A graduated business model is a sweet spot

CollabNet is in an open source sweet spot.

Its open source Subversion, a version control system for distributed development, is so vital that big customers are almost eager to grow into its paid Enterprise Edition.  

This is a solid, professional business model, not too far removed from what proprietary vendors have done for years with trial versions. The fact that you can see the underlying code is a very minor distinction, especially with this customer set.

But CollabNet founder Brian Behlendorf saw some open source users were not making the jump to paid, so this week he will launch a subscription product called Subversion On Demand.

Teams using something like Visual Studio can switch to the online Subversion for just $55 per user per month (minimum of 50) and get additional features like discussion forums and simple document and file support utilities.

"The on-demand model gives them a site on our Santa Clara data center. It’s a dedicated instance. They’re not sharing it. You can create accounts and manage the permissions," he said. It's almost like people are paying you to market the thing to themselves.

Because there's a lot more in the Enterprise Edition. "If you’re using this at the scale of more than a couple of dozen users you want to ask how it works in requirements tracking, defect and task management, and a broader strategy of managing the application lifecycle. That’s when we talk about Enterprise Edition, and for us it’s flipping a switch. By showing them Subversion, by showing them the baseline capabilities, there’s extra value that becomes obvious."

It reminds me a bit of the old shareware days, when developers would give away crippled versions of their code, with ads all over the interface, and then collect money to take the ads off. Only Behlendorf insists the original open source Subversion is not crippled.

"This is not in competition with free. We’re going to keep Subversion on Demand in sync with the open source releases. Nor are we doing an internal fork."

But I suspect they are going to make money anyway. Lots of it.