Open Source Business: When Mohamed lives on Mountain
451 CAOS Group report “Open Source is not a business model” has been criticized in the blogosphere, saying that it overlooks vendors for which pure open source is providing a tidy revenue stream.
Dave Neary sees an (open source) future for small businesses, with few (happy) customers, explaining that since free software doesn’t get developed like proprietary software, the free software industry shouldn’t look like the proprietary one.
I totally agree with Dave’s last point, free software is a different thing, as formerly pointed out in
“Capability Coordination in Modular Organization: Voluntary FS/OSS Production and the Case of Debian GNU/Linux“.
Discovering knowledge differences or similarities and making use of them in order to pursue one’s ends is however not costless. Knowledge search is expensive. Because knowledge is dispersed, the organizational problem does not usually have a cheap and easy solution. Ideally – think of the market – the “first-best solution†to the problem would result in the coincidence (or collocation) of productive knowledge and rights to act on that knowledge in the same hands. As in the case of Mohamed and the mountain whereby Mohamed could go to the mountain or the mountain to Mohamed, there are two ways we could achieve a solution to this problem.
Now, what happens is that with free software actually Mohamed lives on mountain. Think of Tobias Oetiker, RRDTool and MRTG author, and think of how many brilliant hackers make a living in the open source long tail. Life style companies, great programmers, but is it really their destiny to stay small?
The open source long tail is too long to be tucked inside trousers or a skirt, that’s why SpikeSource, SourceLabs or OpenLogic try to (partially) solve it.Those companies are appropriating returns from the commons in original ways, taking advantage of the (frequent) absence of corporate actors within many open source projects in the long tail.
The business side of open source is still a largely unexplored planet, and there is no evidence of the fact that small businesses have to stay so. Not yet, at least.
Roberto Galoppini and 
Matt Aslett 10:40 am on November 4, 2008 Permalink
I think Dave raised an important point when he wrote that the free software industry shouldn’t look like the proprietary one, and I do think that most of the vendors we covered in our report are following the strategies they are because they are still thinking like proprietary companies. While there is the potential for greater margins for small vendors from open source, as I in response, I am still not convinced that there is anything special about the sort of business Dave describes that makes it an inherently open source business model.
Roberto Galoppini 10:33 am on November 5, 2008 Permalink
Hi Matt,
thank you to join the conversation.
I just read the report, and I believe you covered the topic exhaustively.
What I am saying here is that there is an opportunity out there. Mohamed lives on mountain, with his or her small business, but this doesn’t mean things have to stay like this. The lack of enterprise taking (commercial) care of those buckets of technology left space for business. Look at Groundwork partnering with Tobias, or think about the 500 open source projects supported by OpenLogic. Solutions providers are not taking part in this picture yet, but they probably will, soon. The film industry helped sound technicians and others to be their own bosses, in an efficient and effective manner.
Who said it couldn’t be done with hackers as well?