "K-" and ends with a "-ski". It's also affiliated with a sinister group of known East German "hackers" whose avowed goal is to "conqer" the American workplace.

I could proffer further examples, but any healthy-minded citizen will clearly see that GLP games encourage roguery of the worst kind and are unsuitable for emulation by the large, dependable corporations upon which our Constitution is based.

Adapt...

[carvalhao]

I found this article quite insightfull. One of the paradigms of modern business is the outsourcing model, and that is due to a recurrent need to reduce overhead in any kind of business (overhead always looks like bad news for stock investors). And software aquisition and maintenance IS a major overhead in any IT oriented enterprise.

The obvious solution is to get the resources as they are needed. And that business frame fits perfectly on the OS business model. That, and not Open Source fundamentalism, is what may make or mars OS.

Therefore OS must continue to focus on enhanced flexibility and customization, not offered by other non-OS platforms, as a way to thrive. Then, let us consultants do the rest of the dirty work :)

Missing option: consumer desktop business models?

[G4from128k]

Unless you count WalMart/Lindows as embedded, the only business model that seems remotely geared toward consumer desktop is a subscription model. I can see how Linux provides multiple sound business models for b2b, but wonder if any company can make money off consumer desktop linux.

Any thoughts?

Sleepycat license question

[16K Ram Pack]

Does anyone have any more details on this?

Like if I submit a fix/enchancement to MySQL in the GPL version, can they as the 'owners' put that in their commercial license which their customers can release without the source code?

Re:Sleepycat license question

[Wesley Felter]

Like if I submit a fix/enchancement to MySQL in the GPL version, can they as the 'owners' put that in their commercial license which their customers can release without the source code?

If you (foolishly) assign the copyright on your code to them, then they can do whatever they want. If you keep copyright to your patch, they can only use it under the license you have chosen.

Re:Missing option: consumer desktop business model

[DR SoB]

Yes, with a few simple steps:

1. IBM dumps tons of money into marketing Linux (any distro..)

2. IBM upgrades OO..

3. IBM allows blatant pirating of OS, and offer's free (or next to free) training. Pirates = Free training..

4. IBM reduces price of x desktop model that comes with Linux.

5. IBM sell's business licenses because now it's desktop version is well known to market/consumers/PHB's..

6. Profit!

Cygnus

[Henrik S. Hansen]

Cygnus was actually the very first company to deal exclusively in Free Software (back then the term 'Open Source' was not yet coined). The company's founder, Michael Tiemann actually got the idea from the GNU Manifesto, which outlines ways to make money from Free Software.

Cygnus primarily provided support, but I think they also did some development. Maybe someone can elaborate?

In my mind, Cygnus is a good example of how a small company can survive on just dealing in Free Software. Many people need support, or perhaps need custom-made changes to Free Software.

AFAIK, Cygnus is now part of Red Hat, and Michael Tiemann is CTO of Red Hat.

Aren't They Forgetting....

[bfg9000]

.... don't actually create a competitive product, fire all your coders and replace them with lawyers, and sue everyone in existence in hopes that somebody will give you money to leave them alone?

Of course, that strategy has yet to be proven, and it seems to have a few holes in it....