Open Source Strategies

A blog about open source software and business models, enterprise software, and the opentaps Open Source ERP + CRM Suite.

Tuesday, October 18, 2005

Open Source vs Shared or Collaborative Source

With the OSI talking to Microsoft, there's been a lot of "shared source" in the news lately. The idea is pretty interesting: Paying customers (or, in some cases, significant contributors) are allowed access to the source code. Thus, the benefits of open source can be achieved without the "tragedy of the commons," where users can take from open source without ever giving back.

Is this a better model than open source? It depends:
  • You are able to collect payments from your users, but then you're back to selling those users again. For an established vendor, that might not be a big deal. For a startup, this cost could be significant.
  • If the users can make significant contributions in return, then enforcing payment to develop source code will just add the cost of "selling" to the overhead of creating software. Note that significant contributions could happen even if only a small percentage of users contributed, if there were enough users to start with.
  • If you're competing against a true free open source alternative, a "shared source" model would be a pretty tough sell, unless you already have a lot of brand recognition or trust amongst users. Why would anyone pay to get the source code when they can get it free somewhere else?
  • Even more dangerous is the possibility that after a while, the free alternative becomes so widespread that it becomes a standard. Your for-pay shared source cooperative does well for a while, then fades.
It seems to me that shared source is a step forward for established vendors in giving more participation to their users. It may also work in narrow niche markets where open source hasn't arrived...yet. For startups or broad market technologies, though, open source is probably still the better option, especially if they might end up competing against open source alternatives.

In other words, shared source probably works better for Microsoft than the rest of us.

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Wednesday, October 12, 2005

Why Open Source Works As a Licensing Model

A couple of weeks ago, there was an article in eWeek which asked whether the profit motive will "fragment" the open source community.

This actually gets us to a common misperception about open source: that it's result of a small, dedicated a group which simply believes that all software should be free. If this were true, "making money from open source" could be seen as a betrayal of the cause. Perhaps the rest of the believers would then throw up their arms, give up, or at least go elsewhere.

The reality, however, is quite different. The "open source community" is really a hodgepodge of incumbent Independent Software Vendors (ISVs), startup ISVs, hardware vendors, free speech advocates, academics, users, service providers, and, now, venture capitalists and lawyers. They have very little in common except for practicing a common software licensing model.

In light of this, the question should not be whether profit motive would fragment the "open source community," but rather why an "open source community" seems to exist at all? Why does such a disparate group get drawn to practicing this software licensing model at all? The reason is simple:

Open Source Works For a Lot of People For a Lot of Reasons

As a brief summary,
  • It works for developers and academics as a way to collaborate on research and development.
  • It works for incumbent ISVs and hardware vendors as a complementary product strategy.
  • It offers users and service providers a lower cost of ownership (usually) and greater flexibility (almost always.)
  • It offers a startup ISV a way to develop products faster and cheaper using pre-existing components and distribute those products more efficiently.
  • It offers free speech advocates a vehicle for creating a pool of collectively owned intellectual property.
and so forth. A full analysis of why different groups adopt open source would probably fill a small library (there are already quite a few good books about it.)

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