The gist is: open source for deployment, commercial for hosted. Matches with Marten comment about people that have more time than money (they download and deploy in house), and those that have more money than time (they buy the hosted version). And it fits with the SaaS shift, plus totally solves the separation of communities: they self-select themselves, which is the best because you do not have to do it. No tension. No tight-rope walking.

Happy to discuss it live at OSBC.

Cheers,

fabrizio

So said, while medium-to-large companies are already starting to enjoy open source self-sufficiency, I can hardly see smaller ones going that way.

As usual, customers are always willing to pay for value, but vendors need to deeply understand their core value propositions.

I think this may change in the future as we see more open source being created and supported by end-user companies. It really hasn’t happened yet, at least not at the enterprise level, but I’ve heard rumors.

Chris

I like the issues you’re raising Andrew, especially about segmentation.
Talking about OpenOffice.org, just to make an example, I see a (potential) clear distinction between consumers and enterprises.

While individuals basically need a free (as in beer) office suite, medium-to-large enterprises have different needs, included support for packaged-services to migrate macros, etc. Often isn’t just matter of time, at least if you have to manage risks (and in similar migrations you have to, indeed!).

So said, I agree that every situation (package, and the product around it) is different, and how wisely says Chris you need to be flexible, time matters!

What is becoming clear is that most open source-based companies will have revenue from a variety of sources, each one of which will have it’s own business model. And the mix of revenue streams will be different for each company and it will change over time. Adaptability is the key thing, really.

Chris.

Wonderful post, Roberto. Yes, I believe Fabrizio Capobianco is the farthest along of anyone I am aware of in the dynamics of commercial open source. Fabrizio is clearly a pioneer of the Open Core Licensing business model as I articulated in August 2008 on my blog. Perhaps he invented it? (I simply coined the term and articulated a basic definition.) I am admittedly fuzzy on the history of some business models and vendors in 2000-2005. At the time of my first open core blog, I did not include AGPL in hopes of being more inclusive, but I added it in my second blog on the topic as I realized the point it addresses is unavoidable. Fabrizio had already been a long proponent of AGPL.

And Funambol’s example brings a good reason as to why copyright ownership is important in Open-Core: Funambol was able to create a unique license to accomodate his correct concerns around GPL v2 (not sure if Funambol used GPL v2 at one time? Anyway, he created the Honest Public License to include a sort of Affero clause) and then switch to AGPL when it came out - license switching is not something you can do without copyright ownerships or some sort of major control. I plan a blog to expand upon the further benefits of copyright ownership.

I believe Fabrizio’s segmentation of features by user type is one great way - and works beautifully in Funambol’s space, but I am not sure it as clear for every other segment as it is for Funambol’s division of community/enterprise and mobile carriers. Consider CRM, RDBMS, ETL, EAI, BI, etc. I would love your and Fabrizio’s thoughts on that - what do you see as the “separate kinds of users” in the corporate world? Seems fuzzy to me. Although it is true, to paraphrase Marten Mickos’ characterization, that some users will always have more time than money (”community) and others will have more money than time (”enterprise”), especially now during this poor economy I think there are more enterprises with limited budgets that would use community editions “for now” and then upgrade later to commercial versions with more features.

I am also curious of your and Fabrizio’s thoughts on the use of visible code in the commercial/carrier license? Is it done? beneficial? Not a requirement?

Ultimately, I agree with a key point of your post:
“Open source core is not bad or good per se, as far as the name confusion is resolved in favor of customers. ”
Yes, the key to any successful model is delivering value to users (both in open source and commercial editions.)