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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."
I want to get paid for my effort/time/expertise. I can't afford to be altruistic until I don't have to worry about making mortgage payments any more.
Some people do programming projects because they enjoy them, not everyone requires payment. Just like some people participate in sports for enjoyment (though in this country that is declining), not everyone requires a 10 mil salary just to play sports.
I think Google is a fantastic example. They use commoditized hardware and open source software. They built a better mousetrap in a world full of entrenched corporate behemoths.
The Next Big Thing will come from someone enterprising who can use the tools and open internet standards to create the next Google. You won't have to worry about selling licenses if that person is you.
Developing free open source programs will not make you rich, but if you develop something everyone uses, it will often get you name recognition in the industry. That name recognition can help you to land better-paying jobs than you might have otherwise had access to. Granted, the vast majority of open-source programmers remain relatively anonymous, but there is the possibility, especially if you create an entirely new project that does something useful and innovative.
Obviously, you probably still won't get the millions you could (emphasize COULD) get if you wrote it closed-source and patented it, but it's also much more likely to get wide distribution, and has a far greater chance of becoming the standard way of doing whatever it is it does, if it's open source and free.
Not that I'm advocating one choice over the other. What direction you decide to go depends entirely on your own situation, your tolerance for risk, and what you expect to gain from coding whatever project you're coding.
I think in many cases, these kinds of effects can be seen with FREE software, instead of Open Source. Instant Messengers, for example, are mostly closed source, but have had the same kinds of wide-spread effects.
~D
This sig has been enciphered with a one-time pad. It could say almost anything.
Nmap, for instance, is GPL'd Open Source software, and it is also sold to security companies for large amounts of money under a different license.
Narrow thinking is for narrow minds.
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".
I have agree with some of the previous postings here, in that Free and Open software no longer exists in the "hobbyist space" - we have real technological and economic implications to deal with. The one thing that we should NEVER comprimise on is quality of the code produced, either to serve a certain company, standard or set of interests. Within a company, with closed projects, this ideal is most likely impossible. But it is this very same ideal that has made a lot of the high-profile projects into the high-quality pieces of software we recognize them as. So no matter how much we get pushed towards more business-like models/applications/environments, we need to keep the quality of code in these projects as high as possible. And in the end - we ALL come out ahead.
Welcome to the world of the corporate slave. If you only live to serve your mortgage, consider selling you house.
The reality is that chances are you wont ever write something that influences technology on a global scale. Maybe you are doing amazing stuff, but then I have to ask why got got a first post on slashdot.
Your outlook is valid, and open sourcing probably won't work for you. But it did work for Linus and Alan Cox and Andrew Tigwell (sp?) and a lot of other people. Linus in particular is worth a hell of a lot more now that he would be if he'd elected never to release his hard work as open source.
These are the highest profile examples, and of course there are shades of grey down to the little guy who never even submitted a bug report because he regard his time as too valuable to donate.
Norman Cook's Ode to Sl
A lot of OSS contributors are in full-time jobs on commercial projects and just work on OSS in spare time.
Others are probably university students working on programming papers for degrees.
A few maybe have sponsorship from their companies to work within OSS projects.
If you're a programmer who's motivated by money then fine, what's the problem? Go work in the commercial sector, get paid and pay the mortgage.
But please don't judge everyone else by your own standards - the OSS community is blessed with a great number of altruistic people who program for fame or just because they enjoy doing it.
Deal with it.
Gentoo Linux - another day, another USE flag.
Ah, but what if, by releasing it as Open Source you could get it to influence technology on a global scale, but you couldn't by releasing it in a closed-source model? What would you do then?
(And it should be pointed out that quite a few people do make a living writing Open Source software, and if you can create something great you most certainly will be able to get someone to pay you to work on it.)
The point of the article is that OSS has greater leverage than closed-source. Not really new, but neat to see documented.
'Sensible' is a curse word.
OSS is great, but many people (myself included) sometimes want it to Just Work. Look at the junk that is shovelled out of Redmond. Half-baked, half-assed authentication and directory services, insecure-by-design operating systems, no proper privilege separation, etc. etc.
But plonk down 49 USD on a USB printer and click Print, and it prints!
If I plug my USB 10/100 NIC into my laptop under RH 9, it kernel panics and dies.
If I want to use my Radeon AIW under Solaris x86, I'll be lucky to get it to even work in text mode.
The business model is to take the product and make it useful, just like a steel mill or lumber yard. Take raw material, make it accessible to the common man (consumer), who trades you the money value of his time for the product.
I want to delete my account but Slashdot doesn't allow it.
Yes, and without your tremendous skill and abilities, the world of open source will surely shrivel and die. Because really, it's all about you.
Many people ignore the fact that no business model is required for open source to be successful. Confederations of users can drive successful open source projects. Internal developers of non-software businesses pooling their resources to produce software to make their jobs easier and more productive. Apache comes to mind.
Logic is not Divine.
This article fluffs over how open source is a viable business model but the "success stories" and business models described are skeletal. So where's the beef? Redhat - that no longer offers a Linux distribution, RedCarpet that has all but disappeared, Stallman and GNU - the guy that can't even afford a haircut - come on guys. If you're gonna talk about the "successful open source business model" you better put some more meat on the bone. This article makes open source look postively scary from a business perspective.
Life is a tale told by an idiot, full of sound and fury, signifying nothing.
William Shakespeare
...Open Source desktop software has been pretty stagnant in the past few years. All the great OS dekstop programs are playing catch up with their commercial relatives and most of them are lagging well behind. Don't get me wrong, I'm a huge open source zealot, but it seems that innovation has been mostly confined to server related software. There are of course exceptions to this, with some truly innovative software like Dasher, but most of the flagship OS projects still feel like imitations of their popular commercial counterparts.
Ximian Desktop and Sun's Linux-based Sun Java Desktop System.
I can't say these projects come to mind when I mark progress in Free Software in the 2000's. The Ximian Desktop is arguably inferior to KDE, XFCE, and other substantial window managers, including my favorite WindowMaker. I still haven't seen Sun's Java Desktop. Come to think of it, I have never seen a usable Java Desktop program at all.
Here's my list of the seminal programs of the last three decades:
an ill wind that blows no good
People have been making comments like this on slashdot for as long as I can remember, and I have to wonder how many of them really get paid to write shrink-wrapped software. Statistically, it is a very small amount, with very many more writing in-house software. The thing is, for all of that large majority of software developers, open source software won't hurt you at all. The only people who will use your code are paying you up front to write it, so it's not like you need the copyright protection to allow you to make money selling it. The code you are writing is probably very tailored to the specific needs of your employer and so "the competition" really wouldn't be helped much by having access to it. In most cases your code might as well be open source, and wouldn't make any difference whatsoever to the business model which is feeding you and paying your mortgage. If anything, having the common bits - things you would otherwise license from a third party - open source will just make your life easier.
And if you really want to, you can make money directly writing open source software as well. It isn't easy, and you have to be something of an entrepreneur. But it certainly can be done, and from what I can see, the people doing it are living thier dreams, and are being compensated quite well for it. If you don't want that sort of risk, than shrink wrapped software isn't really the place to be anyway. Trying to make it big creating the next killer app is just as hard, if not harder, than creating a career around OSS programing. If you want to change the world, it will be a risky no matter how go about it - that's just life. If you want a stable job, those are going to be in IT and they will only gain from open source software.
Did you just compare programming to sports??? Wow.
So you write it, and it works, but you dont want to maintain it, and no one else in the company can, although they need it!
Release it as open source - the payback is that you get to use the program, well maintained and all, even after the developer has moved to higher places, be he engineer or student on day-release.
Sent from my ASR33 using ASCII
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?
"This isn't a study in computer science, its a study in human behavior"
No, I'm talking about a Free Software movement that has been going on seriously for some 20 years now that is more than happy to co-exist alongside commercial software.
I'm sorry to break it to you but the dot-com bubble has burst. Several years ago.
Sorry, your point is??? I thought the dot.com bubble was more about idiotic financeers overvaluing companies - what's this got to do with free/commercial software development?
You can't spent countless man-hours on man-hour intensive kind of labour (lots of manhours=high cost) like software development and make money on some low-margin side channel like customization services or support.
IBM, Novell, Red Hat, etc. seem perfectly capable of working within that model. My company, which sells telephony platforms on Linux-based systems makes a profit from services and support while developing the software in-house. I still don't see what's the problem?
That is true. They are giving something away for free that kills another persons livehood. Of cause, someone else is making something free that kills their own livehood as well.
Ah, I think I get it now. In your vision of the world, generosity and volunteer work are not allowed then on the basis that it might stop someone else profiting from it. In your world there is no room for altruism, eh?
By the same logic, rather than having the Red Cross and Oxfam goint into the Sudan with free food parcels, we send in K-Mart or ASDA (if you're in the UK) to go sell them the food. Hmmm...
I assume he does that but the commercial sector is highly affected by free products. It also drives the offshoring trend since lower labour cost is needed to counter marketloss to people who work for free.
Then how about you get your local politician /senator to speak up in the appropriate government chambers and gets a bill passed that taxes company profits heavily if they use cheap off-shore labour? In my world, a company that makes profits in a particular country should be obligated to create a certain percentage of jobs in that country also - "you take something, you give something back."
This has nothing to do with Open Source but everything to do with your commercial enterprise pandering to the rich fat shareholders.
No one has any godgiven right to live on a specific line of career and anyone can give away their own work for free of cause. But don't kid yourself, it does hurt everyone working in the industry.
So what? Virtually all of our coal-mining industry in the UK has been annihilated - not because there's no more coal to mine but because it became too expensive to mine compared to importing it (much of it from the US).
However, if I complained about that I would be a hypocrite because I also like cheaper electricity as a result of that business decision.
Sure, it sucks if you lose your livelihood but invariably it's as a result of this bigger thing called progress.
Gentoo Linux - another day, another USE flag.
Open source is built for many reasons. One of the real strengths of open source software is that the community becomes the powerhouse of production rather than a single corporation. Profit is one motive that someone may bring to the community but it is not the only one. Helping customers, just plain fun, altruism, and hurting competitors are all common motivations for contributing to open source.
What I see as really funny is how often people complain about open source losing its soul because companies participate in open source to hurt their competitors. WTF? Open source development means you will have an organic self-governing network of developers which will include developers who have all manner of motivations.
This isn't about any one thing, people...
Funny, yesterday, I started a blog on this same topic (or one closely related). It is at http://ossne.blogspot.com
Let me tell you about my motivations for contributing open source software:
1) Fun of learning new technologies
2) Profit-- by minimizing the money my customers spend on software licenses, I can control more of their IT spending. First mover advantage comes into play here.
3) Hurting competitors: Microsoft, Siebel, Oracle etc. might make decent software, they are taking money I would rather get from my customers. So hurting them is good business.
4) Altruism. I actually think that freedom is a good thing. I think a world where open source software dominates would be better than one that doesn't.
So all these can co-exist.
LedgerSMB: Open source Accounting/ERP
"The Business and Economics of Linux and Open Source" by Martin Fink provides a much better prospective on the subject.
So here's my problem with Open Source from a business prospective. The same issue applies to a variety of industries, not just software, but open source software is a particularly good example.
I've heard claims that the best developers are as much as a thousand times more productive than the worse developers. Open Source might actually prove that contention; all of open source seems to be the contribution of a relatively small group of highly productive developers.
I also believe it because I've seen for myself the difficulty of scaling up a successful development organization. It's usually a case of diminishing returns as you add more staff.
This applies to any industries where a small group of highly skilled super-contributors can add a tremendous amount of value to a company.
So what is the long-term value of a company if the reality is that there is a relatively small group of super-contributors that actually add most of the value? What happens to the value of the company if that group leaves?
This is not an argument for close source. Unless you're an uber-profitable company that can afford to use nuisance tactics to protect your market share, some group of super-contributors will clone your success eventually even without violating your IP rights. Particularly given the relatively low capital requirements of a software start-up.
I've heard concerns that Google will suffer when many of its long-term super-contributors find themselves suddenly able to cash out and retire. How many dot-coms seem to have evaporated overnight shortly after their super-contributors were able to cash out?
So given that indentured servitude is still illegal in most developed countries. How do companies build long-term value of the form that venture capitalists and long-term shareholders are willing to invest in?
Some people do programming projects because they enjoy them, not everyone requires payment. Just like some people participate in sports for enjoyment (though in this country that is declining), not everyone requires a 10 mil salary just to play sports.
I wish more people would think this way. Do what you love, and if you get paid for it, great! But those that are motivated by money alone usually reflect it in their work (i.e. Microsoft).