Business models for open source business applications? Bernie Gleason Common Solutions Workshop September 24, 2003

How open source community works Organization develops first version of software Code release to a community of developers to use and modify Developers obtain an open source license to possess, compile, modify and redistribute the software Changes are sent back to managing group for consideration for inclusion in the official version Process continues indefinitely

Software Proprietary – fee for executable software and source is generally not available. Shareware – initial software is free but usually a fee for continued use and upgrades. Freeware – software is free but source code is not shared. Open Source --software is free and source code is shared

Crossing the Chasm Jeffrey Moore, “Crossing the Chasm”

Crossing (Recommended Approaches) Target niche markets Target niche areas Provide the “whole product,” including supporting services Work from the edges on in Look for the “pain”

Niche Markets Advantages Requirements for delivering a whole product is simplified and limited Niche markets spread word-of-mouth references and endorsements Visible success of market dominance is more easily obtained

Primary Questions and Concerns? Businesses – How the heck do you make money? Customers – How can you depend on a product that doesn’t have the support of an established vendor? Investors -- What is the development and funding plan for long-term sustainability? IT Shop --How radical is the change to the way that IT does business?

Threats Lack of confidence that company will survive Hacker image Freeloaders – all takers but few contributors Patent infringements

Economic Models Service Sellers Loss Leaders Widget Frosting Accessorizing Cathederal and the Bazaar, Eric Raymond

Software Trends Commodization – will drive down prices Customization – will give customers more opportunities Collaboration -- will leverage participation beyond software Tim O’Reilly – July 2003

Business Approaches Proprietary sitting on open source.org and.com Packaging Services – Halo effect Component replacement

Look at JBoss (as a possible model) Focused Concentration -- application server Architecture and version control Brand identity – JBoss Small core staff of 15 or so Developers provide service Training first step in business plan Second step to become a service company.org and.com structure Community participation – quality assurance

Observations Enlightenment – customers and IT Information sharing -- clearinghouse Commercial relationships Exemplary business models and references Component architecture and interoperability Institutional strategy and policy “Tipping Point”

Questions?