Business models for open source business applications?

Bernie Gleason

Common Solutions Workshop

September 24, 2003

How open source community works

• Organization develops first version of software • Code release to a community of developers to use

and modify • Developers obtain an open source license to

possess, compile, modify and redistribute the software

• Changes are sent back to managing group for consideration for inclusion in the official version

• Process continues indefinitely

Software

• Proprietary – fee for executable software and source is generally not

available. • Shareware – initial software is free but

usually a fee for continued use and upgrades.

• Freeware – software is free but source code is not shared.

• Open Source -- software is free and source code is shared

Crossing the Chasm

Jeffrey Moore, “Crossing the Chasm”

Crossing (Recommended Approaches)

• Target niche markets

• Target niche areas

• Provide the “whole product,” including supporting services

• Work from the edges on in

• Look for the “pain”

Niche Markets Advantages

• Requirements for delivering a whole product is simplified and limited

• Niche markets spread word-of-mouth references and endorsements

• Visible success of market dominance is more easily obtained

Primary Questions and Concerns?

• Businesses – How the heck do you make money?

• Customers – How can you depend on a product that doesn’t have the support of an established vendor?

• Investors -- What is the development and funding plan for long-term sustainability?

• IT Shop -- How radical is the change to the way that IT does business?

Threats

• Lack of confidence that company will survive

• Hacker image

• Freeloaders – all takers but few contributors

• Patent infringements

 

Economic Models

• Service Sellers

• Loss Leaders

• Widget Frosting

• Accessorizing

Cathederal and the Bazaar, Eric Raymond

Software Trends

• Commodization – will drive down prices

• Customization – will give customers more

opportunities

• Collaboration -- will leverage participation beyond

softwareTim O’Reilly – July 2003

Business Approaches

• Proprietary sitting on open source

• .org and .com

• Packaging

• Services – Halo effect

• Component replacement

Look at JBoss (as a possible model)

• Focused Concentration -- application server• Architecture and version control• Brand identity – JBoss• Small core staff of 15 or so• Developers provide service• Training first step in business plan• Second step to become a service company• .org and .com structure • Community participation – quality assurance

Observations

• Enlightenment – customers and IT

• Information sharing -- clearinghouse

• Commercial relationships

• Exemplary business models and references

• Component architecture and interoperability

• Institutional strategy and policy

• “Tipping Point”

Questions?