Slashdot Mirror
BBC Examines Open Source Business Model
twitter writes "The BBC's David Reid attended Euro OSCon in Amsterdam and reports what he learned about the Open Source Model. He sums up the rise of non free software in the 1980s and how people and companies like IBM can make money with free software. From the article: 'The open source movement does not object to making money. The source code may be free, but there is gold in software support, training and publishing.'"
Do you really want to use software built on a model of the software is free but you pay for support?
There would be a huge incentive to make software hard to use, buggy, etc.
There's also gold in the software customization market, like a VAR would in the propriatary market.
Being able to take a free foundation and tailor it perfectly for your business model is much better than trying to wrap your company around a canned, closed source solution.
Whats good for the customer is good for the consultant.
"there is gold in software support, training and publishing."
thats all well and good.. doesnt help a programmer pay the bills though.
Sure it does -- the company gets revenue through support, etc and pays programmers to make software so they have a product to support.
What comes first, finding a teacher or becoming a student?
Maybe this explains why the open source model is so good at writing software with user interfaces so inscrutably craptastic they practically require support.
If you want to say that Open Source software can lead to a viable business strategy, then I don't think anyone can really argue with that. There are companies that sell bottled water and others that sell magical stones, so there's got to be some way to make money stuff that is given away for free.
But is it a better strategy than actually selling proprietary software? Perhaps, but then again, it depends on how you define "better strategy". The whole point of keeping software closed is to keep control over the product. By doing so, it is possible to make money through lucrative licensing schemes. And the best part is that you only have to write the software once in order to license it multiple times.
With Open Source software, the product is generally available for free from any number of vendors, so such a situation limits the licensing fees that can be generated. Also, because of the nature of Open Source software, customers may choose any number of other service companies to do customization work. This is not the case with Closed Source, as the company that owns the product maintains strict control over who has the ability to do customization work on it.
On top of all this, how lucrative is "Service" anyway? In general, a product-driven strategy has a better margin than a service-driven strategy. A product only has to be written once, so the costs are all up front. In a service company, each project requires a certain number of employees, and as projects increase, so does the required headcount. There is always a growing cost of payroll associated with growth in a service company, so much so that as the number of engineers increase, the profit margin falls significantly because of increased costs such as HR and "non-essential" staffing overhead.
This is not to say that there isn't money to be made here. In fact, there is a lot of money to be made by keeping projects to a minimum and keeping headcount low. However, a company with any aspirations to become large and self-sustaining must rely on a strong product base and not solely on service.
But it doesn't mean that Closed Source is better. Just different. In many ways (such as from the point of view of the customer), Open Source represents a much better solution than Closed Source offerings. However, from a business standpoint, it's hard to imagine why anyone would see OSS as a better alternative to CSS.
Jesus saved me from my past. He can save you as well.
Note: RedHat was just an example and they have worked their business model pretty well, but I can't see it working for everyone.
Bruce
Bruce Perens.
The company paying the salaries of the programmers also has a much better insight into the product, and hence can support it to a much deeper level, as well as produce fixes or customisations in a shorter timeframe than a support company that doesn't have anyone inhouse who knows the codebase inside-out.
The small-time operator helping grandma do monkey tasks and being paid peanuts for it - well, there's room in the ecosystem for them, and they free up the programmers at Redhat et al from having to deal with the grandma level issues.
This only works if the company that's providing this support/documentation/etc. is
1. the same company producing the software
and
2. is producing support/documentation/etc. that is qualitatively / quantitatively better than freely available resources.
For practically all open source products available there exist publically available Forums where anybody can ask a question and get a reasonably quality or even high quality reply.
In addition, for the majority of open source products there are many resources available with regards to documentation, tutorials, etc.
So the only way you're going to make money off of support/etc. is if you can 'beat' those freely available resources - and I'm not entirely convinced that works for 'any' open source software. I feel like that is reserved to some of the larger and more 'difficult' open source projects such as Apache (plenty of free resources out there, but also plenty of companies providing dedicated support/etc. for it).
--
And of course with regards to #1... if you code a piece of open source software, and you try and sell it, and it's not selling.. and you don't have the time/resources to even try to make money off of support/etc. then you're still not going to make money off of your open source software - but others might.
Parent should not be modded "Troll". He brings up a valid point: if someone offered me a free car and said they would offer "service and support" for a fee, I would immediatly assume the car must be prone to having problems.
It's similar to a week or so ago when an article on slashdot brought up Microsoft entering the anti-virus/security market. It seems like a conflict of interest when part (or all) of your revenue comes from fixing your own company's mistakes.
With that said, I am still an avid supporter of open source and roughly 50% of the computers where I work run Redhat Enterprise Linux.
I dunno. I like to think of windows as "number two".
*cough*
While there may be 'gold' in support for some people, the suggestion that software developers should *only* make money on the support of their products is fundamentally flawed. First of all, it doesn't scale. Secondly, there is conflict of interest between providing paid support and creating software that is robust, intuitive, and easily customizable, such that it doesn't need much support in the first place.
Let's assume that you, a software developer, has created a product that is reliable, intuitive, and easily customizable. For the same reason that some uses would rather download a free version of an equivilent commercial product, why would you expect them to pay you for support, that assuming you've done your job well, they wouldn't really need? After all, for the few issues they would have, they could just look at the source.
That's a personal problem, the last job I had I made plenty through doing software support, training and publishing in the software I wrote. I knew it better than anyone else so mine tended to be the more in-depth stuff. I suspect that my next job will do so also.
It's pretty common, look how many tutorials and papers at places like Ottowa Linux Symposium, Supercomputing, and other large conferences are written by the programmers. Even in some semi-canned software (Autocad for one) I've been put in touch with the programmers for support.
It's not code monkey work if that's all you want, it takes more discipline and knowledge, but it can be very rewarding. But then if all you want to be is a code monkey you shouldn't be complaining about this in the first place - you are limiting yourself in both your position and salary.
------- Sorry about the spelling, I suffer from two problems. Dyslexia makes it difficult to spell well, lazy makes it
But is that relevant in the context of this article? If the software they were selling was open, you could buy support from whoever you wanted. This destroys the incentive to produce buggy software because the writer of the software never knows whether they will be the one paid to fix it.
Don't you hate meta-sigs?
Selling THE software.i ons+... so the buyer becomes actual OWNER of the software, not just a licensee, "person permitted to use our package".
Not "licenses to use", not "support+media+manual" packs, but THE software, that is binaries+source+specs+tools+IP+support+customizat
Sure that won't work in case of simple, tiny generic apps, but for specialised software - the government commissions a countrywide tax system, vote counting system, car registration index, health care accounting software, portals for government institutions and such. It's not likely the company would sell more than one (countrywide) license anyway, and profits from access to the sources, API, specs, ability to release the userspace tools for people for free, while making them possible to be modified to fit existing systems, it's all very important.
People paid to create software, pay for work, not pay for item. People paid to modify the software, audit the sources, add features, keep it bug-free (not pay per bug, but pay per month of bugfixing support service), people writing manuals, how-tos, guides - lots and lots of opportunities to get paid for work on common, publically accessible code base. And of course getting paid to create the code base in the first place.
Anagram("United States of America") == "Dine out, taste a Mac, fries"