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!
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