Difference between revisions of "Open Source Motivations Final Paper"
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| + | ==== OSS Business Models ==== | ||
| + | Various business models are emerging in response to the open-source "movement." Some of the basic examples of business models and the companies employing them are the following [N]: | ||
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| + | - Branded distributions (Red Hat Linux): This model builds upon the notion that similar to the bottling water market, consumers are willing to pay for a product when packaged because they trust it more. | ||
| + | - Sell hardware, give away software (IBM, Intel, HP, Dell): This model builds on the attractiveness of and demand for hardware by giving away software complementing hardware for free. | ||
| + | - Sell services and support (IBM, Red Hat, Novell): This model is perhaps the most obvious way for companies to make money since like closed-source software, open-source software does not preclude the need for technical support and customization services. | ||
| + | - Dual versions (sendmail) | ||
| + | - Dual licensing (mySQL) | ||
| + | - Value added software | ||
| + | - Sell sponsorships (Open Source Development Lap) | ||
| + | - Sell ads and t-shirts (Sourceforge) | ||
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| + | This list is not exhaustive, and over time, companies will surely come up with more innovative ways to make a profit from not only using but developing open-source software. | ||
| + | |||
| + | Examples of companies finding ways to make a profit from developing open-source software are dual-licensings and, generally, investing in OSS as a method to attain strategic advantage. For example, IBM invested $1 billion in Linux 2001, and then took more than $2 billion in Linux-related revenue in 2003 [31]. IBM's revenue comes from hardware, consulting, and selling middleware. Eighty percent of IBM's software revenue comes from middleware [32]. Middleware has highest demand when large companies want their software to run on multiple OSes; thus, IBM gains when Microsoft's monopoly OS is weakened with any competing OS. | ||
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| + | [[This quote needs some introductory comment explaining why we're reading this quote or link it with something said in the previous paragraph. "CIO magazine" probably should be deleted.]]CIO magazine: "Vendors that have embraced open source haven't suddenly gone all soft and fuzzy. They see it as an opportunity to sell software that works with open source, as well as consulting, integration and support services. This is a major shift from a few years ago, when most vendors viewed open source as inconsequential. Now they see it as a loss leader for profitable services." [33] | ||
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| + | Another strategy is dual-licensing, which works by providing a free, open-source version of the software, and also sell another version that can be proprietary. The MySQL database is free for a GPL [[explain this and maybe in a footnote explain the various licenses so a layperson can understand]] version but companies that want to base closed-source software on it can purchase a license that doesn't require the linked code to be GPL [34]. The QT GUI toolkit is free on Linux, but one of its major advantages is cross-platformness, and the Windows version is not free. For this strategy to work, a company must ensure that open-source contributions do not restrict its ability to distribute non-open-source versions of the software. The company can accomplish this by using an NPL-style license [[explain what is an NPL license]], by requiring that code be GPL but copyright assigned to the company, or by developing the software entirely in-house. | ||
Revision as of 01:28, 9 December 2004
OSS Business Models
Various business models are emerging in response to the open-source "movement." Some of the basic examples of business models and the companies employing them are the following [N]:
- Branded distributions (Red Hat Linux): This model builds upon the notion that similar to the bottling water market, consumers are willing to pay for a product when packaged because they trust it more. - Sell hardware, give away software (IBM, Intel, HP, Dell): This model builds on the attractiveness of and demand for hardware by giving away software complementing hardware for free. - Sell services and support (IBM, Red Hat, Novell): This model is perhaps the most obvious way for companies to make money since like closed-source software, open-source software does not preclude the need for technical support and customization services. - Dual versions (sendmail) - Dual licensing (mySQL) - Value added software - Sell sponsorships (Open Source Development Lap) - Sell ads and t-shirts (Sourceforge)
This list is not exhaustive, and over time, companies will surely come up with more innovative ways to make a profit from not only using but developing open-source software.
Examples of companies finding ways to make a profit from developing open-source software are dual-licensings and, generally, investing in OSS as a method to attain strategic advantage. For example, IBM invested $1 billion in Linux 2001, and then took more than $2 billion in Linux-related revenue in 2003 [31]. IBM's revenue comes from hardware, consulting, and selling middleware. Eighty percent of IBM's software revenue comes from middleware [32]. Middleware has highest demand when large companies want their software to run on multiple OSes; thus, IBM gains when Microsoft's monopoly OS is weakened with any competing OS.
This quote needs some introductory comment explaining why we're reading this quote or link it with something said in the previous paragraph. "CIO magazine" probably should be deleted.CIO magazine: "Vendors that have embraced open source haven't suddenly gone all soft and fuzzy. They see it as an opportunity to sell software that works with open source, as well as consulting, integration and support services. This is a major shift from a few years ago, when most vendors viewed open source as inconsequential. Now they see it as a loss leader for profitable services." [33]
Another strategy is dual-licensing, which works by providing a free, open-source version of the software, and also sell another version that can be proprietary. The MySQL database is free for a GPL explain this and maybe in a footnote explain the various licenses so a layperson can understand version but companies that want to base closed-source software on it can purchase a license that doesn't require the linked code to be GPL [34]. The QT GUI toolkit is free on Linux, but one of its major advantages is cross-platformness, and the Windows version is not free. For this strategy to work, a company must ensure that open-source contributions do not restrict its ability to distribute non-open-source versions of the software. The company can accomplish this by using an NPL-style license explain what is an NPL license, by requiring that code be GPL but copyright assigned to the company, or by developing the software entirely in-house.
