Open Source Business Models By Mike Telmar, Jacob Jennings, and Jerome Thomas

Agenda What is open source? Reasons for open source Reasons against open source Dangers with licensed software What is the conventional business model? The five models Why students should care

What is Open Source? Generally speaking it is computer software that is designed with the source code open to the public and with no license or distribution requirements.

What is Open Source? Free Redistribution: the software can be freely given away or sold. Source Code: the source code must either be included or freely obtainable. Derived Works: redistribution of modifications must be allowed. Integrity of The Author's Source Code: licenses may require that modifications are redistributed only as patches. No Discrimination Against Persons or Groups: no-one can be locked out. No Discrimination Against Fields of Endeavor: commercial users cannot be excluded. Distribution of License: The rights attached to the program must apply to all to whom the program is redistributed without the need for execution of an additional license by those parties. License Must Not Be Specific to a Product: the program cannot be licensed only as part of a larger distribution. License Must Not Restrict Other Software: the license cannot insist that any other software it is distributed with must also be open source. License Must Be Technology-Neutral: no click-wrap licenses or other medium-specific ways of accepting the license must be required.

Advocates Reasons to use Open Source Software Higher quality, more reliable Quicker technical support No licensing More secure Cheaper Freedom Faster

Critics Reasons to not use Open Source Software Not for mission-critical applications Potential backlash from open-source community Often buggy and untested code

Example of Dangers with Licensed Software Ernie Ball  Music company  Transferred out-dated computers to secretarial work  Sued by Microsoft for unknown breaching of licensed agreements  Cost $100,000  CEO, Sterling Ball, within 6 months used no Microsoft products  Uses all open source (saved $80,000+) news.com.com/ _ html?tag=lh

What is conventional business model? Paying programmers to create software Closed source code Requiring customer to pay for each copy of software (Licensing) Making money off software design, not maintenance and support Examples:  Microsoft XP Microsoft XP  Apple Mac OS Apple Mac OS

The Five Models Open Source + Service Mixed Open Source + Buy Off Open Source + Aggregation Open Source + Hardware

Open Source + Service Companies sell support and services around open-source software Advantages  Pay only for support, not software  Low switching cost Examples  Red Hat (Linux) Red Hat  JBoss (middleware) JBoss

Mixed Open-source code base with proprietary add- ons Advantages  Proprietary add-ons may not be necessary  Acquire experience before buying add-ons Example  Sourcefire (security) Sourcefire

Open Source + Buy Off Companies offer a proprietary license for their open-source software Users can modify the software and redistribute it without making the code open Examples  MySQL (database) MySQL  Gluecode (web servers) Gluecode

Open Source + Aggregation Companies assemble various open-source software packages into integrated units Advantages  Simplifies open-source integration and support Example  Navica (open source selection) Navica

Open Source + Hardware Hardware makers use open source as the foundation for the software that runs the machines Advantage  Lower prices on hardware Example  Cisco Cisco

Why students should care Know options in purchasing software and applications The most popular new business model in the software industry, according to venture capitalistsaccording to venture capitalists Big corporations are investing in open-source  IBM and Oracle have both invested over $1 billion each

Things to remember Examples of software created with open- source business models  Red Hat Linux, MySQL, Mozilla Foxfire Companies are investing big money  IBM, Oracle Advocates believe it’s better because it’s faster, cheaper, and more reliable

Bibliography news.com.com/ _ html?tag=lh linux_cz_dl_0615jboss.html linux_cz_dl_0615jboss.html Polvi, Alex. Personal Interview. February Red Hat JBoss Sourcefire MySQL Gluecode Navica Cisco