World Computer Congress Keynote

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

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

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

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

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…)

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 business model of the future
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

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”

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

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

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
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”?)

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

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

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