Funambol A Successful Business Model for Open Source Systems Fabrizio Capobianco, CEO

What is Open Source? The Source is Open It is mostly licensed with a copyleft clause It is a community effort It is NOT free

The Source is Open

It is mostly licensed with a copyleft clause

It is a community effort

It is NOT free

To create a successful business around an open source project you need: A huge market A commodity market A large community A price cushion A reference implementation of an open standard (optional but useful) Not every project is a business

To create a successful business around an open source project you need:

A huge market

A commodity market

A large community

A price cushion

A reference implementation of an open standard (optional but useful)

OSS business models Generally associated with the different licenses: GPL/LGPL business model: pure service model, where revenue comes from professional services (OSS + Services) BSD/Apache business model: revenue originates both from license fees on ad-hoc software reselling and professional services Dual licensing business model: revenue relies mainly on license fees

Generally associated with the different licenses:

GPL/LGPL business model: pure service model, where revenue comes from professional services (OSS + Services)

BSD/Apache business model: revenue originates both from license fees on ad-hoc software reselling and professional services

Dual licensing business model: revenue relies mainly on license fees

OSS dual licensing No cost for open source or personal projects Widespread use and testing of the software Fast growth of a large installed user base High quality, stable and reliable products A commercial license, which releases companies from requirements to publish their source code Freely copy, modify and redistribute, protecting your IP Full guarantee on the product future thanks to source code visibility and access to a wide community of developers Freedom from vendor lock-in Rapid and complete support

No cost for open source or personal projects

Widespread use and testing of the software

Fast growth of a large installed user base

High quality, stable and reliable products

A commercial license, which releases companies from requirements to publish their source code

Freely copy, modify and redistribute, protecting your IP

Full guarantee on the product future thanks to source code visibility and access to a wide community of developers

Freedom from vendor lock-in

Rapid and complete support

OSS “honest” dual licensing Two different communities Open source users Commercial users No bait-and-switch Keep the communities isolated No features are hold from the open source community, if they make sense and would be needed there “ Do not upsell your community” guideline Do not sell anything to your open source community Nope, do not even sell them support (it gets your hands dirty and you cannot call back a salesman when you launch him/her towards a customer…)

Two different communities

Open source users

Commercial users

No bait-and-switch

Keep the communities isolated

No features are hold from the open source community, if they make sense and would be needed there

“ Do not upsell your community” guideline

Do not sell anything to your open source community

Nope, do not even sell them support (it gets your hands dirty and you cannot call back a salesman when you launch him/her towards a customer…)

The future is SaaS The world is moving toward Software as a Service First consumer email (Hotmail) Then enterprise sales force automation (Salesforce.com) Then consumer content (Youtube, Flickr, Facebook…) Soon all enterprise email, driven by mobile Then everything else, consumer and enterprise Every single software service will be consumed over the network (think 2015, not tomorrow) Even word processing will be hosted. Google Docs is here to stay, so is Office Live. More to come. The dream of the network computer is going to materialize, eventually Google Chrome is a critical element of the SaaS world. It is an operating system running an highly optimized language (Javascript)

The world is moving toward Software as a Service

First consumer email (Hotmail)

Then enterprise sales force automation (Salesforce.com)

Then consumer content (Youtube, Flickr, Facebook…)

Soon all enterprise email, driven by mobile

Then everything else, consumer and enterprise

Every single software service will be consumed over the network (think 2015, not tomorrow)

Even word processing will be hosted. Google Docs is here to stay, so is Office Live. More to come. The dream of the network computer is going to materialize, eventually

Google Chrome is a critical element of the SaaS world. It is an operating system running an highly optimized language (Javascript)

The business model of the future Honest Dual Licensing with AGPL A market for your Community Edition A revenue model for your Hosted Edition

Honest Dual Licensing with AGPL

A market for your Community Edition

A revenue model for your Hosted Edition

Open source is key There is no question about it, I believe it is proven: it is just a better model to develop software that brings incredible quality and invaluable savings You just have to be careful not to screw up your relationship with the community The game is tight-rope walking, a.k.a. funambulism Honest dual licensing is the way Guarantees a scalable business (no scale in professional services businesses) Maintains a positive relationship with your community

There is no question about it, I believe it is proven: it is just a better model to develop software that brings incredible quality and invaluable savings

You just have to be careful not to screw up your relationship with the community

The game is tight-rope walking, a.k.a. funambulism

Honest dual licensing is the way

Guarantees a scalable business (no scale in professional services businesses)

Maintains a positive relationship with your community

AGPL is the license AGPL v3 is the ASP version of GPL v3, a FSF license approved by OSI It protects your project from being used as a service, circumventing copyleft, because there is no distribution of software The ASP loophole is the cancer of open source “ Do not be dumb, give it an A”

AGPL v3 is the ASP version of GPL v3, a FSF license approved by OSI

It protects your project from being used as a service, circumventing copyleft, because there is no distribution of software

The ASP loophole is the cancer of open source

“ Do not be dumb, give it an A”

A market for your Community Edition It has to be different than the one where you are going to make money You are NOT going to make money here, but you will get all the benefits of a big community That market - in most cases – should be the enterprise. Not every enterprise Those companies that value the source code in open source That want to touch it Those that want to deploy open source in house

It has to be different than the one where you are going to make money

You are NOT going to make money here, but you will get all the benefits of a big community

That market - in most cases – should be the enterprise.

Not every enterprise

Those companies that value the source code in open source

That want to touch it

Those that want to deploy open source in house

A revenue model for your Hosted Edition Deployed vs. Hosted is the key to Honest Dual Licensing Service Providers that want to provide your software as SaaS will license the Hosted Edition of your code (with additional software, only meant for the hosting use) Even Enterprise will pay for it, because it will be convenient Maybe, you could run it yourself, instead of selling it to Service Providers

Deployed vs. Hosted is the key to Honest Dual Licensing

Service Providers that want to provide your software as SaaS will license the Hosted Edition of your code (with additional software, only meant for the hosting use)

Even Enterprise will pay for it, because it will be convenient

Maybe, you could run it yourself, instead of selling it to Service Providers

Where will the revenues come from? Software usage (e.g. per user per year, based on bandwidth consumption or a similar model) Recurring revenues are sustainable (and the market likes them) Advertising (the software is free, the ads pay for it) Advertising is what made the Internet Companies

Software usage (e.g. per user per year, based on bandwidth consumption or a similar model)

Recurring revenues are sustainable (and the market likes them)

Advertising (the software is free, the ads pay for it)

Advertising is what made the Internet Companies

The Funambol case Honest Dual Licensing Community Edition based on AGPL Carrier Edition for SaaS A market for the for your Community Edition Enterprise use Funambol Community Edition for free, no features hold back from the commercial product A revenue model for your Hosted Edition Service Providers license Funambol Carrier Edition to host it as SaaS, either on a per-user per-month basis or with advertising

Honest Dual Licensing

Community Edition based on AGPL

Carrier Edition for SaaS

A market for the for your Community Edition

Enterprise use Funambol Community Edition for free, no features hold back from the commercial product

A revenue model for your Hosted Edition

Service Providers license Funambol Carrier Edition to host it as SaaS, either on a per-user per-month basis or with advertising

Who else is doing this? Today: Funambol ;-) Potentially: SugarCRM, Zimbra Yahoo and many others With evil variations: Google Perfect case: Salesforce.com Getting intrigued: Microsoft Future: everyone (wasn’t the title of the presentation about “A successful business model”?)

Today: Funambol ;-)

Potentially: SugarCRM, Zimbra Yahoo and many others

With evil variations: Google

Perfect case: Salesforce.com

Getting intrigued: Microsoft

Future: everyone (wasn’t the title of the presentation about “A successful business model”?)

The business model of the future So… this is how to make a sustainable business model using open source in the future SaaS-dominated world: Honest Dual Licensing with AGPL A market for your Community Edition A revenue model for your Hosted Edition

So… this is how to make a sustainable business model using open source in the future SaaS-dominated world:

Honest Dual Licensing with AGPL

A market for your Community Edition

A revenue model for your Hosted Edition

Funambol A Successful Business Model for Open Source Systems Fabrizio Capobianco, CEO