Commercial Open Source: Commercial and Open Source are still not antonyms

Over the last few days I have just been reading my news alerts on commercial open source and I found out that someone still thinks it sounds like a contradiction in terms, others question about how open is commercial open source, while there is who argues that OSS vendors have to sell products, not subscriptions.

While it is still unclear if and at which extent a software developer can change the world, the “blue ocean” of Open Source innovations got larger and larger in 2007, proving open source to be a formidable tool to put in place viable business strategies. Customer innovation has still a very important role, as it still matters cooperation and collaboration among open source firms, maybe also in the form of vendors’ consolidation.

Is Bill Hilf right saying that with proprietary software you buy a guarantee, and you can eventually sue someone if something goes wrong? CIOs working within small to medium enterprises are probably more interested in software that works than in buying this “ecosystem of accountability”. Need to know more about what open source can do for you? Read the Open Source Guide for SMEs.

What is an open source firm is still an open issue apparently: Jeff Gould is among them who do not consider the Split OSS/commercial approach open enough. I am looking forward to join Andrew Aitken at the Open Source Think Tank 2008 on February 7-9 in Napa Valley, and share with him and others some opinions also on the “false positive” phenomenon.

Savio Rodrigues got more critical on some open source business approaches, writing:

The problem is you’ve given the user something of great value for free (i.e. the product), and now you’re asking him to pay for something of much less value (i.e. the support). [..]

OSS businesses of the future will have to offer products to paying customers that are different than what is available for free. Emphasis on products.

VCs do like millions of downloads, but we all know that one customer every thousand users might be a viable strategy for MySql and very few others. Despite it is questionable if support has or not less value than the product itself, we know it is true that selling the right to use assets is more profitable than selling ownership of assets. In this respect Savio, emphasizing the importance of the product, is definitely raising an interesting issue. Soon more on these subjects.

I wish you all a great year, and invite you to take a moment to watch this Blue Man Group video: our planet is the only one we can live on, take good care of it, either if you love or hate open source.
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Technorati Tags: commercial open source, oss, open business, Open Source Think Tank, AndrewAitken, JeffGould, SavioRodrigues, MySql, BMG, Blue Man Group, BillHilf

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5 thoughts on “Commercial Open Source: Commercial and Open Source are still not antonyms

  1. Well, there’s certainly a lot of content in this posting, but I want to just address one portion, that of Savio’s comments you highlite. I think CIOs would disagree with the statement that support is of much less value than a product. Without some form of support most CIOs will not be willing to deploy a piece of software. And CIOs are willing to pay for quite a bit of piece of mind which is what support buys. We heard that loud and clear from CIOs interviewed at last year’s Think Tank. It will be interesting to see if they feel the same way this year. But, just because CIOs are willing to pay for support, doesn’t mean they are willing to pay for it only from the developer of the open source solution itself. One of the benefits of open source is choice. They may be willing to go elsewhere if they feel they can get as high a level of support. This brings up a couple of other points, a business with a high services revenue component traditionally doesn’t scale to meet the required returns for most investors, and in order to be successful today, growing a large and competent channel is critical. How much of the services is a vendor going to keep and how much are they going to give to their channel to motivate them? So,again, I disagree with Savio’s point, but it is a very complex issue.

  2. Hi Andrew, happy to see you joining the conversation.

    I think CIOs would disagree with the statement that support is of much less value than a product. Without some form of support most CIOs will not be willing to deploy a piece of software. And CIOs are willing to pay for quite a bit of piece of mind which is what support buys. We heard that loud and clear from CIOs interviewed at last year’s Think Tank.

    I suspected it and I was just waiting for customers feedback like the ones you reported. What about the size of those enterprises?

    But, just because CIOs are willing to pay for support, doesn’t mean they are willing to pay for it only from the developer of the open source solution itself.

    Appropriating returns from the commons is not an easy task, but it is also true that well established open source firms likeRed Red Hat don’t seem too worried by copy cat versions. Yet another complex and interesting issue here, am I right?

    [..] a business with a high services revenue component traditionally doesn’t scale to meet the required returns for most investors, and in order to be successful today, growing a large and competent channel is critical. How much of the services is a vendor going to keep and how much are they going to give to their channel to motivate them?

    Well, I definitely agree with you Andrew, the channel is critical and few open source firms found their way, here Open Source Franchising I am sure can play an important role. Do you agree?

  3. Well lets address the Redhat comment. Redhat certainly does a good job and as long as the overall adoption of Linux continues positively worldwide, they are safe. But, we’re hearing from some very large customers that as their dependency upon Redhat grows, and consequently their cost, they are beginning to figure out exactly where their break even is between adding more REL subscriptions and hiring a sys admin, or training up one of their own. Additionally, as more lower and free versions of Linux gain in functionality, usability and supportability, we’re hearing that enterprises are concentrating new REL subscriptions around high-volume and mission critical work loads while using the other Linux’s for other functions. Virtualization is a huge trend, and we’re seeing tremendous interest, but it’s still a bit early for many large scale deployments.

  4. Retain customers is not trivial, as soon as they get technologically autonomous, but as you stated there is a trade-off.

    Besides economical considerations, I believe that another factor is the need for customization. When a customer need its own flavor of a commercial Linux distribution, whatever is the reason, it is time to consider to go on its foot. Flexibility matters. Right?

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