Business models for open source software

There are several different types of business model

Business model

A business model describes the rationale of how an organization creates, delivers, and captures value...

s for making profit using open source software (OSS).

Introduction

Open source software can be sold and used commercially. It is a part of the software industry

Software industry

The software industry includes businesses involved in the development, maintenance and publication of computer software using any business model...

. The financial return on open source software can also come from selling services, such as training and support, rather than the software itself. The use of dual-licensing provides an offer of the software under an open source license but also under separate proprietary license terms. Customers can be attracted to a no-cost and open source edition, then be part of an up-sell

Up-selling

Upselling is a sales technique whereby a seller induces the customer to purchase more expensive items, upgrades, or other add-ons in an attempt to make a more profitable sale. Upselling usually involves marketing more profitable services or products but can also be simply exposing the customer to...

to a commercial enterprise edition.

Further, customers will learn of open source software in a company's portfolio and offerings but generate business in other proprietary products and solutions, including commercial technical support

Technical support

Technical support or tech support refers to a range of services by which enterprises provide assistance to users of technology products such as mobile phones, televisions, computers, software products or other electronic or mechanical goods...

contracts and services. Another possibility is offering open source software in source code

Source code

In computer science, source code is text written using the format and syntax of the programming language that it is being written in. Such a language is specially designed to facilitate the work of computer programmers, who specify the actions to be performed by a computer mostly by writing source...

form only, while providing executable

Executable

In computing, an executable file causes a computer "to perform indicated tasks according to encoded instructions," as opposed to a data file that must be parsed by a program to be meaningful. These instructions are traditionally machine code instructions for a physical CPU...

binaries to paying customers only. With permissive software, any company can distribute the package without the source or software freedoms.

Some companies provide the latest version available only to paying customers. Companies provide proprietary extensions, modules, plugins or add-ons to an open source package. Independent developers often accept donations. SourceForge

SourceForge

SourceForge Enterprise Edition is a collaborative revision control and software development management system. It provides a front-end to a range of software development lifecycle services and integrates with a number of free software / open source software applications .While originally itself...

, for example, lets users donate money to hosted projects which have chosen to accept donations. Users of a software may come together and pool money into a bounty for the implementation of a desired feature or functionality.

Other financial situations include partnerships with other companies. Sometimes a commercial version may be sold to finance the continued development of the free version.

Sell subscriptions

Subscription business model

The subscription business model is a business model where a customer must pay a subscription price to have access to the product/service. The model was pioneered by magazines and newspapers, but is now used by many businesses and websites....

for online accounts and server access. Combine desktop software with a service, software plus services

Software plus services

Software plus Services combines hosted services with locally running software in a variation on cloud computing. Such composite applications combine traditional software with remote services to provide a consistent user experience across devices and form factors.There are various reasons for this...

.

Governments, companies or other non-governmental organizations may develop internally or hire a contractor for custom in-house modifications to software, then release that code under an open source license.

Hybrid

A vendor forks a non-copyleft software project then adds closed-source additions to it and sells the resulting software. After a fixed time period the patches are released back upstream under the same license as the rest of the codebase.

Examples

Much of the Internet runs on open source software tools and utilities such as Linux

Linux

Linux is a Unix-like computer operating system assembled under the model of free and open source software development and distribution. The defining component of any Linux system is the Linux kernel, an operating system kernel first released October 5, 1991 by Linus Torvalds...

, Apache

Apache HTTP Server

The Apache HTTP Server, commonly referred to as Apache , is web server software notable for playing a key role in the initial growth of the World Wide Web. In 2009 it became the first web server software to surpass the 100 million website milestone...

, MySQL

MySQL

MySQL officially, but also commonly "My Sequel") is a relational database management system that runs as a server providing multi-user access to a number of databases. It is named after developer Michael Widenius' daughter, My...

, and PHP

PHP

PHP is a general-purpose server-side scripting language originally designed for web development to produce dynamic web pages. For this purpose, PHP code is embedded into the HTML source document and interpreted by a web server with a PHP processor module, which generates the web page document...

, known as the LAMP stack

LAMP (software bundle)

LAMP is an acronym for a solution stack of free, open source software, referring to the first letters of Linux , Apache HTTP Server, MySQL and PHP , principal components to build a viable general purpose web server.The GNU project is advocating people to use the term "GLAMP" since what is known as...

for web servers. Using open source appeals to software developers for three main reasons: low or no cost, access to source code

Source code

they can tailor themselves, and a shared community that ensures a generally robust code base, with quick fixes for any new issues that surface.

Despite doing much business in proprietary software, some companies like Sun Microsystems

Sun Microsystems

Sun Microsystems, Inc. was a company that sold :computers, computer components, :computer software, and :information technology services. Sun was founded on February 24, 1982...

and IBM

IBM

International Business Machines Corporation or IBM is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. IBM manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas...

participated in developing free and open source software to deter from monopolies

Monopoly

A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...

and take a portion of market share

Market share

Market share is the percentage of a market accounted for by a specific entity. In a survey of nearly 200 senior marketing managers, 67 percent responded that they found the "dollar market share" metric very useful, while 61% found "unit market share" very useful.Marketers need to be able to...

for themselves. Netscape

Netscape

Netscape Communications is a US computer services company, best known for Netscape Navigator, its web browser. When it was an independent company, its headquarters were in Mountain View, California...

's actions are an example of this, and thus Mozilla Firefox

Mozilla Firefox

Mozilla Firefox is a free and open source web browser descended from the Mozilla Application Suite and managed by Mozilla Corporation. , Firefox is the second most widely used browser, with approximately 25% of worldwide usage share of web browsers...

has become more popular, stealing market share from Internet Explorer.

Active Agenda
Active Agenda
Active Agenda is an open source risk management tool.Active Agenda is designed to support operational risk management in organizations and is optimized for high reliability organizations. It is a browser-based multi-user enabled software...

is offered for free, but requires all extensions to be shared back with the world community. The project sells a "Non-Reciprocal Private License" to anyone interested in keeping module extensions private.
Adobe Systems
Adobe Systems
Adobe Systems Incorporated is an American computer software company founded in 1982 and headquartered in San Jose, California, United States...

offers Flex
Adobe Flex
Adobe Flex is a software development kit released by Adobe Systems for the development and deployment of cross-platform rich Internet applications based on the Adobe Flash platform...

for free, while selling the Flash Builder IDE
Integrated development environment
An integrated development environment is a software application that provides comprehensive facilities to computer programmers for software development...

.
Apple Inc. offers Darwin
Darwin (operating system)
Darwin is an open source POSIX-compliant computer operating system released by Apple Inc. in 2000. It is composed of code developed by Apple, as well as code derived from NeXTSTEP, BSD, and other free software projects....

for free, while selling Mac OS X
Mac OS X
Mac OS X is a series of Unix-based operating systems and graphical user interfaces developed, marketed, and sold by Apple Inc. Since 2002, has been included with all new Macintosh computer systems...

.
Canonical Ltd.
Canonical Ltd.
Canonical Ltd. is a private company founded by South African entrepreneur Mark Shuttleworth to market commercial support and related services for Ubuntu Linux and related projects. Canonical is registered in London and employs staff around the world...

offers Ubuntu
Ubuntu (operating system)
Ubuntu is a computer operating system based on the Debian Linux distribution and distributed as free and open source software. It is named after the Southern African philosophy of Ubuntu...

for free, while they sell commercial technical support contracts.
Francisco Burzi offers PHP-Nuke
PHP-Nuke
PHP-Nuke is a web-based automated news publishing and content management system based on PHP and MySQL originally authored by Franscisco Burzi. The system is controlled using a web-based user interface. PHP-Nuke was originally a fork of the Thatware news portal system.PHP-Nuke was originally...

for free, but the latest version is offered commercially.
Ingres is offered for free, but services & support are offered as part of a subscription. The Ingres Icebreaker Appliance is also offered as a commercial database appliance.
Linspire, Inc. offers Freespire
Freespire
Freespire was a community-driven Linux distribution which was composed mostly of free, open source software, while providing users the choice of including proprietary software including multimedia codecs, device drivers and application software....

for free, while selling Linspire
Linspire
Linspire, previously known as LindowsOS, was a commercial operating system based on Debian GNU/Linux and later Ubuntu. Linspire was published by Linspire, Inc. and focused on ease-of-use, targeting home PC users...

.
Mandriva
Mandriva
Mandriva S.A. is a publicly traded Linux and open source software company with its headquarters in Paris, France and development center in Curitiba, Brazil. Mandriva, S.A...

offers Mandriva Linux
Mandriva Linux
Mandriva Linux is a Linux distribution distributed by Mandriva. It uses the RPM Package Manager...

Free and Mandriva Linux One for free, while selling Mandriva Linux 2008.
Mozilla Foundation
Mozilla Foundation
The Mozilla Foundation is a non-profit organization that exists to support and provide leadership for the open source Mozilla project. The organization sets the policies that govern development, operates key infrastructure and controls trademarks and other intellectual property...

have a partnership with Google
Google
Google Inc. is an American multinational public corporation invested in Internet search, cloud computing, and advertising technologies. Google hosts and develops a number of Internet-based services and products, and generates profit primarily from advertising through its AdWords program...

and other companies which provides revenue for inclusion of search engines in Mozilla Firefox
Mozilla Firefox
Mozilla Firefox is a free and open source web browser descended from the Mozilla Application Suite and managed by Mozilla Corporation. , Firefox is the second most widely used browser, with approximately 25% of worldwide usage share of web browsers...

.
MySQL
MySQL
MySQL officially, but also commonly "My Sequel") is a relational database management system that runs as a server providing multi-user access to a number of databases. It is named after developer Michael Widenius' daughter, My...

is offered for free, but with the enterprise version includes support and additional features.
Novell
Novell
Novell, Inc. is a multinational software and services company. It is a wholly owned subsidiary of The Attachmate Group. It specializes in network operating systems, such as Novell NetWare; systems management solutions, such as Novell ZENworks; and collaboration solutions, such as Novell Groupwise...

offers openSUSE
OpenSUSE
openSUSE is a general purpose operating system built on top of the Linux kernel, developed by the community-supported openSUSE Project and sponsored by SUSE...

for free through the openSUSE Project
OpenSUSE Project
The openSUSE Project is a community project to produce, improve and document the openSUSE Linux distribution and make it the "world's best Linux distribution".-Project:The openSUSE Project is a community program sponsored by Novell, AMD and IP Exchange...

, while selling SUSE Linux Enterprise (SLE).
OpenSearchServer
OpenSearchServer
OpenSearchServer is an open source application server allowing development of index-based applications like search engines. Available since April 2009 on SourceForge for download, OpenSearchServer was developed under the GPL v3 license and offers a series of full text lexical analyzers and can be...

offers its community Edition on Sourceforge and a Enterprise Edition with Professional services to Enterprises with a paid license
Oracle
Oracle Corporation
Oracle Corporation is an American multinational computer technology corporation that specializes in developing and marketing hardware systems and enterprise software products – particularly database management systems...

- VirtualBox
VirtualBox
Oracle VM VirtualBox is an x86 virtualization software package, originally created by software company Innotek GmbH, purchased by Sun Microsystems, and now developed by Oracle Corporation as part of its family of virtualization products...

is free and open-source to anyone, but the VirtualBox extension pack can only be used for free at home, therefore requiring payment for business
Red Hat
Red Hat
Red Hat, Inc. is an S&P 500 company in the free and open source software sector, and a major Linux distribution vendor. Founded in 1993, Red Hat has its corporate headquarters in Raleigh, North Carolina with satellite offices worldwide....

offers the Fedora for free through the Fedora Project
Fedora Project
The Fedora Project is an endeavor sponsored by Red Hat to co-ordinate the development of the Fedora operating system. Founded on September 2003 as a result of a merger between the Red Hat Linux and old Fedora Linux projects...

, while selling Red Hat Enterprise Linux
Red Hat Enterprise Linux
Red Hat Enterprise Linux is a Linux-based operating system developed by Red Hat and targeted toward the commercial market. Red Hat Enterprise Linux is released in server versions for x86, x86-64, Itanium, PowerPC and IBM System z, and desktop versions for x86 and x86-64...

(RHEL).
Sun Microsystems
Sun Microsystems
Sun Microsystems, Inc. was a company that sold :computers, computer components, :computer software, and :information technology services. Sun was founded on February 24, 1982...

offer OpenOffice.org
OpenOffice.org
OpenOffice.org, commonly known as OOo or OpenOffice, is an open-source application suite whose main components are for word processing, spreadsheets, presentations, graphics, and databases. OpenOffice is available for a number of different computer operating systems, is distributed as free software...

for free, while selling StarOffice
StarOffice
StarOffice, known briefly as Oracle Open Office before its discontinuation in 2010, is a proprietary office suite. It was originally developed by StarDivision which was acquired by Sun Microsystems in 1999...

.
Untangle
Untangle
Untangle is a privately held company based in Sunnyvale, California. The company provides an open source network gateway for small businesses, schools, and non-profit organizations. Untangle provides multiple gateway applications installed at the edge of a network.-History:Untangle was founded in...

provides its Lite Package for free, whilst selling its Standard and Premium Packages by subscription.
Zend Technologies
Zend Technologies
Zend Technologies Ltd. is an Israeli world wide web infrastructure software company with headquarters in Cupertino, California, U.S., technology center in Ramat Gan, Tel Aviv, Israel and offices in France, Italy and Germany...

offers Zend Server CE and Zend Framework
Zend Framework
Zend Framework is an open source, object-oriented web application framework implemented in PHP 5 and licensed under the New BSD License.-Licensing:...

for free, but sells Zend Server
Zend Server
Zend Server refers to a PHP application server product line offered by Zend Technologies, released in early 2009 with production support available for Windows and Linux. It is available in two versions, Zend Server and Zend Server Community Edition. Zend Server is supported on x86 and x86-64...

with support and additional features.

External links

Selling Free Software, Free Software Foundation
The Emerging Economic Paradigm of Open Source - Bruce Perens
Economic aspects and business models of Free Software - Free Technology Academy (2010)
"FOSS Business Models in Developing countries" - compilation of material and sources

The source of this article is wikipedia, the free encyclopedia. The text of this article is licensed under the GFDL.

Introduction

Hybrid

Examples

See also

External links