Converting an Open Source Project into a Business?

Yaztromo asks: "I'm about to try to make the jump and move my jSyncManager Project from being a time-consuming hobby into a full-time business. I'm hoping to follow the model of other successful Open Source businesses by selling integration, development services and support contracts. Has anyone in the Slashdot community attempted to move their Free/Open Source projects from hobby to business? What were the special challenges or obstacles faced?"

Comments

Re:biggest problem..

[ip_vjl]

biggest problem ... getting people to pay for something free

Tax forms from the IRS are free. But many people pay someone (who knows what they're doing) to fill them out for them.

OpenSource to Business

[bensin]

I have been working on this project for the pass two years on allowing independent music website a way of selling individual tracks to their users. But after a year of no real bites i decide to turn it up a notch and make it my own business. Which is now . The transition is a whole lot different and a whole lot more stress. You have to be able to hang on and fight for your dreams. Make sure you look for the most efficient ways of promoting your product. Join Newsgroups and etc.... Starting up a business is very difficult so don't expect a cakewalk. Your competition doesn't nee any more competition so you are going to have to be creative in your product and how you market it. I wish i could find forums and website that help guide you through this process but i can't find any right now but if any one knows of any let me know.

I am going to do that too

[prostoalex]

The support model for open source is somewhat interesting. It's pushed quite frequently as panacea for open-source businesses, but I was reading Chris Pratley's blog yesterday (he works for Microsoft), and he was pointing out some interesting and obvious problems:

You can grow a business to the extent that there is "friction" in the marketplace that makes it not worthwhile to clone your product and business (say, to $100,000). But if your business grew to a significant size (say, $1 million) then someone else will come along, covet that money, and use your source to kick start a clone of your business. This is true in hardware as we all know (all the cheap knockoffs you see of original products), and the friction costs are higher in most cases for hardware. If for example you make an open source accounting app that starts to do well, I can take that source, study it, and start selling and supporting it for less than you offer it, and we can have a price war until we're both paupers, or one quits. Even better, as you make improvements, I get to incorporate them in my product as well, so you can't really stay ahead of me for any length of time.

The full post is here.

So in a nutshell, good luck. But if you start generating any money on your project, a fellow developer can download the source and make it a policy to undercut your support pricing by 20%. Many customers will stay with you because of additional benefits provided (they like the service better, they like you personally, etc.), but some might switch, too.

Re:Specifically for this product

[Marxist Hacker 42]

I admit that I'm MUCH more familiar with the PocketPC market than the PalmOS market. However, here's two business models that seem to have worked well in the PocketPC market (at least among the hardware vendors I know and have had machines from: Hitachi, LG, Audiovox, and HP):

1. Get on their Shareware Catalog. Almost all third party vendors (I doubt you could do this with Palm, Inc. but Handspring and Sony spring to mind, and I'm sure there are others) want to differentiate their product by having more prebundled software come with it, and one way they do this is with a shareware CD that has setup programs all ready to go and linked into the (usually HTML) CD documentation.

2. Lower the cost of the OEM license until it doesn't make sense for them NOT to do it. $1/copy would do the trick- especially if you point out that they can really increase sales because your product makes their hardware compatible with a LOT more systems. They won't blink at giving up 1/100th of their profits to you if you increase their market share by a few million machines.