Open Source is a Viable Business model

This is probably the most debated and inquired question I have faced till date. Is business model built on top of Open Source softwares viable? Newcomers to this concept find it difficult to digest that a company can survive by opening up the source code of its product. There are also many learned people who still disagree with this fact. This discussion springs up in many forums, IRC channels and mailing list which sometimes turn into a flamewar.

Normally when we say Open Source and Free, the thing we visualize is “free of cost software”. Free always means Free as in sense of Freedom, otherwise stated. None of the FOSS licenses say that you can’t make money out of your software. There are many companies making highly popular Open Source softwares and are always in the forefront like Red Hat, Novell and Mozilla.

Where is the Money?

Now the question comes, where do you make money? One way is to sell the software(intellectual property), other way is to sell the support. A person can download the source code, strip off the Trademark stuffs like name, logos etc and use it without paying a dime. In this scenario, the second way becomes more viable. The reality is that second way is the most famous source of income of these companies(say XYZ). If you have a reputed company(say ABC), you won’t hesitate to pay extra fees for support to keep your business running on the track. You may even consider extending the support if the first support period expires. Sensible companies like ABC care more for support rather than cost of the software they buy. Even if the software is awesome and support turns out to be crap, you are in a quicksand, more you try to come out, more you go in. If the support is excellent, then you would always be assisted by the tech support even if the product is not upto the mark.

People quote that who would anyone give away their hard work for free? I ask, why reinventing the wheel? No body forces you to open the source code, its all upto you to act on their recommendations. If one opens up the source code, people may be able to read the code, find new bugs, performance glitches and even make available the patches. This is how FOSS world works. You can even sell the patches version of your software. It all about sharing and caring.

Real Examples

Let’s have a look how Mozilla makes profit. It gives away its product for free, AFAIK all its products are free. What is its source of income? Check out the search bar of firefox, you would find that the default search engine is set to Google. This is a major traffic source for Google because who cares to change to default search engine? At aleast not me! Google pays a hefty amount for just setting the default search engine, what a trick! Mozilla is all submerged with $$$ these days and its revenue is increasing day by day.

Many companies give away their products for free and charge for support. One of the best example is MySQL AB which was acquired by Sun rcently. MySQL is dual licensed. If anyone wants to use it, they can download the community server and even use it for commercial purposes. No technical support is attached with it. The other is the Enterprise Server which comes with full technical support and even extra propriotery tools if you wish to buy.

Business Prospects

This is the time of global recession. Companies are handing pink slips to many of its regular employees since they don’t have enough money to sustain. A big amount of their budget goes in buying licenses and updates to already highly priced softwares. The money saved by moving to Free (as in Beer and Freedom) softwares can be enormous. The initial cost can be even more due to training the employees, but its the long run which matters the most. Such transition can be taken during merrier times which makes a firm ready for the bad days.

If one wants to start a new business, then highly charged proprietary softwares can be a main hurdle in the beginning itself. Investing a heavy capital can be a deterrent factor for smaller players into the field. If such new firms use Free Software then the initial capital is greatly reduced. More the number of players in market means more competition and its always the customers who benefit from it.

Concluding

I think six paragraphs of explanation is enough to explain this concept, if one still can’t understand, the best place is a flamewar on IRC or mailing lists.

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15 thoughts on “Open Source is a Viable Business model

  1. Yeah, riite. that’s why all companies around the world are installing FOSS. Admit it. FOSS is low in quality because the developers don’t get any incentive for developing. Instead of using abc, can you really NAME some reputed companies that switched? With the exception of RedHat, I see no other big FOSS player. The truth is, proprietary softwae has a good quality base, and FOSS does not.. Even you FOSStards should admit it. A company will NEVER UNDER ANY CIRCUMSTANCE decrease the quality of its offering. A quality base is always required. If a company switches to Linux, it’ll have to spend more in training its staff, both in terms of time and resources, as well as spend more on maintaining it, since more breakdowns and support decisions will arise, leading to a higher Total Cost of Ownership. Even in this time of recession, people are reluctant to shift to OSS and are staying with their old licenses. Yeah, you might have convinced some NGO to convert to Linux (if it wasn’t using that already), but most serious busineses are sticking through this time choosing not to sacrifice quality.

    1. The truth is, proprietary softwae has a good quality base, and FOSS does not

      Oh really? Let cut the cheap talks and concentrate on some examples
      IIS v/s Apache
      IE v/s Firefox

      If a company switches to Linux, it’ll have to spend more in training its staff, both in terms of time and resources, as well as spend more on maintaining it

      Reverse way is also true. If a company runs on FOSS and wants to shift to proprietary software, it has to spend more on time and resources and maintaining it. It looks as if your comments are copy-pasted from some other place. (read Digg)

      since more breakdowns and support decisions will arise, leading to a higher Total Cost of Ownership.

      As if proprietary software don’t break? And in FOSS world, only those software are used in enterprises which having backing of big companies like RedHat, Novell etc. Software without support is not used in enterprises.

      You shot on your own foot.

  2. “Oh really? Let cut the cheap talks and concentrate on some examples
    IIS v/s Apache
    IE v/s Firefox”

    And what’s wrong with IIS and IE may I ask? Have you even tried IE 8?

    “Reverse way is also true. If a company runs on FOSS and wants to shift to proprietary software, it has to spend more on time and resources and maintaining it. It looks as if your comments are copy-pasted from some other place. (read Digg)”

    But what are most people running these days? (I’ll give you a big hint: it starts with a “p”)

    “As if proprietary software don’t break? And in FOSS world, only those software are used in enterprises which having backing of big companies like RedHat, Novell etc. Software without support is not used in enterprises.

    You shot on your own foot.”

    Let’s see now, proprietary software…. when it breaks(which happens rarely), I contact the friendly tech support guy who fixes it for me, albeit for a fee, but at least he fixes it. When OSS breaks, I go to bugzilla.com, and wait from as long as a minute to a day to hear, “Give me a backtrace”. Okay…. Big question from Mr. Non-technial…. *What the F is a backtrace?* I am not kidding, all of these stupid so-called “friendly” bugfix and support forums are a joke. You don’t believe me, do ya, okay look at these. I haven’t selected these from any filter. These are what I have just googled up and some of these are problems I am facing on my Ubuntu desktop. EVERYTIME I look for help on ubuntu-blowrums, I get crap like this:

    https://bugzilla.redhat.com/show_bug.cgi?id=451557

    http://ubuntuforums.org/showthread.php?t=419018

    https://lists.ubuntu.com/archives/kernel-bugs/2005-April/000844.html

    https://bugs.launchpad.net/ubuntu/+source/banshee/+bug/250247 (This one is really funny).

    There are hundreds (actually thousands) like these…. lacking any substantial depth. A large number of yappers, and very few problem solvers.

    The problem with FOSStards is that they know that their software is inferior, but they are just unwilling accept it in front of everybody. If it was this easy opening your eyes, Richard Stallman would have been a republican by now.

    1. And what’s wrong with IIS and IE may I ask? Have you even tried IE 8?

      Yes! Why not? IIS? You need to ask this question yourself.

      FYI I have worked even in Microsoft and still say that it FOSS softwares are not as bad as you are showing. Proprietary softwares are also good, but not always as you are propagating.

      But what are most people running these days?

      Huh? How does this matter in this discussion? If switching from one to other is tough, then reverse is also true. You didn’t say anything special. Plus, RedHat and Novell provide enough support for butter-smooth transition. You need to cut-out the FUD and try the transition

      I contact the friendly tech support guy who fixes it for me, albeit for a fee, but at least he fixes it. When OSS breaks, I go to bugzilla.com, and wait from as long as a minute to a day to hear, “Give me a backtrace”.

      I hope you have paid for the proprietary software you are using? Isnt it? So you get the support. You didnt pay for the OSS software and you demand free support? Isn’t it biased? If you want a friendly tech support, go and buy it. Then you won’t face all those hassles which you are getting now.

      If you want the solution, you should go to mailing lists, forums or IRC, not a bug tracker. Bug-tracker are for people who want to report bugs because they want to fix the software and not for those chaps who cry day and night that OSS doesn’t work.

      There are hundreds (actually thousands) like these…. lacking any substantial depth. A large number of yappers, and very few problem solvers.

      You saw all these because the bug tracker is public. If a proprietary software had its bug tracker open, then the situation would have been even more nasty. I can bet on this fact.
      You are comparing apples to oranges.

      The problem with FOSStards is that they know that their software is inferior, but they are just unwilling accept it in front of everybody.

      I am willing to have a debate, I have replied to all of your accusations/proofs that OSS is inferior, and you directly jumped to the conclusion. Have balls and continue the discussion.

      P.S: I have even worked in MS which is a flagbearer of proprietary software. I clearly know what I am speaking of when saying about IE and IIS. Even though having worked in MS, I still support FOSS, this should give you some indication why I didn’t get amused unlike others.

  3. Ah, so the troll is here too. Dude, do you have any friggin idea of software development models? I don’t think so. Because if you knew, you wouldn’t be blabbering off your whore mouth here.

  4. You said, “I hope you have paid for the proprietary software you are using? Isnt it? So you get the support. You didnt pay for the OSS software and you demand free support? Isn’t it biased? If you want a friendly tech support, go and buy it. Then you won’t face all those hassles which you are getting now.”

    MY REPLY: You don’t get me. I am not demanding free support. I am just accepting the lack of it and thus telling you that the OSS model fails here itself. No wonder it is hard to argue with FOSS-people, they don’t understand.

    1. I want to put 2 points
      1) Even OSS can be commerical. You can sell even OSS. Why not? We are talking at propreitary and OSS. Isnt it? You are mixing commercial tag here.
      2) It is difficult arguing with you. You just beat round the bush. I have put forward all the point and when you find that you have nothing to say, yousay that arguing it tough and we don’t understand. If I have proofs to show and points to argue, why cant I?

      Can you just enlighten me how the OSS model fail here as you just pointed out?

  5. Final word, just to make you understand: Okay, I might be getting a little too much with the comments, but here; again quoting your previous comment:

    “I hope you have paid for the proprietary software you are using? Isnt it? So you get the support. You didnt pay for the OSS software and you demand free support? Isn’t it biased? If you want a friendly tech support, go and buy it. Then you won’t face all those hassles which you are getting now.”

    Now, following this logic of yours and extending it backwards, I haven’t paid for the free software I have used, so again, *I shouldn’t expect any quality from it*. I am NOT expecting any quality. I know that people don’t work without incentive. Paid professionals keep quality good because they are paid for it and know that they might lose the contract if they screw with the quality. That keeps it top notch. OSS developers have no such pressure or motivation. If they screw up, nobody will sue them/demand their money back/cut their paycheck/fire them/reprimand them. Naturally, some top notch quality and most importantly, *innovative and delighting* features will be lacking. It is well-known that vendors who market delightful features satisfy consumers more. Eventually, these delights turn into necessities. Linux is one step behind in the delights dept. (The exception in other OSS being firefox, which has done well). So I say again: I neither demand nor expect anything innovative from most OSS and thus say that it is not fit for the market (where even non-technical consumers exist). I hope you get this point.

    Thanks

    1. Make me understand? LOL!! Looks like you have just been into proprietary softwares so much that you can’t understand anything else.

      Dude, let me tell you – I know the market. To make it very very clear. “I HAVE EVEN WORKED IN MICROSOFT”. You got the point? I have worked in Microsoft too. Don’t teach me and don’t expect me that I can be swayed so easily. I know my ground pretty well.

      The point is pretty simple. I am talking about proprietary softwares and not commerical softwares. You are mixing the two and think that all propritary softwares are commerical.

      You too can have non-commercial proprietary softwares and commercial Open Source softwares.
      If proprietary softwares for which you don’t pay should also be f**ked up. Isnt it?
      Excellent examples of OSS which have excelled even without any lust for cash are
      Firefox
      Apache
      BIND
      MySQL
      PHP
      Python
      etc etc

      You can buy support for MySQL, but even if you don’t want, you can use it for free. You can even have the source and modify it if you have the balls. So using MySQL means you are in a win-win situation.

      Lastly i know the Proprietary,Commercial and OSS ecosystem very well. You need stronger points to back your claims and not get pissed off with lame comments like “Let me explain you last time”, “You FOSStards don’t understand” and loads of other junk pissed off comments. Have balls to argue.

  6. Actally I was kidding with the above…. but Manish, why didn’t you publish one of my replies to your comments? I replied after you said “I think all he knows is “Web Developement”. That too he must have developed alone and not as a huge 100-200 developer & tester sizes team.”

    Here it is:
    Okay….
    Well, I think Mr. Man-ish missed a few points regarding naming companies that use OSS (Please don’t name your neighborhood senior-citizens’ home. It doesn’t count). Okay, let me tell you a not so surprising fact. I’m not as geeky and technically accomplished as you are; hell, I can’t even quicksort without looking up the algorithm on Google. But you know, what? It’s really simple to detect bullsh!t. Let me clear up a few points for you:

    1. I am not anti-OSS. I admire the effort put in by developers into making large scale projects for nothing in return but satisfaction and a sense of accomplishment and positive contribution.

    2. What I am against is bull-cr@p. Bull-cr@p, you see, is when hobby-software is touted by people who don’t like a few snags in proprietary software to be the next big thing. Think about it. How many companies can do what mozilla did with its browser? You said yourself that development teams consist of people l in the hundreds. To get people do collaborate effectively in the hundreds for free is like shooting blanks. There are simply not that many people who are as enthusiastic as you are. you might contribute to the next build of the Linux Kernel along with people like you, but then you’re being oblivious to the fact that there is a vast majority of developers who want something good in return for their efforts and don’t have the time or patience to develop software in their free time (as they have a social life apart from their professional one). Very specialised categories of people can do so. One of them is students, which again is not a very big number when we compare it to professional developers. Linus Torvalds made a copycat OS because he wanted students of Computer Science to be able to understand how it works, without paying for it. This is a really good thing. The bad thing is that the hobbyists’ OS created many fanboys, who till this date carry its banner. “Linux is ready for the Desktop”, they say. If so, why do I still have to search Ubuntuforums for 2 hours if I want to get my webcam working? You see? It’s not READY. To get professional grade stuff like the adobe suite, you have to use things like GIMP, Scribus and Inkscape, which are again a GOOD EFFORT BY PROGRAMMING ENTHUSIASTS, but not as feature rich or easy to use (I am currently working with inDesign and Illustrator for a project and initially wanted to use Scribus, but it had none of the simplicity that its adobe counterpart provided). So let me sum it up to you: I am not anti-OSS. I am against people who claim that it should be deployed in a consumer market, when it is only meant to be used by people with technical skills. All those notebooks and netbooks OEMs are selling these days fitted with ubuntu are not satisfying their users. Most of them are getting returned. If you haven’t seen already, see these:
    http[colon][slash][slash]www[dot]youtube[dot]com[slash]watch[question mark]v[equals]5Qj8p-PEwbI
    http[colon][slash][slash]www[dot]wkowtv[dot]com[slash]Global[slash]story[dot]asp[question mark]S[equals]
    One FOSStard product support guy actually convinced this woman to keep her Ubuntu Dell ntoebook even when she said that she wanted to return it. That’s plain unfair.

    Your argument about switching being always difficult…. of course it is, dumba$$! The dvorak keyboard is supposed to be better than qwerty, but does that mean all of us will to switch to it? Tomorrow, if you make a plane in your garage that flies, lands smoothly and saves fuel like hell, would you start evangelising everybody to use homemade aircraft? This is plain communism and it doesn’t work. Don’t get me wrong…. I really admire you for the amount of know how you have. Honestly…. It’s amazing, but that’s not enough. Claiming OSS to be a viable business model by using names like abc isn’t really an argument.
    So when I say FOSS has bad quality I mean it has bad quality as a market contender, not in any absolute sense.

    3. Your friend anomit really is a d!ck. I wasn’t rude to him initially, but stern as I was a little taken aback by the way he was picking on people lesser than him in some way. I wouldn’t have minded if he hadn’t taken any names, but he did, and that’s mean, no matter what you say. In reply, he displayed the same meanness to me. He may be an amazing techie, but his cokkiness and arrogance aren’t really making him look good. You are polite and I repect you for that.

    4. Again, for Anomit…. so a troll is basically someone who disagrees with you? If he sees my first comment, I wasn’t mean to him, I just disagreed with his manner. He tells me I’m a troll. Anyway, I don’t really care much anymore about him, that’s why I’m not replying on his blog anymore.

    You may reply if you wish to.

    Take Care
    a

    1. Sorry, I am on move and don’t have net connection regularly. Here is my short reply.

      If dvorak keyboard is better than qwerty then dvorak should be promoted. In long run, it’s always beneficial to promote good things even though it might be tough. There is nothing bullshit in it. I am going by your word that dvorak is better as I havn’t used it. So I won’t open my mouth here.
      For rest things like your take on Anomit, post a comment on his blog in this case. I don’t think he would check such an old blog post.

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