Business modelsof open source software and free software                              Trung Huynh       Senior Product Man...
By 2011, 80% of all commercial softwarewill contain open source code.        Open source impossible to avoid, Gartner says...
Executive Summary• “Free software” means software that respects users freedom  and community.• “Open source” refers to a p...
Who Am I ?•   Fontys Universities of Applied Sciences•   Lead Developer @ Minus3 Amsterdam•   Founder @ VNSolutions•   CTO...
The Free Software• Free Software Foundation  (FSF) by Richard Stallmand  1985• Must respect four  freedoms:   – The freedo...
Open Source Software• Free Distribution            • Distribution of License• Source Code                  • Not specific ...
What’s the difference between free software and open source software?• Who’s freedom?• What freedom?           Tim-Oreilly...
FREE SOFTWARE                  OPEN SOURCE• Freedom of the code          • Freedom of the developer• Source code will ALWA...
Why could this matter               to you?• Many developers don’t read licenses.• Open source developers need to be aware...
OSI Approved licenses• 68 Approved Licenses• To name the few :  – Apache License, BSD, MIT  – LGPL, Mozilla (MPL), Eclipse...
3 kinds of Licenses They require that any modified software and any program including this software in a derived product m...
The service model•   Simple service model:     –     commercialization of services that have no link           to a specif...
The service model•   Indirect monetization model:     –   commercialization of services associated to         software dev...
Examples – Zend is the leading provider of software and   services for developing, deploying and   managing business-criti...
The value added distribution                                                              Programmers• Selling a standard ...
ExampleRevenue $909.3 million (increase 22%) in 2011Red Hat offers two versions:•The Enterprise version which is tested an...
The double license model– An open source license for the standard  product– A license that is more protected, which  comes...
The double license model•   The open source license has to be proliferate copylefted.•   The commercial version must be un...
Example•  Magento offers 2 versions :    – The community version, which contains       85% of the commercial version      ...
It is best for open source companies towork on an already established market• Working on an established market ensures:   ...
The mutualization model•   The mutualization model consists in the development of a relatively    simple version of the pr...
Example•   Concrete5 entered the CMS scene in 2008, and since then has been    making solid headway to becoming one of the...
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Speaker trung huynh opensource business model

  1. 1. Business modelsof open source software and free software Trung Huynh Senior Product Manager at Project LANA
  2. 2. By 2011, 80% of all commercial softwarewill contain open source code. Open source impossible to avoid, Gartner says, Network World
  3. 3. Executive Summary• “Free software” means software that respects users freedom and community.• “Open source” refers to a program in which the source code is available to the general public for use and/or modification from its original design free of charge• Open Source business model: – The service model – The distribution with value added model – The double license model – The mutualization model• These business models are profitable and sustainable over time
  4. 4. Who Am I ?• Fontys Universities of Applied Sciences• Lead Developer @ Minus3 Amsterdam• Founder @ VNSolutions• CTO @ Purple Asia Digital• Sr.Product Manager @ Project LANA
  5. 5. The Free Software• Free Software Foundation (FSF) by Richard Stallmand 1985• Must respect four freedoms: – The freedom to launch software for any use – The freedom to study the way software works and thus to freely access its source code – The freedom to redistribute and sell copies – The freedom to enhance software and publish the results
  6. 6. Open Source Software• Free Distribution • Distribution of License• Source Code • Not specific to a product• Integrity of Author’s Code • Not restrict other• No Discrimination software • Technology Neutral
  7. 7. What’s the difference between free software and open source software?• Who’s freedom?• What freedom? Tim-Oreilly and Richard-Stallman
  8. 8. FREE SOFTWARE OPEN SOURCE• Freedom of the code • Freedom of the developer• Source code will ALWAYS be • Code CAN be included in available and can never be proprietary works under restricted. certain conditions.
  9. 9. Why could this matter to you?• Many developers don’t read licenses.• Open source developers need to be aware of the licenses they use.• The right license depends on the code and the community.• Licenses encourage certain behaviors, discourage others.
  10. 10. OSI Approved licenses• 68 Approved Licenses• To name the few : – Apache License, BSD, MIT – LGPL, Mozilla (MPL), Eclipse (EPL/CPL) – GPL …
  11. 11. 3 kinds of Licenses They require that any modified software and any program including this software in a derived product must be placed under the same license Examples: • General Public License (GPL) • Mozilla Public License (MPL) They contain a clause allowing users to mix the software with proprietary software and place it under a proprietary software and place it under a proprietary license, on the condition that the free module remains under a free license Examples • Lesser General Public License (LGPL) • Berkeley Software Distribution (BSD) • License MITAnyone can transform a source code under this license withoutacknowledging its original developerExamples: • Xfree86 • X Consortium • License Apache
  12. 12. The service model• Simple service model: – commercialization of services that have no link to a specific product – A variant of this model : Application Service Provider model Growth levers : –Extending the number of services offered –Specializing the services offered to develop a competitive advantage
  13. 13. The service model• Indirect monetization model: – commercialization of services associated to software developed or packaged internally Growth levers : •Increase market size •Maximum number of users
  14. 14. Examples – Zend is the leading provider of software and services for developing, deploying and managing business-critical applications in PHP. – Zend Offered : • Zend PHP Server – Zend Framework => Enterprise version • Zend Training and Certification
  15. 15. The value added distribution Programmers• Selling a standard version of Programmers Programmers an existing product.• The “sale” is generally made as a yearly subscription to the Software distributer: product and a set of attached packages the different services source codes Bugs singaling, patch development, Subscription to proposal for the more improvement advanced version Free distribution of the community version Objective-expanding the community Community of programmers Customers
  16. 16. ExampleRevenue $909.3 million (increase 22%) in 2011Red Hat offers two versions:•The Enterprise version which is tested and whoseinteroperability is warranted – Red Hat Enterprise Linux, or RHEL, which allows only two users to have RHEL simultaneousl – RHEL Advanced Platform, which allows an unlimited number of user to have it at the same time • The “community” version (Fedora)• Even though Fedora does not provide any revenue, Red Hat is careful not to neglect its community version and participates actively in its animation
  17. 17. The double license model– An open source license for the standard product– A license that is more protected, which comes with a guarantee and is generally linked to a product that offers more functionalities
  18. 18. The double license model• The open source license has to be proliferate copylefted.• The commercial version must be under proprietary license• This solution allows the combination of the free licenses’ advantages=> Community
  19. 19. Example• Magento offers 2 versions : – The community version, which contains 85% of the commercial version => Open Software License (OSL 3.0) – The commercial version: » Enterprise : $14,420 / year » Enterprise Premium : $49,990 / year => Magento Enterprise Edition License• Also offered –Consulting –Training
  20. 20. It is best for open source companies towork on an already established market• Working on an established market ensures: – That consumers are educated. Potential customers have precisely identified their needs, which makes the monetization of the serivce sold by the open source company easier – That a benchmark exists. Open source companies are plagued by confidence issues from users, which tend to decrease if one or more proprietary software have already proven their efficiency. The existence of a benchmark also highlights the pros of an open source product (price, quality of service, etc.) • Open source’s main successes emerged on a market that was under the sway of a proprietary software seller: 1. Database: MySQL et PostgreSQL vs. Oracle, IBM and Microsoft • ERP: Compiere vs. Oracle and SAP • CRM: SugarCRM et Compiere, vs. Siebel o Oracle • OS: Red Hat vs. Microsoft
  21. 21. The mutualization model• The mutualization model consists in the development of a relatively simple version of the product and the subsequent development of modules on demand
  22. 22. Example• Concrete5 entered the CMS scene in 2008, and since then has been making solid headway to becoming one of the premier go-to web publishing platforms available today.• C5 offers : – Free version of CMS – Addition feautures are developed upon request – Certain features will be sold on Marketplace
  23. 23. Thank you
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