Open-Source Business Models

Phil Windley blogs a talk by HP’s Stormy Peters on open-source:

She suggests the following business models around open source:

– Commercial software – Oracle running on Linux is the example she uses.
– Support and services – This is the professional services model.
– Aggregation and enhancing – This is Redhat and other Linux vendors.
– Commercialize with a dual license – “Free for non-commercial use.”
– Enable hardware
– End of life – What to do with a dog product that isn’t selling?
– Building an ecosystem – Eclipse is the example here.

Why would you want to open source a product?

– Commoditizes a market you don’t control (disruption)
– Make a technology pervasive
– Promote a proprietary product you have
– Lower the overall cost of a project (shared effort)
– Promote hardware
– Enable custom solution for customers (let them roll their own)
– Exit a business
– Leverage resources from others

When isn’t it appropriate? This is bound to be controversial?

– The product is a control point (Windows)
– The product is obsolete (Windows—NO she didn’t really say that.)
– The cost doesn’t justify the benefit. This is a nod to the fact that open source development isn’t free.
– Misdirection and defocusing of resources
– Intellectual property risk cannot be justified. Don’t open source something you can prove you have the right to. This is important.
– Don’t open source something to compete against the OS community.
– Just because its cool (I disagree with this—this is a great reason to open source something—ofttimes you don’t see the benefit until people play with it and geeks are the ones to do that).

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Rajesh Jain

An Entrepreneur based in Mumbai, India.