Alessandro Nadalin gave a presentation on open source business models at the Better Software 2010 conference in Florence. He discussed four common ways that both open source and closed source companies generate revenue: 1) selling the software, 2) selling software support, 3) developing and boosting the software, and 4) providing training. He provided examples of companies like Canonical, Varien, Red Hat, and the Mozilla Foundation that have successfully implemented open source business models through combinations of these strategies. Nadalin also argued that open source licenses can effectively protect intellectual property rights and debunked the myth that open source work is unrewarding. He encouraged the audience to consider open source as a viable business model.

1. Open source business models
Better Software 2010
Florence, May 5/6th
Speaker: Alessandro Nadalin

2. Who am I?

OS passionate & enthusiast

PHP developer

SEO consultant

Freelance used to work with OS products

Freelance used to give back to the OS market
✔
Member of the Joomla! Bug Squad
✔
GPL plugins for GPL softwares

Nerd
✔
Blog
✔
LinkedIN
OS business models @ Better Software 2010, Florence

3. Reasons why I'm here
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Improve consciousness about OSS power
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Clarify OS can be rewarding
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Proove OS­driven business models can be
succesfully achieved

Florence is nice :­)
OS business models @ Better Software 2010, Florence

4. Disclaimer
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Do I hate companies working with closed­source
software?
No, love & peace dudes.
OS business models @ Better Software 2010, Florence

5. Table of contents
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OS vs CS models
✔
Where do we get into?
✔
How do we get into?
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OS case study
✔
Who's succefsully working with OSS?
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OS rights
✔
We are not protected!
✔
We are not rewarded!

Hints

Cya
OS business models @ Better Software 2010, Florence

6. OS vs CS: what can we do?
1: We sell the software,
2: We sell software support,
3: We develop/boost the
software,
4: We train people for our
software.
OS business models @ Better Software 2010, Florence

7. VS1 CASE: we sell the software
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CS companies are usually forced to sell their
software to survive
✔
CS companies usually give trial versions for free
✔
Time­limited
✔
functionally­limited

OS companies can easily choice between:
✔
Selling the software
✔
Distributing the software freely
✔
Provide both commercial and free software versions
( functionally equal )
✔
Provide both commercial and free software versions
( basic and enterprise edition ) OS business models @ Better Software 2010, Florence

8. VS1: from our POV
So, image you as a startup, imagine you estimated
equal revenues from both models, which one will
you choose?
I bet the one which gives you more freedom.
OS business models @ Better Software 2010, Florence

9. VS1: customer's POV
Imagine you as end­user, you have to choose
between a trial version of software A and a
community edition of software B.
We (probably) don't need to discuss.
OS business models @ Better Software 2010, Florence

10. VS1: other company's POV
Imagine you as another company which needs a
software which does what your software do.
If you're a CS vendor running against an OS
vendor that company has to choose among:
✔
Your software, that always needs your support
✔
Their software, that might need other's vendor
support
Is closed source software as rewarding as you
thought?
OS business models @ Better Software 2010, Florence

11. VS2: we sell software support
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CS company can sell support:
✔
To the end­user
✔
To their resellers
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OS company can sell support:
✔
To the end­user
✔
To their resellers
✔
To other companies
Other companies can be resellers and developers:
closed source software forces you
to consider other companies only as resellers.
OS business models @ Better Software 2010, Florence

12. VS3: we boost the software
Let's start with a concept:
6 months of inactivity and your software is OLD.
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Software NEEDS upgrades
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Customers NEED enhancements
Who's responsible for the delivery
of all this stuff?
OS business models @ Better Software 2010, Florence

13. VS3: boost the software
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CS software:
✔
YOU

OSS:
✔
You and your customers
CS clients can provide feedbacks and tests. Passive stuff.
OS is the only place where the customer is active
(this reminds me the agile way, doesn't it?) and
interested in testing, reporting, providing patches,
features and so on.
OS business models @ Better Software 2010, Florence

14. VS3, a disclaimer...
”HELL YEAH!,
I developed kicks­ass OSS and now I'm gonna make
money with the effort of my community.”
This doesn't happen all the time.
But with OS can happen, with CS not.
When you know you won't have any possibility,
that is not FREEDOM.
OS business models @ Better Software 2010, Florence

15. VS4: we care a lot!
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CS software training:
✔
Using the software
✔
Mastering the software
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OSS trainings:
✔
Using the software
✔
Mastering the software
✔
Extending the software
OS business models @ Better Software 2010, Florence

16. Who's doing it right?
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Let's analyze:
✔
Canonical
✔
Varien
✔
Red Hat
✔
Mozilla foundation
...leaving Alfresco, Atlassian, Sun and many others for your case studies...
OS business models @ Better Software 2010, Florence

17. Canonical
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Provides both desktop and server
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Ubuntu
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Edubunutu

Kubuntu
editions while selling commercial contracts ( for
technical support ).
OS business models @ Better Software 2010, Florence

18. Varien
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Provides free kick­ass ecommerce
platform Magento CE

Sells super­kick­ass ecommerce platform
Magento Enterprise Edition
✔
Basically sells features for an already good software

Recently ( 15 March 2010 ) received a $22.5
million capital injection
OS business models @ Better Software 2010, Florence

19. Red Hat

Provides Fedora for free while selling RHEL
Althought I firstly admit Red Hat isn't the proper
company to show you, we have to admit that
since 1993 years RH is selling good software,
keeping together a solid community helping
other entities in fundraising ( CC ) instead of
being the fundraiser.
Red Hat is solid. That's the point.
OS companies can be solid companies.
OS business models @ Better Software 2010, Florence

20. Mozilla foundation
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Not properly a company as we intend it,
Mozilla's incomes are basically composed by:
✔
Fundraising
✔
General donations
✔
Partnerships
Partnerships?
Offers software integration: for example, Google
as the default search engine of FireFox.
Succesfull vertical integration.

21. Myths: we have no rights!
Huuuuuuuge myth about OSS is that you're not
protected by licenses.
Common­widely­used OS licenses like
✔
GPL
✔
LGPL
are strict, when we need it.
✔
If you re­use GPL code, you must release GPL
and give credits
✔
If you re­use LGPL code, you must give credits
OS business models @ Better Software 2010, Florence

22. Still dubious?
Ask Robert Jacobsen ( a single developer ) if the
100k from Matthew Katzer ( Kamind Associates
), in the next 18 months, will be a valid reason to
continue developing and releasing GPL...
Time's are changing: those who believe that OS is
something rewardless that can freely ( free as in
freedom and free as free beer ) help their
commercial products risk to loose the train to the
next level.
OS is now a business, keep it in mind.
OS business models @ Better Software 2010, Florence

23. Hints
Maybe lots of you already know it, but I
recommend you to read the guidelines of the
hacking business model.
OS business models @ Better Software 2010, Florence

24. At the end...
FLAME TIME!
P.S. : Feel free to contact me for discussing how
much does OSS kicks­ass :­)
alessandro dot nadalin AT thegooglemailprovider dot com
OS business models @ Better Software 2010, Florence