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The Linux distillery How on earth do you make a dime out of Linux and open source software?
The Linux distillery How on earth do you make a dime out of Linux and open source software? | How on earth do you make a dime out of Linux and open source software? |
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| by David M Williams | |
| Monday, 05 January 2009 | |
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Page 3 of 3 When it comes to open source software, one thing has to be noted from the onset. “Open source” isn’t the same as “anti-commercial.”Featured Whitepaper
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It’s a significant difference. An open source software solution will protect end users from being stuck with a poor support company or developer. Any capable organisation or person or group of people can be hired to take on the work. A second thing which must be noted is that it’s no longer true the bulk of open source software developers are altruistic individuals giving up their free hours. Of course, the contribution of such people is still of great importance and value but it’s not uncommon to now find open source code bankrolled by the likes of IBM, Sun Microsystems, HP, Red Hat and other companies. In this regard, the programmers do genuinely have real jobs, paying real money, feeding their family, paying for their homes and cars. The reason this works is because one of the primary business models for open source is through the sale of services and not the sale of licenses. In fact, as far as business models go, it almost seems backwards: Linux, for instance, is not charged as much as the market will tolerate but is just given away at no cost. Instead of hiding information, Linux can be examined by anyone at all, and – if you have the inclination and the technical smarts – the manner in which it works can be completely understood. Despite this, there’s no denying that Red Hat – for one example – is a commercial success. Red Hat don’t profit from their Fedora Linux distribution but they can make money from derivatives – like offering technical support. This really isn’t anything new; sales people since the dawn of time have been giving things away in order to sell something else. Telcos will offer mobile phone handsets if you sign up a contract with them. Finance companies will offer holidays or televisions if you take out a loan with them. Giving away software for free is smart. It encourages consumption. Software that might otherwise not be looked at receives serious evaluation. Increasing the consumption of that product increases the size of the market for any products and services which accompany the product. That’s the way notables like WordPress and SugarCRM bring in their revenue. A case in point: because Linux is so readily available it has a share in the operating systems market. Consequently, the market size for Linux-related products and services has increased. The result of this is that a company of the likes of IBM or HP or Dell now makes money from the hardware underneath Linux, or, particularly in IBM’s case, from the provision of consulting and support and implementation services. Additionally, if an open source product is unique and is especially good it actually pre-empts any competition. Apache is a tremendous example: by being freely available and very good it is difficult for anyone to introduce a competing product. You can’t beat Apache on price and a lot of work would have to put in to beat it on features. Those providing support for Apache can expect many long years of paid work. But all this said, there’s one final point to make. Those who do not understand open source business models believe it is naive to think people aren’t motivated by money and thus believe it cannot work. Yet, the reverse is also true: it is naive to think people are only motivated by money. Open source developers – and as discussed can be well-paid – can rightly hold to a belief they are doing something positive for the world at large. And that's a true incentive. |
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