Open Source No Longer A Business Model

The 451 Group, an analyst group that I really respect came out with a controversial new report entitled Open Source is not a business model.

This report really flies in the face of what has almost become a cliche - that if you just build software and give it away for free you can build a business by charging customers for support and customization.

The 451 Group says it ain't so.

In fact, they posit (after analyzing the businesses of 114 open source-related companies) that:

A) the majority of open source vendors now use some kind of commercial licensing as at least a part of their business.

and

B) that at least half of them develop some code for the product as "out of sight" material...

And, they then point out that 70% of the companies surveyed offered support services to their customers.  But, only 8% of them said that this is a primary revenue stream.

Matthew Aslett (the report's author) even says "there is very little money being made out of open source software that doesn't involve proprietary software and services".

This actually supports what we've been saying at CrownPeak for a long time.

Open Source software is a great solution.  And, in fact it can many times be the perfect solution for your needs.  However, choose Open Source for the right reason.  Choose it because you are "free to develop"  Choose it because you have unique requirements and a team, or can afford to spend money on support, maintenance, upgrades and infrastructure management.  Don't choose it because it's "free of cost".  You're going to spend money - whether it's with a commercial software vendor or an Open Source provider/support vendor or your own internal team.

Comments

[Matthew Aslett]

Hi Robert,

Thanks for the mention. I just wanted to clarify one thing though: the title of the report is "Open Source is Not a Business Model".

Despite what has been reported elsewhere, nowhere in our report does it state that pure open source is not a *viable* business model.

What we have observed, however, is that most of the vendors building business around open source code are using some form of commercial licensing to distribute, or generate revenue from, open source software.

Of course it is possible to make money offering support for pure open source software. Most of the vendors we looked at weren't doing so, however.

Thanks
Matt

[Robert Rose]

Great catch Matthew - and a great piece of work... Was a bit over-eager in my "titling"... Fixed it.