Somebody gets it: the Open Source Business model
December 2nd, 2008 | Published in oss
Businessweek just published an article called Open Source: The Model is Broken, which contains some statements about open source which not everybody understands. From the article:
So open-source companies that rely on support and service alone are not long for this world…. Open source has simply become a means to an end—it lowers economies of scale for software and in doing so, is prompting more innovative business models… We’ve learned that collaboration results in really good software that everybody can use…. But the value is in the collaboration, not in open source itself.
I agree that selling open source software and services in a similar way that closed source software is sold is not a sound business idea.
Open source is most succesful if:
- it’s collaboratively developed by organisations that need it, but it’s not their unique selling proposition.
- it’s collaboratively developed by organisations that need it, but don’t sell it.
Example for the first point: Linux is being developed by a large number of organisations, most of them don’t sell Linux. Selling linux is not their core business, but whatever they sell, it gets better by including or using linux. Improving the operating system doesn’t translate in helping the competition. Improving the operating system to them means sharing the costs of maintaining and testing the improvement. This in turn means that they have more resources to focus on really innovative stuff on top of the shared commodity software.
Example for the second point: many organisations do not sell software. They may be providing a service, and the software itself is not improving their competitive edge. Governmental organisations for example. They need software to do whatever they need to do, but do not really care if other similar organisations use the same software. In this case it makes sense for them to collaborate on building the required software.
Open source is like web 2.0
Open source is a lot like web 2.0. It’s about collaboration enabled by the internet. There are two books that summarize the whole web 2.0 phenomena:
- The wisdom of the crowds – the internet enables you to collect knowledge from anywhere on this planet.
- The long tail – the internet enables you to aggregate all the little pieces.
Web 2.0 focuses on the effects these two things have on information and knowledge. Software is a unique product in the sense that it can benefit from these same effects:
- Everybody on this planet can provide their knowledge to a software product,
- and all the little coding improvements made, all of the world, make for one big useful software product.
But for the internet to have the same effect on software developement as it had on knowledge and information, the software needs to be open source. Only then can the internet enable collaboration on software products.
