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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?
Today I watched a TV show on hackers. How the hacker culture formed, from the phone interventions to the computer makers. One thing that called my attention was Bill Gates' letter to the homebrew computer club, saying:
"As the majority of hobbyists must be aware, most of you steal your software. Hardware must be paid for, but software is something to share. Who cares if the people who worked on it get paid?"
It's so funny, isn't it? At the beginning, Bill Gates complained about people sharing "his" software. But now, people sharing FREE software (Linux, OpenOffice) is what's ruining his business.
Oh the irony....
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.
Bruce
Bruce Perens.
Damien Conway, who trains programmers through his business Thoughtstream, said: "I think the most successful of those is definitely licensing support; providing the software and then saying: 'if you want to buy a support contract, here's what it will cost you on an ongoing basis'.
There's more than just support:
There's also building and designing systems using open source. Like backup and mail systems, for example. It can sometimes be a lot cheaper (in savings on proprietory licenses) for a company to hire someone to implement an open source solution.
Then there's customization. Sendmail does X and Y but some company wants it to also do Z. They hire a programmer to write an add-on or a module. Again it can be less than buying proprietory licenses.
I've been implementing Linux systems for nearly 10 years doing just this and I've made a lot of money by helping companies save money.
These are programmers building great technology to help their peers to build software to solve customer problems.
Let's face it, the Open Source Model is more focused on meeting the needs of its user community for the sake of the community. In contrast, the closed-source for-profit model typically works on the basis of, "Is this good for company? Will this help us sell more product?". When your concerned 100% about the community your mentality behind development is far more focused on the solution and how the product can be improved, with no extra baggage like the requirement of turning a profit by giving focus on things that would simply sell a product (the changes in closed-source could be good or bad, since the focus is a sell not product improvement). I know it's been said before but it can not be overstated, for-profit companies can easily disappear and no promise that any sort of support is available in the future. The Open Source Model is so flexible that as long as people still use the software it can still be improved and developed. Essentially it's quite hard when using Open Source to lose any time investment (unless the software was that poorly used to begin with), while with closed-source model you can lose both time and money when the company that provided you the product disappears as well as the product support to never re-surface again.
In Open Source there is little room for added restrictions now and later that would require another license for using the software, while for-profit will always say the EULA is subject to change and can later lock you into paying continually more. The real gold in the Open Source Model is the flexibility it gives in use of the software. The protection from a lot of the stupid restrictions (i.e. paying based on number of concurrent users of the software) that we see in closed-source software almost practically pays you back in peace of mind and saves people from features in closed-source software that are specifically designed to lock you into their products.
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.
The problem with that analogy is that support is never free. Vendors of proprietary closed source software also charge for service and support.
"If they have both, tell them we use Linux. And if they have that, tell them the computers are down." -Dave Chapelle
One very recent open source innovation is Flock, a browser that integrates next-generation web technologies such as RSS, blogs, bookmarks and photo sharing.
That would be the same Flock I downloaded the preview of last week - the one that is a build of Firefox with a new skin, a mildly different methodology for bookmarking (meh, tags) and er... er... it has a pop up editor for your blog that er... is not quite as good the one you can get by er... going to your blog and er... creating a new post... oh and a really shonky clipboard feature...
Oh and Next-gen web technologies? Hmm, my first blog (and I was slow to get on that bandwagon) er... 2001... so four years ago, practically neolithic in IT terms. RSS, hmm, played with that in 2002 for the first time professionally. Bookmarks, they've been around at least a decade in web browsers and the prior art must stretch back to the dawn of computing. Oh and photo sharing... has been around since a tech first realised he could digitise a pair of breasts and then display them on a teletype and then send it to his mate at the next terminal*
* and I'll bet there are some suggestive punched cards out there as well...
The problem with that analogy is that support is never free.
Tell that to my Mum.