this is a topic talked about at several places including here (Jonathan) and here (Red Monk) all of which are perfect arguments ?
A point I felt that was not clearly articulated in my earlier readings was that I look at open source as just a different Market Capture Strategy.
You have a choice today. Do you want to spend millions in Marketing and Sales of your product or do you want to spend those millions into the product and follow the route of Bottom up marketing. ( and refer : death of cold calling)
Refer to what an a CEO of Major insurance carrier says regarding barriers to entry. I shall explain in a different blog entry of how the barriers can be eliminated in Web2.0 world.
Keeping the discussion to making money in open source. Once you leverage open source to overcome the barriers to entry you have several ways to make money including :
Business Models
- Donations : Apache , Debian
- Advertising : Sourceforge , O’Reilly Media, Sys Con
- Membership : Eclipse , Java.net
- Conversion :
--- Maintainence / Support / Subscription : JBoss , Solaris
--- Brand ownership - IBM (Eclipse)
--- MEdia Kit - Suse Linux
---- Add Ons (Dual License) - Niku Clarity , mysql
- Software as a service - Google with GMaps and a bunch of other services . Frankly if you are in SaaS world there is an even better case for you to go open source as the customer is interested in the service and not the software.
- Professional Services - interface21 (Spring framework)
Also note the Demand supply equation in the open source world works like this
Supply side:
- Technology Vendors : Achieve critical mass and gain market share aggressively
- Technology Vendors : Share cost of development and testing
- Individuals : Solve a particular problem and make the solution available to the world
- Individuals : Get involved in an areas of interest to learn , contribute and help career.
Demand Side :
- Lower Total Cost of ownership
- Transparency and freedom to enhance , modify the products to suit specific needs
- Better quality as a result of large user community base and hence more testing and improvements
- Demand side decision influencers generally involved in open source world
Understanding the type of payer you are in the open source world and understanding the kind of leverage you are looking for from this type of model is key for Enterprises.
Here are some personality traits of open source players
Three kinds of players
»Innovators – Model : Build Great Products - Achieve Critical Mass very aggressively ---Make $$$ by any/all of the Business Models
- Hibernate , Spring , Linux : started by a developer to scratch an itch and then they got a life of their own
- Eclipse , Netbeans , Tomcat : started by Big product companies as a strategy to achieve Critical Mass ASAP and leverage economies of scale
»Contributors - Ride on the success of a good open source product. Strategy is to start contributing to successful products. Come on the main contributor list and then you sell your expertise in that area by virtue of having IP on the product. Example JBoss/Tomcat story , numerous one person outfits.
»Consultants - Neutral parties who look at open source as another IT Solution for the their client. Build the expertise by working on the technologies and tools
$23.12 (04/02/07)
