Viable open source business models emerge

The problem with Open Source has always been to my mind that the myth of Open Source slowed down the development of mature business models.

The myth is that OSS is an almost altruistic endeavour when end-users cooperate to produce the software projects they require.   In this myth, the vendor role is one of coordination, packaging and support for which the end-users willingly pay maintenance and support fees.

Unfortunately, this virtuous circle was the exception rather than the rule when it came to enterprise OSS:  Most Open source projects rely almost entirely on vendors for code contributions and vendors have found it hard to get the maintenance fees from users who struggle to justify paying for something perceived as free.  This has made the path of any business following this model extremely difficult.

Therefore, I have been pleased to see that the myth is beginning to dissipate and what has been happening behind the scenes emerge.  The451, who have an excellent blog focused on the enterprise Open Source space, have recently published a report which is interesting because it rings true to my experience when it says:

The majority of open source vendors utilize some form of commercial licensing to distribute, or generate revenue from, open source software.


Ad hoc support services are used by nearly 70% of the vendors assessed, but represent the primary revenue stream for fewer than 8% of open-source-related vendors.


Most vendors generating revenue from open source software are reliant on direct sales staff to bring in the largest proportion of revenue.

The cynics among us might say that this is starting to sound very like the closed source model that OSS was meant to kill.  However that would still be a little unfair – OSS is still different but maybe not as different from a commercial perspective as originally advertised.


Posted in Imported, Open Source.

One Comment

  1. Ronan,
    I’ve only just got round to seeing this. You do need to be buying me that pint and hearing a more subtle Value creation & sharing view that is working for Red Hat.
    Cheers – Peter Green

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