Stuart Cohen, formerly CEO at Open Source Development Labs and currently CEO of Collaborative Software Initiative, says The Open Source Model Is Broken in article today in Business Week.
For anyone who hasn’t been paying attention to the software industry lately, I have some bad news. The open-source business model is broken.
Companies have long hoped to make money from this freely available software by charging customers for support and add-on features. Some have succeeded. Many others have failed or will falter, and their ranks may swell as the economy worsens. This will require many to adopt a new mindset, viewing open source more as a means than an end in itself.
Red Hat, arguably the most successful open-source company, has also found ways to add value beyond supporting the Linux kernel. It adds substantial layers of software on top of the kernel, a solid piece of software that needs little support, in order to provide additional value to its customers. If Red Hat relied on supporting the Linux kernel, it would go out of business simply because the code is so sound.
And therein lies the great paradox: Open-source code is generally great code, not requiring much support. So open-source companies that rely on support and service alone are not long for this world.
Consider Sun MicroSystems’ (JAVA) $1 billion acquisition of open-source database software vendor MySQL. With it came great code, but little revenue for the acquiring company. MySQL does provide the perceived value of choice and some open-source “cred” for Sun, but unless it adds significant value on top of the open-source project, I don’t see how Sun will ever generate enough revenue to make this a profitable transaction.
Now for the good news: We’ve learned that collaboration results in really good software that everybody can use.
While the open-source business model may be broken, the concepts behind open source will continue to bring new value to customers and strong returns to software company stakeholders.
But the value is in the collaboration, not in open source itself. . .
On January 22, 2007, OSDL and the Free Standards Group merged to form The Linux Foundation, narrowing their respective focuses to that of promoting Linux in competition with Microsoft Windows.
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