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You Can Make Money with Open Source

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Re: You Can Make Money with Open Source

#31

Post by rmason »

elviejo wrote: post #23
jasonkester wrote: post #18

Indeed. That's never been in dispute. You can also make money playing violin in the subway. The thing is, if you want to make money, there are a lot better ways to make money than playing violin in the subway. And if you want to make money with software, there are a lot better ways to do it than to give your product away and hope that some of your users will give you charity or pay you for support. Wait until we see…

Mmhh how about Automatic with wordpress?? They give their product for free and yet have a SaaS ? Or how about OnVelocity? They provide a source code repository and have hosted version. Or SugarCMS ? Or couchdb with couchbase? It seems to me that there are plenty of Saas companies that share their products as open source.

Automattic venture round http://gigaom.com/2008/01/22/wordpresscom-creator-raises-29m...

SugarCRM venture round http://www.sugarcrm.com/about/sugarcrm-investors

CouchBase venture round http://www.venturecapitalupdate.com/funding/08/16/couchbase-...

If you raise tens of millions of dollars you can put off the need to become profitable for quite some time ;<).

Re: You Can Make Money with Open Source

#32

Post by brudgers »

rmason wrote: post #7

This story is a bit misleading. If you study the successful companies using open source as a business model you will find they all raised large amounts of venture capital. That was during the window when open source as a business was a brand new idea. That window has now all but closed and it is exceedingly difficult to find examples of successful companies that bootstrapped their way to success running an open sourc…

Exactly. RedHat was able to grow into a publicly traded company because they happened to be in the right place at the right time and were lucky and were smart.

In the years since, people have made money on FOSS. But nobody has come close to making money from FOSS at the scale of RedHat. Making money in a way that scales off FOSS is hard enough that it put Sun out of business.

Re: You Can Make Money with Open Source

#33

Post by jeffh »

Disclaimer: I work at ActiveState, named in the article.

I'd just like to point out that ActiveState is not VC funded and is profitable. We are able to grow other parts of the business from core products that are enhanced open source (much, but not all, of which is contributed back to the core open source projects). Most of this is in support and services, but we also have highly regarded tools products and a popular IDE (Komodo, of which we fully open sourced the core editor).

Not sure why there are so many negative vibes to this article.

Re: You Can Make Money with Open Source

#34

Post by mistercow »

2muchcoffeeman wrote: post #19
mistercow wrote: post #14

Earlier quoted context omitted.

>There have been only 3 successful open source companies ever: MySQL, Jboss, and Redhat See now, there's just no reason to go around saying things like that. Even if that were true (it's not), how would you know that it's true? Do you have a complete database of profitable businesses in your head? I doubt it. A significant number of open source companies are privately held, and there's really no telling how successfu…

Isn't Mozilla Foundation a non-profit? Wikipedia says it owns a taxable entity, the Mozilla Corporation, but gets the majority of it funds from donations from Google. I think the companies listed only develop Open Source software and sell services. Google and Apple may use and support Open Source projects, but the real money makers are proprietary. I agree that the list is still wrong.

Mozilla Foundation is non-profit. Mozilla Corporation is for-profit, and makes most of its revenue by selling the default search engine slot in Firefox to Google.

>I think the companies listed only develop Open Source software and sell services.

That's true, but I think it's looking at the situation completely wrong. It's sort of like saying that making left shoes is unprofitable because there are so few successful businesses that exclusively manufacture left shoes.

Re: You Can Make Money with Open Source

#35

Post by tlipcon »

dennis82 wrote: post #10
rxin wrote: post #8

Earlier quoted context omitted.

What about Cloudera?

Cloudera is primarily a consulting company, as are most open-source companies. There have been only 3 successful open source companies ever: MySQL, Jboss, and Redhat

Cloudera isn't primarily consulting. In fact we have about 8x as many engineers in product development compared to consulting, last I counted.

Re: You Can Make Money with Open Source

#36

Post by wladimir »

jasonkester wrote: post #18

Indeed. That's never been in dispute. You can also make money playing violin in the subway. The thing is, if you want to make money, there are a lot better ways to make money than playing violin in the subway. And if you want to make money with software, there are a lot better ways to do it than to give your product away and hope that some of your users will give you charity or pay you for support. Wait until we see…

On the other hand, one may enjoy playing violin in the subway. The money will then be very welcome but just a means to keep on playing, not a goal.

Re: You Can Make Money with Open Source

#37

Post by Garoof »

sounds wrote: post #25
jasonkester wrote: post #18

Indeed. That's never been in dispute. You can also make money playing violin in the subway. The thing is, if you want to make money, there are a lot better ways to make money than playing violin in the subway. And if you want to make money with software, there are a lot better ways to do it than to give your product away and hope that some of your users will give you charity or pay you for support. Wait until we see…

You can also make a lot of money today by selling your manufacturing off and watching it relocate to China. There's a balance between monetizing before the next quarterly earnings call and developing a real product. I believe free software is an industry-wide sea change and any company that fails to adapt will go the way of the dinosaur. I've also seen plenty of people try to argue that you can't make money on free s…

I don't really feel that way, and it's not really something I've spent a lot of time looking into, but. There is one thing that bothers me and if you feel like talking about that that'd be cool.

Most of time there's some example of people making money with open source it comes off a little like "you can do open source development and have it play into this other thing that makes money". The other thing is often support or some "service" that people can use your product with.

And it's easy to see how that makes sense for something like a Linux distro (although you'd still ultimately want it to not need "service"). But, like, if I was Cosmigo and had made Pro Motion, I would not be sure how to go about it if I wanted to open source it and make money from that. Surely no one wants a pixel art tool that requires "service", and so on.

Might just be that I haven't seen the right examples because I haven't looked into it that much because I'm not actually that interested in this kind of thing. But yeah, it is one thing that has been bothering me, so.

Re: You Can Make Money with Open Source

#38

Post by sounds »

Garoof wrote: post #37
sounds wrote: post #25

Earlier quoted context omitted.

You can also make a lot of money today by selling your manufacturing off and watching it relocate to China. There's a balance between monetizing before the next quarterly earnings call and developing a real product. I believe free software is an industry-wide sea change and any company that fails to adapt will go the way of the dinosaur. I've also seen plenty of people try to argue that you can't make money on free s…

I don't really feel that way, and it's not really something I've spent a lot of time looking into, but. There is one thing that bothers me and if you feel like talking about that that'd be cool. Most of time there's some example of people making money with open source it comes off a little like "you can do open source development and have it play into this other thing that makes money". The other thing is often suppo…

This is a great question.

Pro Motion is a Pro Tool. I capitalize that because the Pro Tools can charge higher prices for a license to use their software, and nobody complains because professionals make that investment back right away.

Here are some other examples of Pro Tools: Adobe Creative Suite, Avid, Visual Studio and Xylinx ISE.

I picked the last two examples on purpose because Visual Studio and ISE are compilers. Visual Studio does a lot of languages but for simplicity let's assume it's just Visual C# and ISE does several languages but Verilog is arguably the most important.

The only way compilers can charge top dollar is by cheating: the open source compilers have demonstrated a higher quality, broader support, faster bug fixes and more features than their competition. Pro Tool Compilers can only exist on a closed system. For Visual C# it's Windows. For ISE it's the Xylinx patented chip architecture. It might seem impossible that enough professionals would be interested in an open source project that they would rather spend their time developing the tool they need rather than buying it, but that's what happened for C compilers. Even Apple releases XCode for free.

It may take years for other Pro Tools to become open source. The Gimp is not going to replace Adobe CS anytime soon. But it will happen eventually because as a professional I would rather have a tool I can customize to my needs. Adobe's move to always-online products is a huge turn-off for example.

So in the meantime there's a lot of money to be made by selling Pro Tools – but that's not where the market is going.

Selling a service may never be a money maker for Pro Tools; but professionals have to climb the learning curve anyway, even if they paid Adobe first. It might make more sense to look at how most professionals learn Adobe's products in the first place: they either pirate the software or learn it using someone else's copy (such as at school). They only really pay once they've entered the business world.

In the business world suddenly a service contract makes total sense! It might not be a service contract for the Gimp (hah! lol) but would it be nice if there was a company that offered enterprise training and support? Oh wait, Red hat, IBM, SAS, the list goes on and on.

Where open source would really make a difference is that anyone, anywhere in the world, could download the software for free (and not need to feel guilty about it). In fact, the feedback from professionals all over the world would be worth 100x what Adobe gets now from licensing fees.

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