Oss Business Models

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Oss Business Models

  1. 1. AN INTRODUCTION TO OPEN SOURCE SOFTWARE BUSINESS MODELS PRADYOT SAHU
  2. 2. An Introduction to Open Source Software Business models <ul><li>An Introduction to Open Source Software Business models. </li></ul><ul><li>How open source software companies are created and run. </li></ul><ul><li>The basic building blocks of an open source software organization. </li></ul>
  3. 3. OSS Business Models - Contents <ul><li>Donation </li></ul><ul><li>Free Software, Paid Extra </li></ul><ul><li>Dual Licensing </li></ul><ul><li>----------------------- </li></ul><ul><li>Money Generation thru Sales </li></ul><ul><li>---------------------- </li></ul><ul><li>Some other models </li></ul><ul><li>----------------------------- </li></ul><ul><li>Exit by Sales </li></ul><ul><li>Exit by Stock Market Listing </li></ul>
  4. 4. OSS Business Models-Main <ul><li>Donation </li></ul><ul><ul><li>Individual, </li></ul></ul><ul><ul><li>NPO, </li></ul></ul><ul><ul><li>Corporate </li></ul></ul><ul><li>Free Software, Paid </li></ul><ul><ul><ul><ul><li>Customization </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Support </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Training </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Implementation </li></ul></ul></ul></ul><ul><li>Dual Licensing (MySQL, Alfresco)‏ </li></ul><ul><ul><li>Free Licensing Version </li></ul></ul><ul><ul><li>Paid Closed Source Licensing Version (Features/Performance)‏ </li></ul></ul><ul><ul><li>Paid Customization </li></ul></ul><ul><ul><li>Paid Support </li></ul></ul><ul><ul><li>Paid Training </li></ul></ul><ul><ul><li>Paid Implementation </li></ul></ul>
  5. 5. Money Generation thru Sales Models <ul><li>Paid CD/DVD software distribution (Shipping and Handling charges)‏ </li></ul><ul><li>Paid Online or CD/DVD Tutorials </li></ul><ul><li>Paid Training and Seminar fees </li></ul><ul><li>Sell subscriptions for online accounts and server access. </li></ul><ul><li>Advertising Sales (Google planning for Android)‏ </li></ul>
  6. 6. Some More Models <ul><li>Just Sell OSS commercially. (no dev)‏ </li></ul><ul><li>Offer commercial technical support contracts and services (no dev) . </li></ul><ul><li>Attract customers by free open source edition, then up-sell to a commercial edition. </li></ul><ul><li>Have open source software in your portfolio to attract customers for other commercial solutions. </li></ul><ul><li>Offer open source software in source code only, executable binaries to paying customers only. </li></ul><ul><li>Latest version available only to paying customers. </li></ul><ul><li>Offer commercial extensions/modules/plugins/add-ons to your open source software. </li></ul><ul><li>Commercial version to finance development of the free version. </li></ul>
  7. 7. OSS Business Models - Exits <ul><li>Exit by Sales </li></ul><ul><ul><ul><ul><li>MySQL to Sun Microsystems with $1b </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Project Management Software, OpenProj to Serena Software </li></ul></ul></ul></ul><ul><li>Exit by IPO/Stock Market Listing </li></ul><ul><ul><ul><ul><ul><li>such as Red Hat in NYSE </li></ul></ul></ul></ul></ul>
  8. 8. Open Source Software Company Creation <ul><li>Group of individuals connected thru Internet (start a project in Sourceforge.net and get people on board who may be just looking for what opensource software available)‏ </li></ul><ul><li>A non-profit organization (such as Apache Foundation) plus a group of individuals in different locations </li></ul><ul><li>A for-profit organization in different locations (Red Hat)‏ </li></ul><ul><li>A non-profit consortium of companies (partially Open Handset Alliance of Android mobile OS)‏ </li></ul><ul><li>Corporate Organization running Open Source Initiative (Sun Microsystems, Microsoft, Intel)‏ </li></ul>
  9. 9. How to get people to start a company <ul><li>Personal and professional contacts </li></ul><ul><li>Open Source Hosting such as sf.net </li></ul><ul><li>Blogs </li></ul><ul><li>Wiki </li></ul><ul><li>Mailing lists/Groups (such as yahoo/google)‏ </li></ul><ul><li>Social Networking Sites and their Groups </li></ul><ul><li>Free PR such as News </li></ul><ul><li>All these need a few committed and dedicated individuals </li></ul>
  10. 10. Open Source Software Company basic building blocks - Contents <ul><li>Business Plan </li></ul><ul><li>Marketing </li></ul><ul><li>Sales </li></ul><ul><li>Finance </li></ul><ul><li>Operation </li></ul><ul><li>Human Resource </li></ul>
  11. 11. The business plan Written or unwritten business plan, but Clear Objective Shared Vision Clear Commitment No 20 or 60 page business plan 2 page business plan and 10 slides Presentation is good enough
  12. 12. The Marketing <ul><li>No Marketing Agency </li></ul><ul><li>No High cost market research </li></ul><ul><li>Word of mouth – real word of mouth, blogs, social networks, groups, wikis (ALL free)‏ </li></ul><ul><li>PR by making news – </li></ul><ul><ul><ul><ul><li>Internet publications, </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Print media publications, </li></ul></ul></ul></ul><ul><li>Hardware and Software vendors may aid distribution to their customers which includes marketing/PR </li></ul>
  13. 13. The Sales and Distribution Channels <ul><li>Free Mirror Sites (of Universities etc)‏ </li></ul><ul><li>Free Internet download of Free Version </li></ul><ul><li>Paid Internet Download of the Paid Version </li></ul><ul><li>CD/DVD sales (with shipping/handling charges PLUS extra)‏ </li></ul><ul><li>Free or Paid Licensing(or Donation) of Software/Hardware Distributors (Like EEE PC) for Free Software </li></ul><ul><li>Paid Licensing of Software/Hardware Distributors for Paid Software </li></ul>
  14. 14. The Finance – Startup Capital <ul><li>Part-timers working for free with separate full time Job </li></ul><ul><li>Bootstrapping (with Some Services Sales)‏ </li></ul><ul><li>Donation (individual/ corporate donation)‏ </li></ul><ul><li>Angel Donors/Angel Funders (with equity)‏ </li></ul><ul><li>Venture Capital/Private Equity companies rarely fund in established Open Source Organization with Good Exit possibility by Sales/IPO </li></ul>
  15. 15. The Operations Internet Distributed Development Distributed Project Management distributed marketing/ sales Wiki Blogs Free or paid Software-As-A-Service for operations and project management
  16. 16. The Human Resource <ul><li>Free resources for software development, documentation, architecture and may be Project Management </li></ul><ul><li>Free/paid part-time resources for office operations in single or distributed locations </li></ul><ul><li>Paid full-time resources for office operations in single or distributed locations </li></ul>
  17. 17. QUESTIONS ?

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