I just read an interesting article (http://stop.zona-m.net/2012/01/who-can-afford-open-source/), where a maker of school administration software (I’m thinking like Blackboard?) in Italy thinks:
you must either have a big organization that supports the development of that software, or be yourself a big company that can afford to make money also in other ways.
It really makes me sad that this business owner has reached this particular conclusion. I’m not familiar with this product, of course, and I don’t speak Italian, but I imagine that the owner is selling licenses and guaranteeing support, etc. as a sole proprietor or with a couple of employees. He has his code in a vault, and is spending time on development and (likely the biggest time sink) support.
Imagine now, if you will:
This same person concentrated his efforts in developing an open source community around his product. If it’s a good product and he is committed to open source, people will join the effort. Suddenly he has 2 contributors, and then five. and then 10. and then 50, and he’s steering his project instead of having to produce everything himself. His project is more robust because more eyes have seen the code. It’s stronger because the group is large enough to effectively integrate test-driven development and CI principles.
So how does our project owner make money? Well, there are several open source business models (by no means an exhaustive or scientific list):
- The Subscription Model (a la Red Hat) – You sell access to the software for a given time period, and can attach support SLA’s on as premiums. Proven to be effective.
- The Support/Training Model – The software is open source, and the company sells installation and implementation expertise. They typically also offer training and customization. Proven to be effective by OpenNMS,Zabbix, and many others.
- The Open Core Model – The core application is open source, and the company offers extensions or plugins that may be closed to customers, along with support & training. I have some personal issues with this model, but several companys (Zenoss, Vyatta, and others) are currently making money with it.
So at the end of the day this project could have:
- a better code base
- a more robust development environment
- wider adoption
- more contributors
and many other benefits by moving to a FOSS business model. Of course I’m not saying that this person should automatically do this. I’m not a business advisor by any stretch of the imagination. But I really don’t think that his statement holds water. It is completely and increasingly feasible to make money with an open source software projcet.
Lost In Open Source 
Good writeup!
I’m failing to see the distinction between the Subscription model and the Open Core model. Companies with open source products that have features available only to paying customers would be considered Open Core. Red Hat and Zenoss fall into this category. I don’t know about Vyatta.
Whether the companies use a subscription or traditional up-front plus maintenance license is a different dimension entirely. I know that both Red Hat and Zenoss use a subscription model.
Zenoss does offer a degraded (in my opinion) version of their product out as an open source application. To get the “enterprise” features (stealing that term from Vyatta) you pay money for non-open extensions and plugins.
Everything you get access to from Red Hat is released under an open source license (which is why you won’t see syslog-ng in there, or flash by default). You can go and download all of Red Hat’s source RPMs right now and build out the latest RHEL release. What the subrscription gives you is:
So the major difference is that the open core model has closed-source aspects, while the subscription model doesn’t. That why when you buy a Red Hat subscription you sign a legal agreement with the company, but you don’t sign any sort of licensing agreement. That’s because they’re all open source.
In my opinion large corporations (with the exception of a few) cannot afford open source, simply because you are not entitled to any (decent) service with open source. You got it for free, why should you expect to get also decent and reliable support?
I don’t quite understand that.
You’re entitled to the service that you agree to with your vendors.
I know of dozens of companies off the top of my head that provide fully open source software and provide stellar service to their customers.