The Business Value of Open Source Examined

jg21 writes "'Open source developers have the opportunity to influence technology that is being used by companies and do it on a global scale in a way that cannot occur with any other type of software,' contends Bill Claybrook, writing in the current issue of LinuxWorld. The article is a historical overview of the open source revolution, starting in the 80s with the GNU Project, BSD, and TCP/IP and then moving into the 90s with Red Hat, StarOffice, and coming right into the 21st century with the Ximian Desktop and Sun's Linux-based Sun Java Desktop System."

Comments

Business model?

[NineNine]

In this article, the sole example as a working business model is Red Hat:


Red Hat, on the other hand, achieved amazingly high brand recognition with its Red Hat Linux distribution and developed a successful business model around high volume and support subscriptions along with professional services and training. In the book, Open Sources: Voices from the Open Source Revolution, Robert Young, one of the Red Hat founders, chronicles how he and others determined that Red Hat was in the commodity product business where brand recognition is extremely important. As a result, Red Hat developed a business model to exploit the commodity business.

If this is his idea of a "successful business model", then this guy needs to go back to school. The company has just *barely* started to show profits, and has virtually no profitable history to speak of and massive debt. I think it's about 5-10 years early to start calling Red Hat "successful".

Just a few tidbits ....

[airrage]

My pet peeve is articles that paint a lot of wild brush strokes. My company is seriously considering a Linux strategy, but a big MS shop currently. I think this article dumbs down the debate too much.

The pioneers of open source were more interested in building software that helped them achieve both social and technical goals than in taking advantage of the business aspects of open source.

-- I hear this argument alot, I assume the social goals are reducing crime, homelessness, poverty, etc. What social goals can you achieve through an operating system? This goes for Microsoft as well. Seems a little overreaching.

The open source model offers the promise to help businesses thrive in an Internet-based economy provided there is an understanding of the economic, cultural, and political factors that comprise an effective open source strategy.

-- Does it offer the promise or deliver on it? Microsoft offers a lot of promises too!

Providing greater value to customers than competitors can is the key to building a successful business. A successful software business model requires a number of elements that are just as important for open source software as for proprietary software.

-- So open source operates under the laws of economics. I actually applaud this paragraph, shows some realism.

Standards: To promote collaboration.

-- I'm beginning to decry standards. With standards you wouldn't get the giraffe or the duck-billed platypus. OS should evolve.

External contributors are usually motivated by the prospect of working with software that solves important problems for them and others, by the possibility of future gain via the provision of related service and products, by the opportunity to increase their own personal knowledge, or by the satisfaction of building a good reputation among their peers.

-- so we are motivated by intellectual pursuits, money, learning, and ego.

Open source promotes standards and interoperability to the degree that we have not seen in the past.

-- I think I could argue either way on this one.

This usually leads to competition for resources and talent with each software development group acting as a separate company. Open source re-unites development efforts because people throughout a company have access to code.

-- So at RedHat they don't compete for internal resources -- there are no politics? -- and people have access to DEVELOPMENT code. I think you underestimate the power of the dark side. People are people.

This creates high efficiencies in the development of software products and reduces time-to-market.

-- Again, money is a good motivator. Early you said OS operates under the law of economics. Why wouldn't a PS (proprietary sofware) company?

Open source, when it works well, can produce high value, high quality, low cost, portable, and no vendor lock-in software that can be exploited by a number of business models.

--What happens when it works badly? Can it turn out the same garbage I get from MS?

As a result, Red Hat developed a business model to exploit the commodity business.

--Probably the single greatest sentence to be uttered in any article anywhere on the topic of technology. So much could be said about that...

This allows customers to continue to scale their infrastructure at a lower cost than before, and in some cases at a lower cost than they were predicting six or even three months ago. The business value provided by open source translates into savings for the customer.

Developers receive value from open source, but it is more personal value than business value.

--Are we talking Indian programmers or US programmers?

Open source developers have the opportunity to influence technology that is being used by companies and do it on a global scale in a way that cannot occur with any other type of software.

--So the guy who came up with Internet Explorer doesn't influence technology?