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"FOSS Business Model Broken" — Former OSDL CEO
liraz writes "Stuart Cohen, former CEO of Open Source Development Labs, has written an op-ed on BusinessWeek claiming that the traditional open source business model, which relies solely on support and service revenue streams, is failing to meet the expectations of investors. He discusses the 'great paradox' of the FOSS business model, saying: 'For anyone who hasn't been paying attention to the software industry lately, I have some bad news. The open source business model is broken. Open source code is generally great code, not requiring much support. So open source companies that rely on support and service alone are not long for this world.' Cohen goes on to outline the beginnings of a business model that can work for FOSS going forward."
As far as FOSS being something that has serious business problems in regarding to sustaining the developers who work on it, this is indeed a serious problem. It generally can be very hard to raise revenue with FOSS, projects can ask for donations and sell packaged versions, but you often end up with just a trickle with these sorts of things. Programmers should obviously be able to work full time developing software. With FOSS directly competing with commercial software an eroding those markets, could it be that programmers will end up waiting tables during the day just to support the time they spend writing code? fOSS does indeed wipe out commercial software markets and it can actuall
I am supportive of the freedom aspect of FOSS. For far too long commercial software has shut down innovation and stifled the development of improvements through cooperative development with its closed model. FOSS is on the other extreme, its an open model but it leaves programmers in a situation where they cant afford to live. Perhaps a solution for some projects lies in the middle, with a commercial source tiered licence system, where the source code is provided with all licences, the developers are receptive to improvements from customers, and the cost of software is set according to the ability of the customer to pay, a hobbyist who is using the software for fun would pay far less than someone using it in a high revenue business. This assures that the software does have a high degree of openness and accessibility to all, but also assures revenue can be raised to develop the software.
One thing i think we will see FOSS project's movng away from is giving away the software. if you GPL something, it doesn't mean you have to give it away, it just means who ever you sell it to gets the source code along with the program.I could for example write some software, sell it to others and then give them access to the source where only paid customers could make commits and see the source. source is only required if you distribute something....
If you mod me down, I will become more powerful than you can imagine....
Odd, I can think how people are making your equation work with varying choices for step 4.
4) Make it do a complex task that requires skilled labor you provide cheaper than training staff to handle it internally
This works for several companies, a couple of which we pay where I work. The task of consolidating threat profiles, keeping them current, providing solid feedback and rapid response as well as managing secure channels with a variety of companies is something our company could hire a couple full time employees to manage. Rather than be out the cost of staff, we hire an outside vendor who does it very well at a fraction of the expense.
4) Build a small closed source application that utilizes the open source software. We use software built to work with a MySQL database system. The tasks done by the configuration, maintenance and integration are within the reach of a moderately talented programmer, but they are able to do it for hundreds of clients who all benefit from solid testing, research and experience of a few experienced and skilled developers who also contribute back to the open source system. This improves MySQL for anyone who cares to use it, but at the same time benefits the company who own the closed source application utilizing it. (For this example the model has to change step 1 to "Promote and contribute to a really cool product.") This is similar to the business model for Crossover Office where you pay for the expertise that has gone into the development of a product that does nothing you couldn't manage by hiring talented developers but for a price that makes sense for small business.
4) Make your staff the source for training required to manage a complex system. Zabbix is an example of this type of product. You can download and work on Zabbix for free, but it is complex enough that for significant implementation, you really need to get solid training, and that will cost you.
Our core transactional system in fact, would be a great example except that it is a closed source system. The software is good, but there is plenty of similar software that we could use. What we really pay for is the ongoing development, support and integration they offer. They protect themselves from competition by keeping it closed, allowing them to charge a higher fee, but if they were to manage a transition to open source they could potentially drop their development costs significantly, increase market penetration and undercut their competitors while still maintaining the same profits. They would have to face the risk that another company could do a better job pricing or servicing their current customers with the same software, however, and I honestly don't believe they have enough talent in programming, support and management to make it worth the gamble.
B) Eliminate all the stupid users. This is frowned upon by society.
I had a presentation in one of my classes today where an exec from the local IBM outpost was talking about that very thing, claiming the switch Big Blue made in the 90's to selling a solution is the only reason it's still around today.
Creepy stuff.
Free Software is not a great money printer for business in the traditional sense. Instead of earning money they save loads of money and thats something many PHBs have problems wrapping their head around. The software cashcow where you could write an application and then sit back and reap the rewards are dead.
I think the focus in mainstream media is very wrong since they only look at the earning bit and not at how much money can be saved. In their mind Linux isnt successfull if it dont bring in lots of money even if it saves boatloads of money for the people using it.
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Do know that it is generally estimated that less than 20% of programmers work for software companies?
Lots of companies have in house programmers. I have even seen cities with "hiring freezes" post ads for programmers and sys admins.
Every estimate I have seen for the failure rate for computer projects is 80% or higher.
More or less everything with computers has been a disaster.
Bespoke solutions, off the shelf solutions, a combination of the two, you name it, your work will be harder and the money spent will never be recovered. (at least that is the way to bet.)
Of course we see the relatively rare successes and assume that the massive carnage was just the unenlightened fools that didn't know what they were doing.
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