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Open Source: Following the Cycle From Boom to Bust
What does the market think of Open Source? That was the subject of an academic study written by a group from the University of Munich. The study found that from a market perspective Open Source has traveled from a high point just prior to the dot com bust, to a period of about four years when it was out of favor, to again new highs in recent years.
The paper identifies four types of business models that have grown up around Open Source:
- Competitive Weapon
Open Source software prevents commercial competitors from taking total market share.
It can commoditize a layer of software that has less value to the company while the company can then charge for more sophisticated components built on top of the Open Source elements. - Cost or Risk Reduction
Open Source development can be more cost effective for creating software not related to the core business - Dual Licensing
Different licenses available for different groups. The company typically retains 100% ownership of the software, but they offer a tiered licensing scheme, usually with individual license being free and licenses to other companies on favorable terms to allow integration with other products. - Sale of Complementatry Goods and Services
Companies can give away software but try to get revenue from consulting, training and subscriptions
Open Source may be ‘free’, but that doesn’t mean you can’t make money with an Open-Source-based model.
