From service to product - An Open Source Business Model Transformation


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This is final assignment of "Business Model and Financial Strategy" from my EMBA.

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  • Promis’cuity
  • They BIAS your decision
  • NYSE:RHTRevenue $1.13 billion (2012)Operating income $199 million (2012)Net income $146 million (2012)Total assets $2.49 billion (2012)Total equity $1.39 billion (2012)Employees 4,500 (2012)
  • Private Hold LimitedRevenue $30 million (2009)Employees 800+
  • subsidiary of Cavium NetworkEmployees Over 250 (June 20, 2008)
  • NASDAQ:GOOGRevenue US$ 50.18 billion (2012)Operating income US$ 12.76 billion (2012)Profit US$ 10.74 billion (2012)Total assets US$ 93.80 billion (2012)Total equity US$ 71.72 billion (2012)Employees 53,891 (Q1 2013)
  • Mozilla FoundationRevenue $163 million (2011)
  • From service to product - An Open Source Business Model Transformation

    1. 1. +From Service to ProductAn Open Source Software Business ModelTransformation5/9/2013企業經營模式與財務策略 FinalAssignment指導教授:江炯聰、林筠、程淑芬助教:陳育萍P01746035王議德 P01747019林玲如P01748015黃峻崢 P01748038馮妙芬
    2. 2. +Who is Jouston? Active Open Source Evangelist since1998(15yrs) Doing Linux business from 2000 (13yrs) OS Architect(Software)background, learning to be a Well-Rounded Open Source businessman.Professional Career Highlights: Head of Technical Marketing, Shuttle FAE team builder, Canonical Chairman, COSCUP 2010 COO, OpenMoko Country Manager, HancomLinuxFor more Info visit
    3. 3. +What is Open Source Software?5/9/20133
    4. 4. +OSS ChecklistSource CodeFree DistributionDerived WorksNon-DiscriminatoryNon-RestrictiveFree as inSpeech, not as in beer5/9/20134
    5. 5. +Culture and BelievesRelease early and often, delegateeverything you can, be open to thepoint of promiscuity. – EricRaymondGiven enough eyeballs, all bugsare shallow. – Linus Torvalds5/9/20135
    6. 6. +Important Open Source Software 5/9/20136
    7. 7. +Can’t Live Without Open Source5/9/20137utes aree use:product toh the sourceity is lessenomenon)asycheaper thand adherence toment’s values0500100015002000250030003500Middle incomeorganizations(<$50 M)High incomeorganizations(between $50 Mand $1 Md)Very high incomeorganizations( > $1 Md)Money saved since open source solutions are in use*[$ ‘000] (2005)
    8. 8. +Open Source Business ModelsDual License ModelDistribution and Service ModelDistribution and Monetize Model(Freemium Model)5/9/20138
    9. 9. +What Roles Community Play? Customer / User Key Partner / Vendor Opinion Leader / WOMMarketing Pool External EngineerCommunity isalmostEverything youneed but directlymonetize from it.5/9/20139Double Edge Blade Or Say:
    10. 10. +Dual License ModelI have a product with two licenses: one for free and one for money.5/9/2013 10
    11. 11. +Dual License Model One product, Two licenses One for free distribution and free use Another for proprietary use Copyright and Control of the product development ison the original developer’s hand. KSF: Market Leader Why Buy: Customer like it’s open source version andneed it for commercial use.5/9/201311
    12. 12. +Case: Trolltech’s Qt(Pronounce: Cute)5/9/201312KP- QtCommunity- KDECommunity- SUSE LinuxKA- Produce highquality QtLibraries- Porting tovaries OSplatformsVP- Best in ClassGUI Library.- Very easy toprogram- Cross-Platform(Write once,runeverywhere)CRHigh-touched24x7communitymaintenanceCSAny GUIApplicationprogrammerKR- KeyEngineers- CommunityCHInternetC$- High engineering cost- High community maintain cost- Sample devicesR$Sell proprietary version of Qt
    13. 13. +Distribution and ServiceModelBecause your support, I have power to ask money for my service.5/9/2013 13
    14. 14. +Distribution and Service Model Support and Customization and other ProfessionalServices: Consulting Training Brand Licensing Post-Sales Support KSF: Large base of users who Wants to use theproduct, Release Cycle for different market. Why buy: Enough amount of user, Waive MS tax(orPiracy)5/9/201314
    15. 15. +Case: Red Hat Linux5/9/201315KP- Red HatCommunity- CentOSCommunity- Linux KernelCommunity- World Classsoftwarevendors:SAP, EMC,IBM…etc.KA- Leading theOStechnologydevelopment- 24x7 supportVP- Earliest andMost SolidLinuxdistribution- World-classenterpriselevel support- Slower butOn-Schedulerelease cycleCR- 24x7 ITsupport- Low-touchedCentOScommunityCSFortune 500Eg. Banking,Industrial…etc.KR- KeyEngineers- Community- ReputationCH- Internet- CD- SiteLicenseC$- High engineering cost- High customer service cost- Low community maintain costR$- Training/RHCE Certification- 24x7 Customer support
    16. 16. +Case: Canonical / Ubuntu5/9/201316KP- Ubuntucommunity- Dell / HP /Toshiba /Lenovo /Asus / Acer- France,ChinaGovernmentKA- LeadingDesktopLinuxdevelopment- HardwareEnablementVP- Most widelyusedDesktop /Server Linuxdistribution- Ubuntu-Ready PC- 6 month / 24month(LTS)release cycleCR- HardwareEnablement- LaunchPadsupportCS- Dell, HP,Toshiba,Lenovo,Asus, Acerand other PCvendors- France /Chinagovernment- Google- AmazonKR- KeyEngineers- Community- UsermindshareCH- Internet- Free CD- OEM team inTaiwan andUSC$- High engineering cost- High customer service cost- Very low community maintain cost (Allengineers are community member)R$- Training/UCP Certification- OEM Support- LaunchPad (bug/software maintain)- LandScape (Mass Management)
    17. 17. +Case: Cavium NetworkMontaVista5/9/201317KP- Linux kernelcommunity- AP vendors,Intel, ARM,Marvell,Freescale…etc.KA- LeadingEmbeddedLinuxdevelopment- CustomerSupportVP- Most widelyusedEmbeddedRealtimeLinuxdistribution- Strongcustomersupport- Best SDK- Releasecycle followsmajorKernel JumpCR- ProfessionalCustomersupportCS- ARM- Intel- Medical /Healthcare- AutomotiveKR- KeyEngineers- Customersupport team- UserMindshareCH- Internet- OEM teamworldwideC$High engineering costHigh customer service costR$- OEM Support and Site License
    18. 18. +Distribution and MonetizeModelMake you happy so I can earn money from somewhere else.5/9/2013 18
    19. 19. +Distribution and Monetize Model Freemium model derivation, Free for use, Monetizefrom somewhere else. KSF: Large base of users who Using the product. Why buy: Enough amount of user5/9/201319
    20. 20. +Case: Google Android5/9/201320KP- OHA(OpenHandsetAlliance)- Samsung /HTC / LGKA- Leading mobileLinuxdevelopment- App Store- MobileAdvertisementVP- Most widelyused MobileLinuxdistribution- OHA- Open Source- Compete withApple iOS- ControlledFragmentationCR- AndroidCommunity- Mobile ADdashboardCS- End User- MobileAdvertiseBuyerKR- Key Engineers- Community- OHA- PatentCH- Internet- Telecomoperator- HandsetvendorC$High engineering costHigh supporting costModerate marketing costR$- Mobile AD- App Download
    21. 21. +Case: Mozilla Firefox5/9/201321KP- Google- CommunityKA- CommunityengagementVP- Most widelyused browser- Most“Plugable”Browser,thousands ofplug-insCR- Coopetion withGoogle- High-TouchedcommunitymaintenanceCS- Google- CommunityKR- KeyEngineers- CommunityCH- InternetC$High engineering costMiddle community maintain cost(Allengineers are community members)R$- Mobile AD through Google(Default search/Landing Page)
    22. 22. +Open SourceBusiness ModelsDual License ModelDistribution andService ModelDistribution andMonetize Model(Freemium Model)From Service to Product5/9/201322
    23. 23. +Footnote