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The free software business.

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The concept of free software has always amazed me because of the fact that so many voluntary developers were willing to put in time outside their day jobs simply for the fun of it and then give away their work for free. Its voluntary nature however, made me expect that the free software movement will remain the realm of the more technically inclined people and will not to turn into mainstream business. However, it has defied all my expectations, going from strength to strength and I got a clue that it has finally arrived when Dell recently announced a line of desktops and laptops based on linux[2]. But how does a movement whose premise is being “free” get the attention of the business world?

Free Speech, not Free Beer.

One of the less obvious characteristics of the free software philosophy is that nowhere does it bar the developer from charging money for their software. What it does stress is that the source code of the product must be made available so that the user can study/modify it, redistribute it to their friends and release the changes they have made back for the community to use. Companies can therefore charge for their products while still adhering to the free software principles, most of them though, offer their software for free and earn their cash from elsewhere. In this article, I will examine some of the avenues they use.

Product support and technical training.

This is the preferred mode of operation for linux vendors such as RedHat. RedHat packages linux into a distribution and allows users to download it free of charge. They have a strong focus towards the server market as that is the segment that Unix/Linux have been most successful in beating back Microsoft’s stranglehold. Most companies though, do not wish to divert resources from their core competencies to figure out how to install RedHat systems and trouble shoot it in case something goes wrong. So RedHat charges them for the technical training of staff(if needed) and the technical support if needed. RedHat is perfectly within its rights to charge $500 dollars/hour for the training and support as long as they do a good job of it. InTheir core competency is in their intricate knowledge of the distribution they have put together and their ability to swiftly and effectively setup systems or diagnose faults. The great thing is that any other company can also gain the same level of expertise (and they probably have) by studying the code or experimenting with the freely available system. The knowledge is not tied down to the company that owns the code.

Licenced versions of Open source software.

One of the terms of the GPL licence is that software that is tightly linked to another product released under the GPL licence has to be released under the open source licence as well. Some companies, however would like to base their products on an open source one (the free DBMS system MySQL is a good example) without releasing their software as open source. MySQL can therefore have two versions of their database system, one which is released as open source while the other is a closed source version which needs a licence before it can be used as part of a product. The licenced version of MySQL does not require the database user to release their product under the GPL and the licence fees constitute a significant part of the revenue stream of the company.

A slight variation of the above is releasing a basic version of the software as open source so as to obtain a larger audience compared to non free software and charging customers for an upgrade to a premium version which has more features/more support etc. This strategy is followed by Sun, which offers Open Office as a free software office application suite of which Star Office is the premium version.

Software as a service

Companies interested in offering a software service benefit immensely from the open source movement. The availability of free software can drastically reduce development cost, while the availability of the source code from existing open source projects can reduce the development time. Scaling the system up as the business develops is also less expensive, as there is no need to pay for the right to install software on additional computers/servers. With tried as tested open source projects such as Apache, MySQL, Zope etc, web developers have a powerful toolkit to craft their applications with.

On the whole, the open source projects have provided businesses and individuals with a platform on which to innovate. The free availability of code and software ensures a wider target audience as well as more competition in the market. The ability to change code and release it back to the community ensures continual improvement and strengthening of the platform. Just as Isaac Newton attributed his achievements to standing on the shoulders of giants[3], so too can open source developers take advantage of the vast efforts of their predecessors and pave the way for their successors…

[1]www.gnu.org – Information about the GPL licence for free software.

[2]www.dell.com/ubuntu – Dell PCs with Ubuntu.
[3]Quotes by Isaac Newton.

[4]BuilderAU – Making Money from Open source


Written by clueso

May 29, 2008 at 10:50 pm

Posted in Uncategorized

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