Where's the big money in open source?

Where's the big money in open source?

Summary: Are there services you can make essential to people by adding-on to popular open source products?

SHARE:
TOPICS: Open Source
10

Thanksgiving image by Norman Rockwell, from Norman Rockwell MuseumThanksgiving this year reminded me of a key Clue concerning open source.  

The big money in open source lies in making it special. (A 16x20 matted print of this special scene is $30 from the Norman Rockwell Museum in Vermont.)

This is why open source does much better, financially, in the enterprise space than anywhere else.

Every enterprise is special. Every enterprise is looking for an edge, and will pay to attain or maintain that edge.

An enterprise computer system is your offense in the business wars. Getting it to do what others can't gives you an advantage. Managers are forever seeking that advantage.

So the fact your software can be seen, or changed by your customer, does not keep you from profit. By making it special, through add-ons and services, you can  deliver value and get paid.

The problem for mass market open source is this model doesn't pay. Mass market software, by its nature, must be usable by the masses. What you need for mass market acceptance seems to have no relation to what you need to make money.

The answer is to change your idea of who the customer is. It's not the ordinary user. It's the service which is enabled by the software which is your customer.

That's the heart of Google's open source strategy. The company is trying to make its services the heart of mass market open source software. It has a business model for those services.

Let me suggest this is the way to look at your own profit in this area. Are there services you can make essential to people by adding-on to popular open source products?

Of course there are, and if you can deliver these advantages to services with a business model you can get paid for it.

Just remember today's special Thanksgiving clue. To make money, make it special.

Topic: Open Source

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

10 comments
Log in or register to join the discussion
  • Not unique to open source.

    If I understand the argument correctly, people are advised to make money by adapting open source software to the needs of buyers.

    That is not unique to open source.

    The competition is every other major software package, as well as the customer's own staff at enterprises with the resources required.

    Red Hat shows an established way to make money on open source: brand it and sell licenses. The only difference between open source and proprietary software in this strategy is that the seller has paid less to developers for the product.

    I'll assert that uniquely open source money-making has taken everything from the proprietary model but the staff salaries.
    Anton Philidor
    • Is that relaly the case?

      [i]I'll assert that uniquely open source money-making has taken everything from the proprietary model but the staff salaries. [/i]

      Who's coding all this open source stuff? How are they earning a living? What's their opinion of well-heeled organisations like Google and IBM profiting from their work?
      TheTruthisOutThere@...
      • Linux, for example.

        Much of the work is provided by paid staff of the companies able to use the product to make profits on hardware and other software and services. Google sells ads on search. IBM has hardware and services and other software, including proprietary software introduced when open source proves inadequate and the customer is already committed.

        Google as a company apparently provides little. IBM as a company provides low cost, high visibility items like patents which create a good impression. Neither, I expect, has lost money from donations to open source.
        Anton Philidor
      • Coding for Dollar$ ?

        Who indeed. The list is enormous. Why? They do it for fun. For them, writing code is an exercise much like a good game of chess or the Sunday Crossword might be to others. Most are working in IT somewhere and of those, a few are supported by their employer with "on the job" time to write code.
        Sagax-
        • Yeah, me too

          [i]For them, writing code is an exercise much like a good game of chess or the Sunday Crossword might be to others[/i]

          Yeah me too, but I have children to feed and a mortgage to pay.
          TheTruthisOutThere@...
          • Me also..

            I have a kid to feed and a mortgage as well but that doesn't stop me from trading a game of chess for some coding time on weekends and nights. I haven't lost any money and may actually stand to gain if something I develop becomes popular. I am not under any intellectual property agreements so I'm free to do what ever I want.

            I have never understood why people feel so compelled to question a hobbyist programmer that wants to give away his product.
            storm14k
  • The big money in Open Source

    Is still in Microsoft's pockets (with
    a substantial chunk of change in
    Apple's pocket).
    They (Microsoft, Apple, & proprietary
    companies) are squeezing every nickel
    until the buffalo $h*t$. A pirate
    does not readily give up his loot.
    Surrender is not in their DNA, but
    while the storm rages out of control
    they are desperately seeking safe
    port.

    Heave Ho! Throw another patent on the
    fire, Matey.
    Ole Man
    • Maybe the $$ con't have to go to M$

      By a huge margin, the most common reason for not adopting Open Source is lack of support and training. A good sales presentation can be made by a knowledgeable and competent Open Source technician, for the idea of putting those license fees for one year. In that year, that Tech will provide support and train the customers staff. Further by the end of the year they will be self supporting.
      Sagax-
    • MS price for OS is flat.

      A WinXP upgrade sold for $99 (Home Edition - no Media Center functionality) in 2001.

      In 2007 dollars this is $116.80. Vista Home Premium upgrade(includes Media Center)sells for $118.00

      So MS has not been squeezing every nickel out of home users.

      As for patents, you can blame the govt is it regulates and enforces patent law. And I agree, the system doesnt make sense.
      otaddy
  • Interesting thoughts Dana

    Google is using Open source as a means of delivering/selling advertising and that's where their money comes from.

    We'll see if they can sell a product on its own and make money from it without ad revenue.

    I do agree with you that if you can build a product on top of OS software, you may be able to deliver something of value for less cost than the competition.
    otaddy