This document discusses different business models for companies using free and open source software (FOSS). It outlines four main categories of FOSS business models: distribution, service providers, hardware, and retail. For each category, it provides examples of companies and discusses their value propositions, critical success factors, and types of offerings. The document encourages exploring these FOSS-based business models and notes that while there are no royalty fees, there are still options for companies to earn money through various experiments with FOSS.

1. Digital Sustainability
in the Knowledge Society
Free/Open Source Software (FOSS) and Business
Dr. Marcus M. Dapp
Board OKF Germany / IT Strategist, City Government Munich
31.10.2011

2. Historical »Halloween Documents«
Series of confidential
Microsoft memoranda
leaked in 1998/1999 on
potential strategies
relating to free software,
open­source software,
and to Linux in particular
­­ and a series of
responses to these
memoranda written by
Eric Raymond.
Marked "Microsoft confidential", they identify FOSS, in particular Linux, as a major threat
to Microsoft's dominance of the software industry, and suggest ways in which Microsoft
could disrupt the progress of open source software. (Source: Wikipedia)

3. Software business is
changing …
FTD vom 29.10.2008

4. Founding IT startups...

5. Task: Start up the »Open™ Corporation« !
• Somehow...
• Base business model on FOSS
• Try to earn money with it
• Key business plan questions
• Which customer needs do you address?
• What is your offering? (product/service)
• Who are your customers?
• What is the added value they get yor their
money?
3­5­1
interaction

6. Four generic FOSS business models
• Distribution
• Operating system
• Applications
• Service Provider Many different models...
• Full service
• Specialized service
• Events
• Hardware
• Retail
Adapted from Berlecon – FLOSS Survey, part 3 (2002)

7. A) Distribution : Operating system
Examples for GNU/Linux: RedHat, Canonical, Novell
Value proposition:
Packaging + X
Critical Success Factors/Core competencies:
Brand building, distribution, marketing
Types of Offerings:
• Range from standard to individual solutions
<product> <service>
Distribution – Merchandising – Support – Training – Integration ­ Consulting

8. A) Distribution : Applications / Tools
Ex.: mySQL, Star/OpenOffice.org, FireFox, SourceForge
Value proposition:
Scheduling, professional delivery, support
Critical Success Factors/Core competencies:
Software expertise, Community relationship,
Hire core developers, (Dual­)Licensing »symbiosis« !?
Types of Offerings:
• Open up older versions
• Consulting, support
• Dual­licensing (closed and open)
• Proprietary additions (»open core«)

9. B) Service Providers : Full service
Examples: Distributors, Optaros
Value proposition: Technology
product/technology expertise dependence
Critical Success Factors/Core competencies:
leverage technical / integration knowledge
for service offering
Types of Offerings:
• »Everything« around product/technology
• Product support in broadest sense

10. B) Service Providers : Specialized service
Examples: Accenture, IBM, FOSS Group
Value proposition:
business process expertise, IT­consulting
Critical Success Factors/Core competencies:
leverage knowledge for FOSS offering
Types of Offerings:
• Support contracts (e.g. guaranteed reaction) Demand level?
• Training (direct, e­learning)
• General IT consulting or focus on FOSS

11. B) Service Providers : Events
Examples: openexpo.ch, LinuxTag, OSCON
Value proposition:
Present »hot topics & trends«, knowledge
Critical Success Factors/Core competencies:
Pick topics, event management
Types of Offerings:
• Platform for community Who pays?
• Information for customers
• PR/Marketing channel for Service Providers

12. C) Hardware
Examples: OLPC, openmoko, some Android phones, »Freedom Box«
Value proposition:
»free/open hardware«
Critical Success Factors/Core competencies:
community relationship, HW/SW combo
Types of Offerings:
• Hardware
• Software sharing platform
• Support

13. D) Retail
Examples: O’Reilly, CNET, heise, (publisher, bookshops)
Value proposition:
Specialized sales channel for products
Critical Success Factors/Core competencies:
(Mass) market access, retail chain brand
Types of Offerings:
• Software packages
• Books, Tutorials, Videos, etc.
• Merchandise articles

14. FOSS­based business models
• Absence of royalty fees still
leaves options to earn money
• Many experiments are ongoing...
Check out our groups this year!
#1 Offenes Cloud Computing
#6 Freedom Box
#7 diaspora – Freie Alternative zu Facebook?
#15 Geld verdienen mit FOSS

15. Nach der Pause
Unser Gast, Georg Greve, stellt ein
reales FOSS Business vor:
KoLab Systems AG