Business Models and Open Source
April 6, 2008
I’ve always thought the ideal work would include a healthy dose of open source. To this end, I try to make my time wasting activities (slashdot, proggit) worth while by noting the various business models and their success. This is an informal brain dump with extra facts pulled in from Wikipedia – as such you should confirm any information before long term storage in your brain.
For idealistic reasons, the preferred model would be like RedHats. You compose, improve and build open source projects and products, providing them for free and selling the service (consulting, tailored development, support).
The main problem here is that, as a theoretical small business owner, I want to sell products and not services. In addition to the the discreet nature of products (as opposed to continuing duties of services), the constructive feel of a product oriented business seems nice in contrast to the droning of a service oriented business. Here is a question: is the concept of open source at odds with product driven revenue?
The Xen method seemed to be making an open source component and selling closed source support tools. This appeared aimed at preventing RedHat et al. from ‘stealing’ the GPL code and owing nothing to XenSource. I say “seemed” because the true aim could have been to get bought out – as XenSource was on 22Oct2007 by Citrix for $500M.
A well known (and often successful) method of dual licensing was employed by TrollTech. TrollTech owned the source to QT which they monotized by selling proprietary licenses in addition to offering the source code under GPL. Like Citrix, on 28Jan2008 Nokia offered (and TrollTech accepted) a $163M buyout.
Like TrollTech, MySQL offered both support and dual licensing. I notice this is referred to as a ‘second generation’ open source company on Wikipedia – not sure how common this term is, but I take issue with the idea that the distinguishing factor between second and first generation open source companies is their ability/willingness to sell closed source licenses. MySQL was purchased by SUN on 16Feb08 for $1B… are we seeing a trend yet?