Open Source: Where’s the Money?

Having bills to pay and stuff, I sometimes wonder where my next invoice (or paycheck when I was an employee) is coming from. Using Open Source software is a cornerstone of my consulting practice, so I also think about Open Source software. Today, I’m thinking about both.

So, I’m wondering: where’s the money in Open Source software? This article from Business Week (it’s a couple of years old) says the model is broken. That is, selling services and support around Open Source software is not working for many companies who try it, so the model is broken. I would argue that’s a little like saying, “The business model of computer manufacturing is broken… see how few companies can make a profit doing it?” The premise that because few companies succeed doing a thing, that the thing is flawed is, well, kinda stupid.

But that raises an interesting question. Even though the premise of the article is flawed, is there really money in services and support? Some companies do succeed at it. Look at Red Hat, JBoss or Canonical. And if you want a bunch of information about the Open Source Business Model, check out this link.

Personally I believe that our industry will evolve into a model that looks much like the service industry for, say, plumbing supplies. I mean, there are a handful of companies that make pipes and fittings (and I don’t know the name of a single one off the top of my head) but I can look in the phone book and choose from dozens of plumbers. Meaning, one day there will be a handful of companies that “manufacture” software, and the rest of us will be involved in using it to solve business problems (imagine that) and fixing it when it breaks. We’ll be integrators. Software Plumbers.

To sum up, I believe that software development will morph into software solutions, which is inherently service based. So in my opinion, the money is in the services. Red Hat and other companies that are using a services model around free software are getting it right. Just because everybody out there that tries can’t make it profitable doesn’t mean the model is flawed.

What do you think?



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