The document discusses various topics related to open source software, including business models, licensing, warranties, liability, and recycling. It poses questions about how open source software can generate revenue, how to prevent openness from interfering with making money, and who should pay for or benefit from open source code. It also discusses potential revenue streams like warranty services, turning open source software proprietary, and the idea that shared code leads to shared risk and a business model of insurance.

6. The Innovation Premium

14. 10Q’s, 3 months ended Borland Red Hat March 2003 March 2002 May 2003 May 2002 Licenses (and other) 56809 47668 17397 19656 Subscription Services 17561 9409 9785 8866 Services Total Revenue 74370 57077 27182 28522 Total Revenue Cost of licenses 3099 3520 3103 1989 Cost of subscription Cost of services 6599 5035 5649 5280 Cost of services Sales, general, admin 46247 31033 13486 14323 Sales, general, admin Research and development 17971 11949 6019 5143 Research and development Restructuring 17872 1522 Cost as % of services 38% 54% 58% 60% Cost as % of services R&D as % of revenues 24% 21% 22% 18% R&D as % of revenues R&D as % of licenses 32% 25% 35% 26% R&D as % of licenses R&D as % of sales&admin 39% 39% 45% 36% R&D as % of sales&admin R&D as % of expenses 28% 28% 31% 26% R&D as % of expenses Services as % of revenues 24% 16% 36% 31% Services as % of revenues

43. Revenues in $billions US Census Bureau Prepackaged software Data processing Computer services Total pkg% Exports 1985 45 1986 51 1987 56 1988 68 1989 79 1990 16 18 54 88 18 1991 18 19 57 94 19 1992 21 20 64 105 20 1993 25 23 69 117 21 1994 28 27 79 134 21 1998 72 33 140 245 29 14 1999 81 37 164 282 29 17 2000 88 42 185 315 28 20 2001 91 47 184 322 28 20

47. CIOInsight Research IT spending allocations (%) 2001 2002 Staff 36.9 37.8 Hardware 18.3 17.1 Software 14.9 14.9 Services 13.6 13.2 Maintenance 12.2 12.9 Training 4.2 4.0

71. Suggestions? Clarifications?