Notice

Just a reminder, these posts are not legal advice. This site is the personal blog of Mark Radcliffe and the opinions expressed are those of Mark Radcliffe and not those of his clients, DLA Piper or the clients of DLA Piper.

About Me:

Mark Radcliffe

I have been practicing law in Silicon Valley for over thirty years assisting startups and global companies develop and market innovative products and services. I have participated in multiple business cyles in Silicon Valley from hardware to software to internet to cloud. My projects have included developing the dual licensing business model for open source startup, developing the original domain dispute resolution policy for NSI and assisting Sun in open sourcing the Solaris operating system. Recently, I served on the US Japan Innovation and Entrepreneurship Council (one of ten members) to develop a plan to encourage the innovation in Japan and the United States. I have been working with the same attorneys since 1986 although we have merged with other law firms several times. I am now a partner at DLA Piper, a (relatively) new global law firm formed in 2005 from the merger of three law firms. The firm now has 4200 lawyers in 31 countries and 77 cities. My experience in corporate securities (particularly venture capital) and intellectual property enables me to assist companies structure the financing and intellectual property strategy for developing ane exploiting a new product or service. I and my team work with fifty startups at one time as well as Global Fortune 100. I have been fortunate enough to work with companies in software, cloud computing, semiconductor, health care IT and Web 2.0.

After a busy year end, I have time to reflect about the last year and developments in open source.  I was particularly interested in the cascade of articles and comments about how the “Open Source” business model is broken started by  Stuart Cohen’s article in Business Week on December 1.  http://www.businessweek.com/technology/content/nov2008/tc20081130_276152.htm. I believe that Stuart is just wrong.  I think that Charles Babcock got it right in his blog responding to Stuart.  http://www.informationweek.com/blog/main/archives/2008/12/open_source_bus.html?cid=RSSfeed_IWK_ALL.  

From my point of view, Charles’ most important point is that  “open source” is not a business model, it is a means of developing and distributing software. And 451 Group makes a similar point in their report on open source business models (which actually pre dated Stuart’s article). http://www.the451group.com/caos/caos_detail.php?icid=694. I represent over fifteen open source startups (as well as large companies developing open source software) and they have  a variety of ways of making money on open source software, ranging from “dual” distribution to support for proprietary additions.  Marten Mickos in his keynote at OSBC in 2007 noted thirteen different ”open source” business models.  http://akamai.infoworld.com/weblog/openresource/archives/OSBC2007%20-%20Marten%20Mickos%20Keynote.pdf.  Second, “open source” cannot be a single business model because it spans a wide variety of different products: the business models for application software are quite different from infrastructure software.  Third, most of the companies that I represent use a mix of business models, such as dual distribution and SAAS.  In fact, even the “dual” distribution model has two forms: the newer model in which the company distributes a commercial version which has additional functions compared to the open source version and the older model in which the open source and the commercial version are the same.  While the characteristics of “open source” development have strong similarities across different types of products, the business models are likely to quite different and will continue to evolve.

The open source community also owes Charles Babcock (and his colleagues at InformationWeek) a vote of thanks for the Analytics report “Open Source Enterprise: Its Time Has Come, And the Price is Right.”  It provides an excellent summary of the state of open source software in the enterprise, with plenty of specific examples.  However, I think that the most interesting part of the report is “What Happens After the Acquisition”.  This section describes the challenges faced in the integration of open source companies into larger companies.  The nature of open source companies and their communities requires a different approach from traditional acquisitions.  In particular, the acquiring companies need to consider carefully the effect on the open source companies employees and their community when modifying the business model. As more open source companies are acquired by traditional software companies, these issues will take on increasing importance. Both sides need to understand that such an integration will require flexibility.

I think that 2009 will be a very interesting year for open source!

3 Comments

  1. [...] Open Source: Not a Business Model and Not Broken Mark Radcliffe [...]

    Pingback by 451 CAOS Theory » 451 CAOS Links 2009.01.02 — January 2, 2009 @ 5:24 am

  2. [...] Open Source: Not a Business Model and Not Broken In particular, the acquiring companies need to consider carefully the effect on the open source companies employees and their community when modifying the business model. As more open source companies are acquired by traditional software companies, these issues will take on increasing importance. Both sides need to understand that such an integration will require flexibility. [...]

    Pingback by Boycott Novell » Links 03/01/2009: Btrfs Goes into Linux; Super Ubuntu Debuts — January 3, 2009 @ 8:18 pm

  3. [...] In the past, this model has been called “dual licensing” and has been the basis for the successful open source businesses built by Zimbra and SugarCRM.  It is not the only business model: as I noted in my post about the confusion on open source and business models, Marten Mickos found over thirteen different business models for open source companies. http://lawandlifesiliconvalley.com/blog/?p=130 [...]

    Pingback by Law & Life: Silicon Valley » Open Source Business Models: Thoughts on 2009 — January 12, 2009 @ 11:22 pm

RSS feed for comments on this post. TrackBack URL

Sorry, the comment form is closed at this time.