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Open Source Case for Business:Advocacy

The open-source model has a lot to offer the business world. It's a way to build open standards as actual software, rather than paper documents. It's a way that many companies and individuals can collaborate on a product that none of them could achieve alone. It's the rapid bug-fixes and the changes that the user asks for, done to the user's own schedule.

The open-source model also means increased security; because code is in the public view it will be exposed to extreme scrutiny, with problems being found and fixed instead of being kept secret until the wrong person discovers them. And last but not least, it's a way that the little guys can get together and have a good chance at beating a monopoly.

Of all these benefits, the most fundamental is increased reliability. And if that's too abstract for you, you should think about how closed sources made the Year 2000 problem worse and why they might have very well killed your business.

Four Ways To Win

Now for a higher-level, investor's point of view. There are at least four known business models for making money with open source:

  1. Support Sellers (otherwise known as "Give Away the Recipe, Open A Restaurant"): In this model, you (effectively) give away the software product, but sell distribution, branding, and after-sale service. This is what (for example) Red Hat does.
  2. Loss Leader: In this model, you give away open-source as a loss-leader and market positioner for closed software. This is what Netscape is doing.
  3. Widget Frosting: In this model, a hardware company (for which software is a necessary adjunct but strictly a cost rather than profit center) goes open-source in order to get better drivers and interface tools cheaper. Silicon Graphics, for example, supports and ships Samba.
  4. Accessorizing: Selling accessories - books, compatible hardware, complete systems with open-source software pre-installed. It's easy to trivialize this (open-source T-shirts, coffee mugs, Linux penguin dolls) but at least the books and hardware underly some clear successes: O'Reilly Associates, and SSC are among them.


(Frank Hecker of Netscape proposes more models and discusses them in detail in his paper Setting Up Shop.)