OK, “Open Source” Isn’t a Business Model… So?

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Several great blog posts from Simon Phipps (I commented), Stephen Walli (I also commented), and Matt Aslett debate the question of whether there is such as thing as an open source business model. Everyone agrees – vehemently – that there is no such thing. But this whole debate on what you call business models involving giving away software for free misses the point.

Open source has accelerated the commoditization of software. If you’re competing with an open source code base, it won’t be easy for you to charge a license fee. You can offer commercial service and support, training, professional services, blah blah but Red Hat, the poster child for this model, reported $650M in revenue this past fiscal year. Oracle, at $23.3B revenue, is nearly 36 times larger. You can make a tidy sum with this approach but you probably aren’t going to be the next Google ($21.8B and they give their software away). Realistic expectations are in order.

It doesn’t matter what you call it. Making money giving away software isn’t easy. If it was, there would be a lot more Googles and Red Hats out there.

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One Response to OK, “Open Source” Isn’t a Business Model… So?

  1. Onno September 23, 2009 at 5:58 pm #

    Yeah, it seems just debating semantics.

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