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January 11, 2004
Money and Open Source
I recently had dinner with a friend who posed a question I didn't have a good answer for -- "Given that there is a movement towards Open Source software, what is the new way companies will make money?" I've thought about it and I think the answers are "the same way" and "depending on the software." For the Linux operating system, the money making model seems to be in creating a distribution that is specific to a need. For example, creating a high security server or an easy to install desktop distribution. For applications, it might be in creating a specific functionality a company needs. I saw this done with the Open Source IM software we use.
For commercial companies like IBM, where else can you get as high of a return on a billion dollars used against Microsoft than in supporting Linux?
I think that the commercial companies will start creating versions of their desktop applications for Linux once there are more standard distributions or if someone comes out with the desktop that people are migrating to. More commercial companies, of course, will continue porting their server applications to Linux. Is MS SQL Server the only database that doesn't run on Linux? The more software that's available on Linux, the more people will start learning to setup, manage and thus move to Linux. Next week I'm meeting with an NT administrator at work to walk through a Linux install.
What does that tell us?
The big money will be in creating and supporting Linux distributions and selling commercial software that runs on Linux. The small money will be in creating custom or one-off versions of Open Source software. Will there be big money in creating custom versions of Open Office?
I don't think I've flushed out all of the variables or have a good answer. What am I missing?
Posted by michael at January 11, 2004 12:36 PM
Comments
Michael,
I think the big money will be in providing services on top of Linux. Think of all those Notes business partners out there - lots have never sold licenses- they provide applications and design/admin expertise.
I think Linux will (eventually) drive the OS layer towards commodity prices - just like PC server hardware.
I also think that OpenOffice allows individuals and small business to avoid the MSOffice lock-in that most larger organisations now have - due to VBA, excel macros etc. The newest Office "system" is just the latest attempt to leverage other MS products into an organisation.
Often open source tends to mean lowest common denominator - it drives cost down by providing a level playing field. On the other hand, expertise and knowledge tend to be proprietary (to the business or individual at least) and organisations are willing to pay for this expertise to be better or smarter that the competition.
hope this makes some sense......
Posted by: Justin Knol at January 11, 2004 06:43 PM
That does make sense. Everyone that I normally talk to about Linux and Open Source are the technical types of people. It threw me for a loop talking to someone about the money side of technology.
The idea of the OS as a commodity is interesting. That gives me something to think about. Thanks!
Posted by: michael at January 11, 2004 07:54 PM