Sunday, November 06, 2005
Making money with open source
As I mentioned in my first post, I have just recently begun a foray into Linux, and the natural progression to open source. I think Linux is great, and has come a LONG way since I first looked into it back in 2000. I'm also very impressed with the vast number of quality open source projects out there. But, one question sticks out in my mind: How do these folks make any money???
Now, I understand there are a lot of projects out there done out of pure love of computing, programming, or whatever, and hence are not concerned with making money. But, those aren't the projects I'm talking about. The projects I'm talking about are the likes of Ubuntu, Ximian, Eclipse, and Asterisk. These are commercial products, adverstised as such. How are they supported though?
I understand a lot of these projects fund themselves by selling support. I know Ubuntu is in this category. So is Asterisk, although they also get money off of selling hardware. Ximian is now under the Novell umbrella. I'll admit, with the exception of one trial run, I've never actually used Eclipse. Now, I work for a company that produces and sells software. We also sell support. However, there is no way the revenue we get from support could ever fund the company. It does a good job of funding support, but not sales and R&D. So, surely there is something else going on, right?
I have a few thoughts on this. First, perhaps these projects are running off nothing but venture capital (VC) money. If that's the case, that seems to support the theory that we are in the midst of another growing tech bubble, and when the VC guys realize they will never make money, will these projects wilt up and die once the money runs out? If that is not the case, are these developers working for sub-par wages? I have a hard time believing that, but if they do, doesn't that make them the hippies of our generation, with cries of "Free love, baby! being replaced with cries of "Free software, baby!"?
There is one other OSS model I forgot to mention, and that is the model employed by SugarCRM. They have a plethora of options, from free, to a couple of purchase options, to an appliance server, to hosted. Each of the paid options has more features than the free option. It seems like a good way to get users interested with a free option, and when they are ready, upgrade. Although, I'm curious if they get enough paid orders to make up for what they give away for free?
Don't get me wrong, I love open source software, and I think what these companies do is great. I'll just be interested to see what happens over the next 2-5 years, and watch whether or not these projects make any money, or just get by on the pure love of programming.
Now, I understand there are a lot of projects out there done out of pure love of computing, programming, or whatever, and hence are not concerned with making money. But, those aren't the projects I'm talking about. The projects I'm talking about are the likes of Ubuntu, Ximian, Eclipse, and Asterisk. These are commercial products, adverstised as such. How are they supported though?
I understand a lot of these projects fund themselves by selling support. I know Ubuntu is in this category. So is Asterisk, although they also get money off of selling hardware. Ximian is now under the Novell umbrella. I'll admit, with the exception of one trial run, I've never actually used Eclipse. Now, I work for a company that produces and sells software. We also sell support. However, there is no way the revenue we get from support could ever fund the company. It does a good job of funding support, but not sales and R&D. So, surely there is something else going on, right?
I have a few thoughts on this. First, perhaps these projects are running off nothing but venture capital (VC) money. If that's the case, that seems to support the theory that we are in the midst of another growing tech bubble, and when the VC guys realize they will never make money, will these projects wilt up and die once the money runs out? If that is not the case, are these developers working for sub-par wages? I have a hard time believing that, but if they do, doesn't that make them the hippies of our generation, with cries of "Free love, baby! being replaced with cries of "Free software, baby!"?
There is one other OSS model I forgot to mention, and that is the model employed by SugarCRM. They have a plethora of options, from free, to a couple of purchase options, to an appliance server, to hosted. Each of the paid options has more features than the free option. It seems like a good way to get users interested with a free option, and when they are ready, upgrade. Although, I'm curious if they get enough paid orders to make up for what they give away for free?
Don't get me wrong, I love open source software, and I think what these companies do is great. I'll just be interested to see what happens over the next 2-5 years, and watch whether or not these projects make any money, or just get by on the pure love of programming.
