Beta

×

Welcome to the Slashdot Beta site -- learn more here. Use the link in the footer or click here to return to the Classic version of Slashdot.

Thank you!

Before you choose to head back to the Classic look of the site, we'd appreciate it if you share your thoughts on the Beta; your feedback is what drives our ongoing development.

Beta is different and we value you taking the time to try it out. Please take a look at the changes we've made in Beta and  learn more about it. Thanks for reading, and for making the site better!

"FOSS Business Model Broken" — Former OSDL CEO

kdawson posted more than 5 years ago | from the who-needs-support-anyway dept.

Linux Business 412

liraz writes "Stuart Cohen, former CEO of Open Source Development Labs, has written an op-ed on BusinessWeek claiming that the traditional open source business model, which relies solely on support and service revenue streams, is failing to meet the expectations of investors. He discusses the 'great paradox' of the FOSS business model, saying: 'For anyone who hasn't been paying attention to the software industry lately, I have some bad news. The open source business model is broken. Open source code is generally great code, not requiring much support. So open source companies that rely on support and service alone are not long for this world.' Cohen goes on to outline the beginnings of a business model that can work for FOSS going forward."

cancel ×

412 comments

Sorry! There are no comments related to the filter you selected.

Well, duh (5, Insightful)

David Gerard (12369) | more than 5 years ago | (#25969599)

Do IBM sell software? No, they sell you a solution. They'll sell you Linux, AIX, Solaris (IBM is Sun's second-biggest seller after Sun themselves) or Windows.

Don't sell "software", sell "a solution to the customer's problem." This sounds cliched, but it's amazing how many people and companies work around actually doing so.

Re:Well, duh (2, Interesting)

rolfwind (528248) | more than 5 years ago | (#25969857)

Many companies don't want to sell a solution. They'll sell a package (software) that others can make part of their overall solution. I could not imagine many software companies that want to get into the solution business.

Re:Well, duh (4, Insightful)

David Gerard (12369) | more than 5 years ago | (#25970017)

Then the article's saying "too bad for them." Proprietary boxware is on the way out. Proprietary vertical market stuff gets toward "solution" selling. (Certainly at the prices they charge. Honestly, the more it costs, the worse it appears to be in quality ...)

Re:Well, duh (2, Interesting)

flnca (1022891) | more than 5 years ago | (#25970549)

Writing custom software solutions is what MOST of the software industry was doing for decades. That goes all the way down to selling custom computer models (until the 1980ies). Software solution companies sell the customer computers and/or any software they need, be it off the shelf or custom. And that's where FOSS can shine: It can help to reduce the price tag for the customer. Most businesses require custom software that is only relevant to them, and that's where profit can be made. FOSS operating systems like Linux or BSD have a value that is a thousand times higher than that of Windows, at roughly the same price (if you pay up with sponsorship, merchandise or license fees). The giant tool set does or will enable the development of giant development tools for business applications. Most software companies use their own internal development tools. If those were FOSS as well, more companies could use them, and markets would be opened: Business applications on FOSS operating systems. The profit is or will be made from the custom software solutions that every business needs. Being in the solution business has been the bread and butter job for most software developers for decades, and it's unlikely to change.

Re:Well, duh (4, Insightful)

lgw (121541) | more than 5 years ago | (#25970295)

Don't sell "software", sell "a solution to the customer's problem."

I think that's key. The point in TFA was "open-source code is typically of such high quality that you can't make money selling support". While I htink that's a bit self-serving, as there's *planty* of crap open-source code out there, it's almost universially true that open-source code that lots of people use converges on "so high quality you can't sell support" over time. (This as opposed to commercial software that sometimes gets it exactly right, but then goes on to break everything in the next release because you *have* to have a next release.)

IBM does very well selling consulting services. "Open source" is a nice way of saying "we're going to take the code you pay us to write and use it to solve the next guys problem too". And of course that works out well for everyone, since this customer benefits from all the previous companies. Cunsulting firms do that *anyway*, of course, but calling it "open source" gets it all above board *and* lets unrelated people benefit.

Here's a great paradox for ya.. (5, Informative)

QuantumG (50515) | more than 5 years ago | (#25969609)

how supposed "experts" can be so dumb.

support != hand holding.

All software has bugs. If your customer finds a bug in the software they can report it upstream and wait around for the bug to get fixed or they can report it to you and pay you to fix it now. That's support. Same goes for features. Maybe they want to use the software for something that upstream thinks is worthless. They could beg upstream to add the feature. Or they could hire developers to add the feature. Or they could outsource that to you. That's support.

Re:Here's a great paradox for ya.. (2, Insightful)

OzPeter (195038) | more than 5 years ago | (#25969763)

And every bug fixed means one less support call in the future. So in the process of supplying a support service to your customers you are actually doing yourself out of business.

Re:Here's a great paradox for ya.. (2, Insightful)

QuantumG (50515) | more than 5 years ago | (#25969777)

Hehe, yes, because at some point the software will be bug free.. bwahaha..

That's not how it works.

Re:Here's a great paradox for ya.. (3, Insightful)

MightyYar (622222) | more than 5 years ago | (#25970181)

As long as features are being added, bugs will occur. In a sense they are an infinite resource, since I can't think of much in the way of commonly-used software with no feature development. Hell, Windows XP has been "feature frozen" for years now, and yet I still get updates. Or - to use a non-MS example - Python 2.3 went final in the summer of 2003, and yet there was an update this year - almost 5 years after it was "feature frozen". (For reference, Python is up to 2.6 - and their 3rd RC for 3.0)

Re:Here's a great paradox for ya.. (1)

OzPeter (195038) | more than 5 years ago | (#25970281)

However businesses (who have the money to pay for support) like to have stable software, and are less likely to be continually upgrading just for the sake of it. If they can get away with it they are more likely to avoid paying money if they can route around a problem.

In industry I have seen lots of machines who are not connected to the internet and have not been updated for a very long time. As long as they do their job then there is no need to update them.

Re:Here's a great paradox for ya.. (4, Insightful)

MightyYar (622222) | more than 5 years ago | (#25970535)

As long as they do their job then there is no need to update them.

No question, but the world changes around these machines. In an industrial setting I've seen a couple examples of this...

One example is a computer that controlled a visual inspection machine that ran Win 3.11. Worked great until Y2K! In addition, the newer hardware doesn't always run that version of Windows and it was becoming a problem. Additionally, the company was changing to a new file server that Win 3.11 didn't like. Eventually, the whole big thing had to be replaced because the stupid little Win 3.11 machine didn't cut it anymore. Had Win 3.11 been open source and a consultant was able to change it, the machine would probably still be operating.

Another example is at a plant where all of the flow control was done through old DOS programs hooked into serial-based equipment. These days, you simply can't buy the serial-based stuff any more... everything has ethernet. Additionally, it has become very hard to find modern PCs that will talk to the old hardware at all. As a result, all of that old DOS stuff is obsolete and being replaced. If the old DOS software was open source, it could just have been hacked to add ethernet support.

Anyway, my point was just that the tech world changes pretty fast, and a business may THINK it wants stable, unchanging software... but I bet that isn't the case. After all, when's the last time you saw a text-based ATM?

Re:Here's a great paradox for ya.. (1)

Tubal-Cain (1289912) | more than 5 years ago | (#25970187)

Like QuantumG pointed out, it will never be completely bug-free (although the number of show-stopper bugs will drop exponentially (does 'exponentially' apply to a declining graph?).

Also, it is probably safe to assume they don't want to stay on Firefox 2/OpenOffice 2/Ubuntu 8.04 for the rest of eternity.

Re:Here's a great paradox for ya.. (1)

OzPeter (195038) | more than 5 years ago | (#25970355)

In Business/Industry, if it does the job, then why change it? Especially when changing it will cost money. Thats why I still see windows 98 based machines running VB6 Apps.

So once your list of bugs has dropped below a tolerable level there is no need to go looking for support.

Re:Here's a great paradox for ya.. (1)

mR.bRiGhTsId3 (1196765) | more than 5 years ago | (#25970431)

I'm going to go with yes, i.e 1/(x^n)

Re:Here's a great paradox for ya.. (0, Redundant)

timmarhy (659436) | more than 5 years ago | (#25969779)

what a crappy business model - every customer has to pay for the bugs to be fixed on an individual basis? and your wrong about support, support is ALL ABOUT hand holding, clearly you have never worked a helpdesk in your life.

Re:Here's a great paradox for ya.. (-1, Flamebait)

QuantumG (50515) | more than 5 years ago | (#25969803)

Fuck off timmarhy..

Re:Here's a great paradox for ya.. (0, Troll)

timmarhy (659436) | more than 5 years ago | (#25970013)

haha

Re:Here's a great paradox for ya.. (-1, Offtopic)

Anonymous Coward | more than 5 years ago | (#25970167)

*I* am an anonymous coward.

And YOU are a fuckwad.

Irony paradox.

Re:Here's a great paradox for ya.. (2, Interesting)

smitty_one_each (243267) | more than 5 years ago | (#25969845)

FOSS is fantastic compared to the government.
Here is Fred Thompson laying it out for you:
http://www.youtube.com/watch?v=7IrR3o7x1ps [youtube.com]

Re:Here's a great paradox for ya.. (1)

Xerolooper (1247258) | more than 5 years ago | (#25970223)

He's convinced me. I'm starting my new diet plan tonight nothing but donuts.

Re:Here's a great paradox for ya.. (1)

smitty_one_each (243267) | more than 5 years ago | (#25970339)

Excellent. I, for one, look forward to funding both your doughnuts and your healthcare.
The bad news is that, after your death, your resulting cinderblock of a heart will be excavated to go into Pharoah's new public works project.
The good news is that you're adding to a new concept of community organizing that promises to last a long, long time.

Re:Here's a great paradox for ya.. (2, Interesting)

Sentry21 (8183) | more than 5 years ago | (#25969925)

The problem with that is that you end up with tons of disjointed features that only one customer wanted, and you end up like Microsoft Word - a cluttered interface with tons of toolbars, tooltips, palettes, windows, menus, icons, shortcuts, and everything you can cram into the app, 99% of which no one ever uses, and all of which makes the program harder to use, support, maintain, or update.

Re:Here's a great paradox for ya.. (3, Insightful)

QuantumG (50515) | more than 5 years ago | (#25969957)

Wow. The commercial software mindset really is taxing isn't it? You don't push custom features upstream.. upstream won't even accept them unless they are something everyone would want..

Re:Here's a great paradox for ya.. (3, Insightful)

Tubal-Cain (1289912) | more than 5 years ago | (#25970213)

I think the solution is to push for a plugin system in the upstream. I makes downstream customization easier for everybody.

Re:Here's a great paradox for ya.. (2, Insightful)

QuantumG (50515) | more than 5 years ago | (#25970375)

It make maintaining your patch much easier, yes.

Re:Here's a great paradox for ya.. (2, Insightful)

2nd Post! (213333) | more than 5 years ago | (#25970171)

It sounds like you are describing famous foss programs like GIMP, Emacs, OpenOffice, KDE, Mozilla, and GNOME. I think what is apparent is that foss is just a development model, and not that different than closed source, just more distributed.

Re:Here's a great paradox for ya.. (2, Insightful)

Xerolooper (1247258) | more than 5 years ago | (#25970025)

He's only appears dumb from down here.
We look at open source as, free as in beer, free software. Because it makes us more efficient and productive worker bees.
It has a lot to do with point of view. He looks at it as how can I make money as in Micro$oft off this. Because that is his purpose in life.
His attitude isn't surprising or "news"
There are two ways to make money. Since printing your own is illegal there is only one. When you trade your time for money you are not making money you are making a trade. When you sell something over and over again you are creating wealth.

Re:Here's a great paradox for ya.. (1)

QuantumG (50515) | more than 5 years ago | (#25970043)

creating wealth

I don't think that means what you think it does.

Re:Here's a great paradox for ya.. (1)

Xerolooper (1247258) | more than 5 years ago | (#25970073)

Ok I'll bite what do you think that I think that you think that I think that means.

Re:Here's a great paradox for ya.. (1)

QuantumG (50515) | more than 5 years ago | (#25970133)

money and wealth are not the same thing. Selling something doesn't create wealth (hell, it doesn't even create money), making something does. So if you can sell the same thing, over and over, without creating anything more, then the total amount of wealth remains the same.. whereas, if you had to keep making new things, wealth would keep going up.

Re:Here's a great paradox for ya.. (1)

fractoid (1076465) | more than 5 years ago | (#25970241)

Actually I think it kind of does, if I'm interpreting him correctly. Wealth isn't just "having money", it's "getting more money by using your current money instead of by working". If you make an investment (of time or money) and get a fixed return from it, that is a trade - it may be favourable if you get a good wage / price but it's still a trade. Making an investment which gives an ongoing revenue stream is, as I understand it, increasing your wealth.

Re:Here's a great paradox for ya.. (1)

QuantumG (50515) | more than 5 years ago | (#25970313)

I know there's this mainstream idea of "wealth" as something to do with money, but that's really not the case. If I have $400 today and a loaf of bread costs $2, but tomorrow the cost of bread goes up to $4, I am not as wealthy today as I was yesterday, however, if the same number of loaves of bread exist today as they did yesterday then the wealth of the nation (at least the bread part it) is still the same. Wealth is about stuff, not about value.

Re:Here's a great paradox for ya.. (1)

fractoid (1076465) | more than 5 years ago | (#25970463)

Hmm, good clarification. I suppose I was meaning "more money" in the sense of "more buying power", not so much "more dollars" (which has become pretty meaningless recently, although with the stock market crash you can buy 500% more of GM for your dollar now compared to a year ago... should you want to. :P )

Re:Here's a great paradox for ya.. (1)

ChatHuant (801522) | more than 5 years ago | (#25970269)

All software has bugs. If your customer finds a bug in the software they can report it upstream and wait around for the bug to get fixed or they can report it to you and pay you to fix it now. That's support.

And this creates a powerful economic incentive to provide buggy software: if your software is perfect out of the box, the customer will not pay you. As an open source software writer, you depend on the *bugs* in your software for your income. That creates a paradox, and makes your life difficult: your product must be innovative enough, or good enough, to get customers to use it. However, the better your software is, the less money you make! You can write high quality code for art's sake (nice if you don't have a mortgage and/or kids), but if you want to make your living on software you need to look for another business model.

Note that the economic incentive works precisely the other way around for makers of proprietary software: the margin on most software sales is not very large, and one support call will wipe out your revenue for that sale. So the software maker needs to make his software as stable as possible, to avoid the extra costs of supporting it.

Re:Here's a great paradox for ya.. (1)

QuantumG (50515) | more than 5 years ago | (#25970359)

The separation of upstream and downstream and competition takes care of that.

You seem to think I'm talking about something new here. This is exactly what every open source solution company does. Hell, I used to do it freelance, until I found the corporate teet.

Re:Here's a great paradox for ya.. (0)

Anonymous Coward | more than 5 years ago | (#25970395)

Bugs? Don't you mean errors in the program? You should fix those immediately without compensation, since you made the bloody error in the first place.

Re:Here's a great paradox for ya.. (1)

QuantumG (50515) | more than 5 years ago | (#25970507)

Terms like "upstream" and "downstream" mean absolutely nothing to you do you?

Also.. go have a chat to Microsoft about your fantasy.

Re:Here's a great paradox for ya.. (1)

jellomizer (103300) | more than 5 years ago | (#25970537)

What is the cost of fixing the bugs? If you are going to pay someone to fix a bug in an open source project vs. Just asking and see if someone will do it for free a bit longer. May not be a good business decision. As it may take The Open Source Developers 4 months to fix the problem. Vs. hiring someone to fix it. 2 week to fix the problem... (assuming the code can be understood easily by a third party) During this time if the bug is on a mission critical system the company would have found a work around so waiting month for a resolution isn't as big of a deal anymore. Vs. Having to pay someone $10,000 to fix the problem.

Why does nobody understand why this doesn't work? (5, Insightful)

Gavin Scott (15916) | more than 5 years ago | (#25969633)

Open Source development is an absolutely amazing and powerful tool... ...for everyone in the world whose livelihood comes from something *other* than selling software.

Bankers need to run their banks more efficiently so they get together to cooperatively develop some banking application software that makes them all work more effectively and efficiently. This is the magic of co-op software development. There are other people who have the same problems you do, and if you get together you can produce really useful software for vanishingly small cost, and the result can be replicated without limit or expense.

Bankers don't, on the other hand, create free, zero-income banks.

Commerceial software companies making free software is, and always has been, a really dumb idea.

If you find yourself in this position, my suggestion is to move up the food chain towards applications of the software you've developed. Eventually you'll find a level where people have problems they're willing to pay to have solved because they're not common enough to make an open source / co-op solution viable.

If your business plan reads:

1) Invent really cool new product.
2) Give it away for free.
3) Enable the community to do all their own support and enhancements.
4) ????
5) Profit!

let me save you some time and point out that there is nothing you can put in step 4 that leads to step 5.

Open source development is not a segment of the software indusrty, it's a segment of the every-other-industry.

G.

Re:Why does nobody understand why this doesn't wor (0)

Anonymous Coward | more than 5 years ago | (#25969821)

Ha.

Programmers are like bloggers -- a dime a dozen. Why hire when there are plenty of others working for free just to get their name known? Being a signal among the noise is merely a matter of being in the right place at the right time.

Sure, some are good(or lucky, mostly lucky) enough to be hired and paid salary to code but there're a hell of a lot of fully-enabled latchkey kids who've been writing apps since age 5 and they're willing to code without having to worry about things like paying rent since they live in their parents' basements, Bram Cohen [torrentfreak.com] being the canonical example.

Open source serves the greater good as long as people don't have to worry about paying rent or buying their own groceries or making their own car payments unless they want to give up every hour of their free time. CS grads -- unless you have rich parents and a fat trust fund, you can count on writing Actionscript for 16 bucks an hour for the rest of your life!

Re:Why does nobody understand why this doesn't wor (2, Insightful)

fractoid (1076465) | more than 5 years ago | (#25970385)

I love your analogy, but I think it's an even better one than you credit it for. Programmers are like bloggers. They're a dime a dozen - but how many good ones are there? And how many of those are willing to exclusively blog about your project full-time for free?

There will always be a demand for custom software, because every business is different. That means there will always be a demand for developers to build that software. And good developers will always be able to produce better custom software, quicker, and save businesses more money than bad ones will. So good developers will be in much more demand than bad ones, and be paid much more.

Re:Why does nobody understand why this doesn't wor (1)

RiotingPacifist (1228016) | more than 5 years ago | (#25969931)

let me save you some time and point out that there is nothing you can put in step 4 that leads to step 5.

adverts? didnt that work for opera for ~9 versions.

Bankers don't, on the other hand, create free, zero-income banks.

Id like to see a banker code, all this work gets outsources and id bet if you have a big name in foss your name will come up sooner than others.

Re:Why does nobody understand why this doesn't wor (1)

jellomizer (103300) | more than 5 years ago | (#25970601)

Opera with adverts didn't work because you can get Mozilla or Firefox for free. Also D/L those adverts took bandwidth that counteracted the extra speed of the browser. Advertisements do work (like google) and other free SaaS systems. However in Box systems running on your computer it is not so much.

Bankers use to be good software developers. But lately bankers in general have been getting Stupid.

Re:Why does nobody understand why this doesn't wor (0)

Anonymous Coward | more than 5 years ago | (#25970605)

let me save you some time and point out that there is nothing you can put in step 4 that leads to step 5.

adverts? didnt that work for opera for ~9 versions.

It's quite ironic how an open source biased site like this, continously has people posting how they *HAVE* to have adbloc and other plugins for thier browser..

Re:Why does nobody understand why this doesn't wor (2, Interesting)

mevets (322601) | more than 5 years ago | (#25970173)

An old joke goes something like this:
A customer goes to radio shack to get his printer repaired. The repair guy says it will be $300, and be done in two days. Customer balks, repair guy explains the problem, and points out that the parts needed can be bought in the store for $5. Customer is thankful, but is concerned repair guy will get in trouble for turning away business. Repair guy says.... we find we make more money if you try to fix it yourself.

Other than its use as bait, FOSS enables a cottage industry for customization or repair which gives the customer choices like they have for repairing (most) cars, appliances, pets, etc...

The service industry is good work, but there is little opportunity to launch a retire-on-it type of project.

Re:Why does nobody understand why this doesn't wor (1)

maxume (22995) | more than 5 years ago | (#25970467)

The new joke goes something like "A customer goes to radio shack to get his printer repaired. The teenager says that they sell new printers for $65."

Re:Why does nobody understand why this doesn't wor (3, Interesting)

ancientt (569920) | more than 5 years ago | (#25970533)

Odd, I can think how people are making your equation work with varying choices for step 4.

4) Make it do a complex task that requires skilled labor you provide cheaper than training staff to handle it internally

This works for several companies, a couple of which we pay where I work. The task of consolidating threat profiles, keeping them current, providing solid feedback and rapid response as well as managing secure channels with a variety of companies is something our company could hire a couple full time employees to manage. Rather than be out the cost of staff, we hire an outside vendor who does it very well at a fraction of the expense.

4) Build a small closed source application that utilizes the open source software. We use software built to work with a MySQL database system. The tasks done by the configuration, maintenance and integration are within the reach of a moderately talented programmer, but they are able to do it for hundreds of clients who all benefit from solid testing, research and experience of a few experienced and skilled developers who also contribute back to the open source system. This improves MySQL for anyone who cares to use it, but at the same time benefits the company who own the closed source application utilizing it. (For this example the model has to change step 1 to "Promote and contribute to a really cool product.") This is similar to the business model for Crossover Office where you pay for the expertise that has gone into the development of a product that does nothing you couldn't manage by hiring talented developers but for a price that makes sense for small business.

4) Make your staff the source for training required to manage a complex system. Zabbix is an example of this type of product. You can download and work on Zabbix for free, but it is complex enough that for significant implementation, you really need to get solid training, and that will cost you.

Our core transactional system in fact, would be a great example except that it is a closed source system. The software is good, but there is plenty of similar software that we could use. What we really pay for is the ongoing development, support and integration they offer. They protect themselves from competition by keeping it closed, allowing them to charge a higher fee, but if they were to manage a transition to open source they could potentially drop their development costs significantly, increase market penetration and undercut their competitors while still maintaining the same profits. They would have to face the risk that another company could do a better job pricing or servicing their current customers with the same software, however, and I honestly don't believe they have enough talent in programming, support and management to make it worth the gamble.

The FOSS Business model (5, Insightful)

WillRobinson (159226) | more than 5 years ago | (#25969641)

The model of investor expecting to make a quick buck off FOSS is broken. Not FOSS.

I'm looking at you RedHat... (1)

Narcocide (102829) | more than 5 years ago | (#25969679)

Dead weight being thrown away? Shocking!

Re:The FOSS Business model (-1, Troll)

Anonymous Coward | more than 5 years ago | (#25969709)

your response is so typical of FOSS in every way. attitudes like that are WHY microsoft dominates the market, you people don't know how to service a customer.

Re:The FOSS Business model (1)

Narcocide (102829) | more than 5 years ago | (#25969775)

Not even remotely true. Microsoft dominates the market because most of the market claims to want a tool but ends up happily purchasing a toy because the box has pretty colors and the commercials show someone flying over green fields with neat music playing.

Re:The FOSS Business model (1)

timmarhy (659436) | more than 5 years ago | (#25969849)

so MS make products the consumer is happily paying for, and that makes their business model not work because.....? face it, MS makes some good products, FOSS falls flat on it's face with most of the projects out there. how about you all just man up and take a good hard look at what MS does RIGHT and what you do WRONG.

Re:The FOSS Business model (1)

MightyYar (622222) | more than 5 years ago | (#25970441)

Cooooool, you're like Twitter's nemesis!

I think it's a little bit more complicated than you intimate. OSS does very well in many areas where MS goes toe-to-toe, despite MS having a huge war chest. OS does not do particularly well against MS on the desktop - but then neither does anyone else. Apple has made some serious inroads lately, and while it would be foolish to point to open source as the reason for this, it would also be foolish to dismiss it. After all, open source is integral to MacOS and is a large part of what lets Apple compete with MS despite having a fraction of the staff.

Re:The FOSS Business model (1)

Jamie's Nightmare (1410247) | more than 5 years ago | (#25969867)

Thank you. You just provided an example of one of those bad attitudes. What you are really saying is: "Microsoft doesn't make anything good at all, they just use evil marketing techniques to fool ignorant, stupid customers into buying their inferior products."

Linux Haters Blog (0)

Anonymous Coward | more than 5 years ago | (#25969947)

It is shocking to still see Lusers spouting the same tired old garbage after the Linux Haters Blog spent months completely eviserating the idiotic crap these clowns continue to post here on Slashdot.

The Lusers sound like they are happy wasting their lives away in their daily little Slashdot circle jerk, high fiving each other while pretending they are taking over the software world.

Re:The FOSS Business model (1)

Gr8Apes (679165) | more than 5 years ago | (#25969923)

MS dominates the market due to a fortunate timing incident and illegal contracts and tying of products. Nothing more, and nothing less. Several very good OSes were trampled by MS, and many decent products were literally yanked from consumers' grasps.

However, see today's story on MS's software dipping below 90% market share for the first time since 1995, and you'll see that more and more people are realizing the emperor has no clothes.

Re:The FOSS Business model (0)

Anonymous Coward | more than 5 years ago | (#25969995)

...Because people must understand quantum electrodnamics before flicking a light switch or learn regular expressions just so they can search for text.

Wake me up when Linux works like XP does. Many of us do love Linux but we don't have the free time to painstakingly install and tweek 20 different distros(using VM or otherwise) just to see what works best(note that I didn't say Just Works(TM) because choosing distros is like having to choose between different pairs of dirty underwear).

All the command-lines in the universe won't stop what should be simple GUI operations from causing catastrophic lock-ups. I'm no software engineer but the engineers I've spoken to agree that Linux has not yet replaced Windows.

Think about it -- with increasing numbers of Joe users already acclimated to downloading everything they want for free, you'd think that a lot more of them would download a free substitute for Windows with the added bonus of carrying no legal liability and the potential for bling-bling which surpasses even OSX's eye-candy.

Re:The FOSS Business model (1)

FictionPimp (712802) | more than 5 years ago | (#25970439)

Step 1) learn to use a computer

Step 2) Now linux works as advertised.

I have no more issues on my ubuntu 8.10 install then I do on my Windows XP install. I use them both about the same amount.

Both work just great for me.

Re:The FOSS Business model (1)

hedwards (940851) | more than 5 years ago | (#25969945)

So, what we should one up them by also providing the reach around? I suppose that could work if that sort of thing floats your boat.

Reality Vs. Your Looney Ideology (0, Insightful)

Anonymous Coward | more than 5 years ago | (#25969809)

I'm not crazy! Everyone else is!

Re:The FOSS Business model (4, Insightful)

lorenlal (164133) | more than 5 years ago | (#25970175)

Finally! I'm so sad that I had to go halfway down the page to get at this one...

Working with FOSS isn't going to lead you into a business hole. Businesses still need someone who can monitor, upkeep, fix, and add to the machines that power their business. If you happen to write FOSS to do those things, you can make money by still doing work for said customer. If you merely use tools that are out there done by other coders, then you are still providing a service for the business/customer.

The break in this article (and many like it) happens when said supporting company goes "public." Suddenly, profit margins must be maintained, P/E ratio enters the equation... Quarterly performance is the measurement of your business, not "am I doing a good job?" FOSS has its place in business, and in business models. You can make it your job to contribute to the community, or to utilize it, to help generate cash for the business that runs on it... Just don't expect your stock to split anytime soon.

Something that I've learned: The business always has needs. They might not know what they are, and they will be different in 6-12 months. The needs will always exist, they will always require someone to implement them, and then maintain them... FOSS often provides a solution to those needs... Even if the code could be perfect, and you could, theoretically, never have to maintain that FOSS solution, you'll be needed to implement someone else that the business now needs.

And not only that... (2, Insightful)

Jane Q. Public (1010737) | more than 5 years ago | (#25970305)

but FOSS is not "a business model". It is a paradigm -- a principle -- that can encompass many business models. Sun and RedHat are a part of the FOSS spectrum, as is Ubuntu, and a great many companies that supply software other than OSes.

A company has to find the right formula for its needs. The failure of some companies to make a profit does NOT mean that no company can make a profit. In just the last 5or 6 years I have read that Windows was dead, that Linux was dead, that Apple was dead, that Ruby on Rails was dead... and none of those things has turned out to be true.

There is a place for companies that do FOSS as well as a place for Windows.

Re:The FOSS Business model (1)

jrumney (197329) | more than 5 years ago | (#25970191)

My thoughts exactly. Investors expect to make significant multiples in return for taking fairly large risks on startups. The business model of selling support and custom development to customers is a low margin, stable business model with no real startup costs that would justify investors getting involved.

Re:The FOSS Business model (1)

fractoid (1076465) | more than 5 years ago | (#25970415)

The model of investor expecting to make a quick buck off FOSS is broken. Not FOSS.

Exactly. Kind of like how those "make your first million" guys are always touring and doing seminars. They didn't get rich off clever investment, they got rich by giving seminars.

Bundle with hardware or service... (2, Insightful)

LostCluster (625375) | more than 5 years ago | (#25969691)

Software is in a race towards zero, as all IP does when there's no copyright-holding monopoly to pay. Support is becoming increasingly less needed.

Hardware always has value, especially hardware designed to go with the open software. See Asterisk. Services, even just a steady data stream, has value, see TiVo.

That's great (3, Insightful)

Sycraft-fu (314770) | more than 5 years ago | (#25970155)

So long as you are content to have a number of kinds of programs never be open source. If your solution is "Bundle with hardware if you want OSS and need money," ok then don't be surprised when people who's market doesn't deal with hardware chose money over OSS. I'm talking about things like games, or, say, video editing software. Things where you neither want or need additional hardware. Things where the idea is to use the hardware of a general purpose computer to do what you want.

This accounts for most software out there. While there's certainly things like, say, a firewall app/OS or something that it is perfectly valid to bundle with hardware, there's plenty of things that are just programs to run on a normal computer, no other hardware needed or wanted.

For programs like these, the response from many OSS advocates has been "Sell support!" However that doesn't work in a lot of cases. If you program is well written and easy to use, people won't need support by and large. Some of my favourite software packages, OSS and commercial, are ones where I don't need support of any kind. They do their jobs and are easy enough to use I need to additional help beyond what's included.

So what then? What do you do if your software is both a good product, and not one that uses hardware? Currently, the options seem to be "Open source it and give it away for free," or "Close source it and make money." In some cases, people can afford to do the former but not all. The "Just give it away for free," sounds like a nice idea when you are a broke student who would be receiving said free software. It sounds like less of a good idea when you are a programmer with a family to feed who would be getting no paycheck if you do.

So you run in to a large category of programs where you don't have a viable model. Support isn't a viable model since people don't need it. Bundling isn't a viable model since that isn't what your software is for.

Different business models. (1)

khasim (1285) | more than 5 years ago | (#25970301)

So what if there is a segment that won't fit that business model? Sell to the segment that does fit it.

For businesses that do need hardware, sell them a pre-loaded, pre-configured system with a support contract that includes REAL support. Instead of having 100 client companies with 100 sysadmins all duplicating of the basics, sell your service of 10 sysadmins all monitoring and reporting to those 100 client companies.

Take the profit and put it into programmers who continually improve the software running on those systems.

Building a business on Free software doesn't mean that you cannot turn a profit. Just that you won't be the next Bill Gates. But you'll still be able to put your kids through college.

Great code NOT EQUAL TO ease of use (4, Insightful)

MSTCrow5429 (642744) | more than 5 years ago | (#25969805)

Open source code is generally great code, not requiring much support.

The code itself might be great, but generally, the front-end (which I'm distinguishing as separate from the back-end nuts and bolts "code") is a mess. Installation and use difficulties are generally greater in randompackageX off of SourceForge than, say, MS Word or FoxIt. There are some OSS programs that are near hitchless, like Pidgin or Firefox (had noticeable problems with crashing on exit in Vista, though), but if you go beyond the star players, you'll quickly find this argument doesn't hold up to empirical scrutiny.

Re:Great code NOT EQUAL TO ease of use (1)

timmarhy (659436) | more than 5 years ago | (#25969889)

i wouldn't go as far as saying it's great at all. take a closer look at the code on sourceforge, it's as bad as any closed source project i've ever seen.

Re:Great code NOT EQUAL TO ease of use (1)

larry bagina (561269) | more than 5 years ago | (#25969927)

sourceforge is full of shit code and dead end projects. It's like a cemetary next door to a sewage treatment plant.

Re:Great code NOT EQUAL TO ease of use (1)

Tubal-Cain (1289912) | more than 5 years ago | (#25970343)

It's like a cemetary...

I'm with you so far...

...next door to a sewage treatment plant.

Hmm. I wonder what could be the sewage plant [wikipedia.org] ?

Traditional? (4, Funny)

unitron (5733) | more than 5 years ago | (#25969807)

...the traditional open source business model...

It's been around long enough to be "traditional"?

Re:Traditional? (1, Interesting)

maxume (22995) | more than 5 years ago | (#25969877)

I figure that anybody doing anything in a way that they did before or saw somebody else do is pretty much following a tradition (it might be on purpose and well thought out, but it is still pretty much a tradition if it follows an example).

So anything that helps avoid thinking is pretty much a tradition in my book, and often, even if you think about it, you won't find a reason not to follow the tradition.

Jargon Parrot (1)

uassholes (1179143) | more than 5 years ago | (#25969853)

Don't pay any attention to people that use business babble like "going forward'.

Mmmm... Pizza.... (1)

Xerolooper (1247258) | more than 5 years ago | (#25969899)

From TFA:

Think about it like going in with others on a pizza.

Great! now that's all I can think about.

"Open Source" is not a business model (5, Insightful)

MarkusQ (450076) | more than 5 years ago | (#25969949)

The open source business model is broken.

It isn't a broken business model. It isn't a business model.

Saying the open source business model is broken is like saying open source doesn't work as a cheese sauce. It also isn't a very effective screw driver. On the other hand, I have yet to hear a business model you can dance to.

--MarkusQ

Re:"Open Source" is not a business model (1)

dangitman (862676) | more than 5 years ago | (#25970531)

On the other hand, I have yet to hear a business model you can dance to.

Then you haven't [fightthebull.com] really [zdnet.co.uk] looked hard enough, [ministryofsound.com] Have you? [youtube.com]

Re:"Open Source" is not a business model (1, Funny)

Anonymous Coward | more than 5 years ago | (#25970541)

It isn't a broken business model. It isn't a business model.

But Jonathan Schwartz's ponytail says it is fabulous!

Newsflash! (1)

daVinci1980 (73174) | more than 5 years ago | (#25969965)

The CEO of a company that promotes collaboration and community between companies says that the traditional model of OSS is broken.

Instead, he says, successful companies will work with each other to form communities and collaborate with one another to make money.

Film at 11. /vertisement.

Solution in a mixed model? (5, Interesting)

Eravnrekaree (467752) | more than 5 years ago | (#25969973)

As far as FOSS being something that has serious business problems in regarding to sustaining the developers who work on it, this is indeed a serious problem. It generally can be very hard to raise revenue with FOSS, projects can ask for donations and sell packaged versions, but you often end up with just a trickle with these sorts of things. Programmers should obviously be able to work full time developing software. With FOSS directly competing with commercial software an eroding those markets, could it be that programmers will end up waiting tables during the day just to support the time they spend writing code? fOSS does indeed wipe out commercial software markets and it can actuall

I am supportive of the freedom aspect of FOSS. For far too long commercial software has shut down innovation and stifled the development of improvements through cooperative development with its closed model. FOSS is on the other extreme, its an open model but it leaves programmers in a situation where they cant afford to live. Perhaps a solution for some projects lies in the middle, with a commercial source tiered licence system, where the source code is provided with all licences, the developers are receptive to improvements from customers, and the cost of software is set according to the ability of the customer to pay, a hobbyist who is using the software for fun would pay far less than someone using it in a high revenue business. This assures that the software does have a high degree of openness and accessibility to all, but also assures revenue can be raised to develop the software.

Charity shares reverse auction? (1)

shanen (462549) | more than 5 years ago | (#25970007)

How about a financial model of bidding to develop software, functional modules, or related services such as security upgrades and support by 'selling shares'? The developers would specify what they propose to develop or offer and describe how much time and other resources would be involved--and thereby set a value on the project. People who wanted the proposed software would buy shares in the development project, and when they get enough people, then they commit, collect the money, and start doing the work.

Oh yeah, the "reverse auction" part. They shouldn't cut the auction off right away, but allow some extra time for getting more people to buy into the project. That would reduce the per share cost while also increasing the user base.

After the project is completed successfully, the shareholders should get some recognition, perhaps being listed on the project website. If the developers don't succeed in delivering what they promised, then they should be remembered unfavorably. Essentially the developers would be gambling their reputations.

Lots of variations possible. For example, a developer could release already developed software and set up the share auction for the next version or the ongoing support.

Re:Charity shares reverse auction? (0)

Anonymous Coward | more than 5 years ago | (#25970483)

Remembered unfavorably?
How about return the money which was pumped into your "reverse auction"? If I were a customer, and I had to pay for an add-on, and than in 4 months, hear that you failed to build it. The last think I would care about is some plaque on a wall with my name on it.

Re:Charity shares reverse auction? (0)

kz45 (175825) | more than 5 years ago | (#25970577)

"How about a financial model of bidding to develop software, functional modules, or related services such as security upgrades and support by 'selling shares'? The developers would specify what they propose to develop or offer and describe how much time and other resources would be involved--and thereby set a value on the project. People who wanted the proposed software would buy shares in the development project, and when they get enough people, then they commit, collect the money, and start doing the work."

It's called selling software licenses. This is essentially how proprietary software gets funded. You are paying small amounts of money together with all other customers to subsidize the overall cost of the app (R&D,development,etc.).

The difference from your financial model is that the people who buy shares are the ones taking the risk. They don't know if the software will actually be completed on time or at all. Plus, how much say do I get as a purchaser? Is there a "stock holder" meeting that allows me to tell you the features I want? If you ever worked on a software project, you would know that getting the opinions of 10 people is difficult..let alone 100 or 1000.

As a software consumer, I would much rather just pay a flat amount for software that I know is finished. Nothing is stopping a company from using this model, but it's just impractical.

Part of a valid company life cycle (2, Interesting)

reginaldo (1412879) | more than 5 years ago | (#25970015)

I think it is completely reasonable for these companies to go under when the code base becomes stable enough to undercut their business model. They're getting paid for providing a software in which they didn't pay for a large portion of the development costs.

If they want to stay afloat, they will need to stay on top of developments in the open source community to provide consulting for multiple products.

There's a word for people like him (1)

jsse (254124) | more than 5 years ago | (#25970033)

Loser.

I'm trying to be objective here.

Appliances produced by Tumbleweed [tumbleweed.com] , Allot [allot.com] and Radware [radware.com] are all heavily adopting FOSS. They can secure their VC investment, their brand and their business; their staff contribute back to FOSS community and keep it growing. They wouldn't whine, do they?

we all know it's nonsense, when he said no FOSS software giant exists. What he actually meant was 'No FOSS Software Giant that can cash in big profit for small group of people'. If it can't take huge profit, it's then a failure. Bullshit. People paid overprice product just because there're no other better alternative around. Things changed, face it.

Sorry, don't see the problem... (1)

w0mprat (1317953) | more than 5 years ago | (#25970075)

I really fail to see how FOSS is supposedly falling down as a business model. There are tons of businesses that make money as outsourced service providers sitting on little or no IP. Strap the existing service delivery model on top of FOSS, you could build your support business, offer a package, but with a sole benefit you can wave in front of the client: no licensing costs or restrictions.

Any problems arise from it not being done properly.

Don't give it away for free (4, Interesting)

timmarhy (659436) | more than 5 years ago | (#25970081)

One thing i think we will see FOSS project's movng away from is giving away the software. if you GPL something, it doesn't mean you have to give it away, it just means who ever you sell it to gets the source code along with the program.I could for example write some software, sell it to others and then give them access to the source where only paid customers could make commits and see the source. source is only required if you distribute something....

Re:Don't give it away for free (0, Offtopic)

hedwards (940851) | more than 5 years ago | (#25970163)

Except that would be a pretty blatant violation of the GPL. You can't sell the code, access to the code or impede the access of the licensed code. What you're suggesting would have been tried a long time ago if it were even marginally legit.

You have to allow distribution of the code in all cases except for code modified for internal use. And yes that does indeed preclude selling access to the code.

At anyrate as soon as somebody downloaded the code there'd be nothing that person could legally do to stop them from doing it.

Re:Don't give it away for free (3, Informative)

abigor (540274) | more than 5 years ago | (#25970493)

No, you can charge as much as you want for distribution, and you only have to give source to those to whom you, personally, have distributed binaries:

http://www.gnu.org/philosophy/selling.html [gnu.org]

However, as you noted, all it takes is for one customer to put the source up for download, and you're screwed.

Re:Don't give it away for free (1)

wilder_card (774631) | more than 5 years ago | (#25970195)

Wrong. The GPL says the person you give it to can, in turn, give it to anybody.

Re:Don't give it away for free (2, Informative)

RLiegh (247921) | more than 5 years ago | (#25970379)

In fact, a great real-world example of this is CentOS. Redhat charges for their binaries, but since all of their code is FOSS CentOS was able to snag it, re-brand and re-distribute it.

...or maybe, (2, Insightful)

belg4mit (152620) | more than 5 years ago | (#25970131)

the investors expectations are flawed?

You do not have a right to profit, and you certainly don't have a right to irrationally high profit.

Not as bad as social networking (1)

chelsel (1140907) | more than 5 years ago | (#25970149)

The business strategy of "free software, pay for support" is almost as bad as the "ad supported social network" business model. Who comes up with these plans to make a buck?

Re:Not as bad as social networking (1)

dangitman (862676) | more than 5 years ago | (#25970567)

Well, for the "ad supported social network" I'm guessing it's the same kind of people who sell Tupperware or Amway products. Or those people who get paid to advertise nightclubs to their friends.

Software products almost NEVER do it right (1)

erroneus (253617) | more than 5 years ago | (#25970279)

The most important thing people capitalizing on OSS can do is offer something that no one else will offer -- an ear for listening to the customer. With customer requests being priced, customers can contribute to the progress of OSS development and in return, get EXACTLY what they want from the software tools they use. This is something that Microsoft will not do -- listen to the customer and deliver on their requests. (After all, their business model is all about keeping the customer unhappy and wanting more.)

I agree (2, Interesting)

dskoll (99328) | more than 5 years ago | (#25970345)

FOSS is a poor business model. (It's a great software development model, though.)

My company produces both FOSS (GPL) and proprietary software. We happily sell support and service contracts for our free stuff. I estimate that the revenue from support+service of FOSS adds up to about 1% of the revenue from selling the proprietary software. (We include source with the proprietary software; you just aren't allowed to redistribute it.)

Making money from service and support is hard and labour-intensive. Making money from selling proprietary software is much easier, because once the thing is written, you can sell it over and over again, amortizing your labour costs enormously.

Sorry... much as I love, use and contribute to free software, I just don't think it's easy to build a good business around it.

Support model relies on crap, complex s/w (1)

presidenteloco (659168) | more than 5 years ago | (#25970389)

Yes. There is a paradox for sure.
Make your open source, simple, flexible,
with good, interoperating default configuration,
and you're out of a support job.

I've always been suspicious of the model
because it seems to promote the foisting
of sub-par, and particularly, excessively
complex and undocumented software on the
software consumer.

Don't worry. We have a crack team of the gurus
who made this spaghetti, and they can grate
some cheese on it to make it palatable, for
a fee. Hmmmm.

What about just operating, for a fee,
information or transaction services that use software
that you helped write, and charging for the complete
delivery of the service, and the offloading of "all"
IT administration from the customer.

Sometimes they won't even take your money (1)

gravyface (592485) | more than 5 years ago | (#25970593)

One of my clients (a large-ish local retailer) asked me to help them create a portal so they could dish out targeted ads to a niche market under the guise of free content and coupons; kind of a Shoppers Club if you will.

I found a popular LAMP-based CMS/portal to use that would cover 80% of the requirements and since it was open source, I assumed I could customize the rest of it. Wrong. It was a pretty steep learning curve and since I had a big budget, I figured I could coax some support time out of some of the core developers or at least some of the senior users in the IRC channel. Wrong again. I couldn't make a go of it with anyone. My approach was very business-like, I even donated $150 to the project when I first started lurking and made it clear who I was, whom I represented, and what my project goals were. There was no official paid support setup, but I figured I'd be able to draw up some sort of agreement with them and get started relatively quickly, but no dice.
Perhaps the issue is a lack of business sense or organization with a lot of open source projects: how many deals are lost (or never begun) because of it?

Load More Comments
Slashdot Login

Need an Account?

Forgot your password?
or Connect with...

Don't worry, we never post anything without your permission.

Submission Text Formatting Tips

We support a small subset of HTML, namely these tags:

  • b
  • i
  • p
  • br
  • a
  • ol
  • ul
  • li
  • dl
  • dt
  • dd
  • em
  • strong
  • tt
  • blockquote
  • div
  • quote
  • ecode

"ecode" can be used for code snippets, for example:

<ecode>    while(1) { do_something(); } </ecode>