From support services to software services

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  • 1. From support services to software services The evolution of open source business strategies Matthew Aslett, Senior Analyst, Enterprise Software, The 451 Group © 2010 by The 451 Group. All rights reserved
  • 2. Open source is not a business model How do vendors generate revenue from open source software? Published: October 2008 Enquiries to: sales@the451group.com © 2010 by The 451 Group. All rights reserved
  • 3. Open source is not a business model “My view was always that open source is not a business model, nor an industry. Open source is just a production model and a distribution model. So any monetization must be added from the outside, i.e. there is no intrinsic business model for open source.” Marten Mickos © 2010 by The 451 Group. All rights reserved
  • 4. Open source is not a business model “There is no open source business model.” Jim Whitehurst “I debated again yesterday with a colleague on open source business models. I don't believe there is such a thing.” Stephen Walli © 2010 by The 451 Group. All rights reserved
  • 5. Elements of an open source business strategy Revenue triggers End user licensing Commercial license Dual licensing Subscription Open core Support services Open complement Other products/services Copyright control Single open source Software services Vendor Assembled open source Custom development Foundation Closed Advertising Distributed Withheld Software license Development model Reciprocal Public Permissive Private Public/private Vendor Community Aggregate © 2010 by The 451 Group. All rights reserved
  • 6. Defining community relationships Copyright control Vendor Foundation Distributed Withheld Software license Development model Reciprocal Public Permissive Private Public/private Vendor Community Aggregate © 2010 by The 451 Group. All rights reserved
  • 7. Defining customer relationships Revenue triggers End user licensing Commercial license Dual licensing Subscription Open core Support services Open complement Other products/services Copyright control Single open source Software services Vendor Assembled open source Custom development Foundation Closed Advertising Distributed Withheld © 2010 by The 451 Group. All rights reserved
  • 8. Elements of an open source business strategy Revenue triggers End user licensing Commercial license Dual licensing Subscription Open core Support services Open complement Other products/services Copyright control Single open source Software services Vendor Assembled open source Custom development Foundation Closed Advertising Distributed Withheld Software license Development model Reciprocal Public Permissive Private Public/private Vendor Community Aggregate © 2010 by The 451 Group. All rights reserved
  • 9. The evolution of open source business strategies Stage 1.0: Software developed by communities of individuals. © 2010 by The 451 Group. All rights reserved
  • 10. Free or free? “There is no contradiction between selling copies and free software. In fact, the freedom to sell copies is crucial... Selling them is an important way to raise funds for free software development” Richard Stallman © 2010 by The 451 Group. All rights reserved
  • 11. The evolution of open source business strategies Stage 2.0: Vendors begin to engage with the existing developer communities. Stage 1.0: Software developed by communities of individuals. © 2010 by The 451 Group. All rights reserved
  • 12. Products or services? “The move to free eradicates the traditional concept of product, and shifts the value that a company can provide to customers to services.” Michael Tiemann © 2010 by The 451 Group. All rights reserved
  • 13. Cygnus Solutions © 2010 by The 451 Group. All rights reserved
  • 14. Cygnus Solutions © 2010 by The 451 Group. All rights reserved
  • 15. Linux vendors – generic © 2010 by The 451 Group. All rights reserved
  • 16. Linux vendors – Caldera © 2010 by The 451 Group. All rights reserved
  • 17. Linux vendors – VA Research © 2010 by The 451 Group. All rights reserved
  • 18. Linux vendors – Red Hat © 2010 by The 451 Group. All rights reserved
  • 19. The evolution of open source business strategies Stage 3.0: Vendor- Stage 2.0: Vendors dominated open begin to engage with source development/ the existing developer distribution projects. communities. Stage 1.0: Software developed by communities of individuals. © 2010 by The 451 Group. All rights reserved
  • 20. Products or services? “The move to services is not being led by open source companies themselves - they have modeled themselves on the companies they are trying to dislodge.” Mark Shuttleworth © 2010 by The 451 Group. All rights reserved
  • 21. Dual licensing © 2010 by The 451 Group. All rights reserved
  • 22. MySQL © 2010 by The 451 Group. All rights reserved
  • 23. Monty Program - current © 2010 by The 451 Group. All rights reserved
  • 24. Monty Program - desired © 2010 by The 451 Group. All rights reserved
  • 25. Monty Program - desired © 2010 by The 451 Group. All rights reserved
  • 26. OpenNMS - previously © 2010 by The 451 Group. All rights reserved
  • 27. OpenNMS - potentially © 2010 by The 451 Group. All rights reserved
  • 28. OpenNMS - in actuality © 2010 by The 451 Group. All rights reserved
  • 29. Open core © 2010 by The 451 Group. All rights reserved
  • 30. Open core (community controlled) © 2010 by The 451 Group. All rights reserved
  • 31. End user licensing strategies 2008 Sample: 114 “open source vendors” © 2010 by The 451 Group. All rights reserved
  • 32. End user licensing strategies 2010 Sample: 114 “open source vendors” © 2010 by The 451 Group. All rights reserved
  • 33. The evolution of open source business strategies Stage 3.0: Vendor- Stage 4.0 Vendor- Stage 2.0: Vendors dominated open dominated begin to engage with source development/ development the existing developer distribution projects. communities. communities. Stage 1.0: Software developed by communities of individuals. © 2010 by The 451 Group. All rights reserved
  • 34. Proprietary or open source? “I’m coming around to the idea that everything will be a blend of open source and proprietary software or services.” Matt Asay © 2010 by The 451 Group. All rights reserved
  • 35. Open complement Software license Development model Reciprocal Public Permissive Private Public/private Vendor Community Aggregate © 2010 by The 451 Group. All rights reserved
  • 36. Open inside Commercial software/ hardware SAP Open Oracle source IBM Customers JetBrains Day Software Community Open Actuate Citrix source © 2010 by The 451 Group. All rights reserved
  • 37. Open edge Open source Community Customers Commercial software Microsoft Intuit Tibco Mark Logic Objectivity StreamBase © 2010 by The 451 Group. All rights reserved
  • 38. The evolution of open source business strategies Stage 3.0: Vendor- Stage 4.0 Vendor- Stage 2.0: Vendors dominated open dominated begin to engage with source development/ development the existing developer distribution projects. communities. communities. Stage 5.0 The future of commercial Stage 1.0: open source Software developed by strategies. communities of individuals. © 2010 by The 451 Group. All rights reserved
  • 39. Software or services? “The industry has taken open source to one logical conclusion and has crowned ‘services’ as the only important software outcome… The cloud takes open source to its logical conclusion, crowning services as king, rather than fettering us to a discussion of software.” Matt Asay © 2010 by The 451 Group. All rights reserved
  • 40. Google/Amazon/Twitter/Facebook Software license Development model Reciprocal Public Permissive Private Public/private Vendor Community Aggregate © 2010 by The 451 Group. All rights reserved
  • 41. Open source license trends GPLv2 % of projects 07/09 GPLv2 % of projects 03/10 50.6% 48.9% Source: Black Duck Software © 2010 by The 451 Group. All rights reserved
  • 42. Open source license trends GPLv2 % of projects 07/09 GPLv2 % of projects 03/10 50.6% 48.9% GPLv2 projects 07/09 GPLv2 projects 03/10 93,730 97,042 Source: Black Duck Software © 2010 by The 451 Group. All rights reserved
  • 43. Open source license trends GPLv2 % of projects 07/09 GPLv2 % of projects 03/10 50.6% 48.9% GPLv2 projects 07/09 GPLv2 projects 03/10 93,730 97,042 07/09 AGPLv3 03/10 231 Source: Black Duck Software © 2010 by The 451 Group. All rights reserved
  • 44. Alfresco © 2010 by The 451 Group. All rights reserved
  • 45. Coupa © 2010 by The 451 Group. All rights reserved
  • 46. Citrix GoToManage (Paglo) © 2010 by The 451 Group. All rights reserved
  • 47. From support services to software services “Established vendors have adopted open source and cloud computing has changed the rules about how businesses adopt technology. The long-term opportunities are not in open source products and services, but products and services that are built on open source.” The 451 Group © 2010 by The 451 Group. All rights reserved
  • 48. The future of open source business strategies Update on open source -related business strategies still •Open source specialists and beyond Survey of 1,200 CAOS user community members Scheduled: October 2010 Comments/suggestions: twitter.com/maslett matt.aslett@the451group.com © 2010 by The 451 Group. All rights reserved