Great discussion over @ Slashdot: Is Open Source Software a Race To Zero?
I really think the open source approach has lots of benefits, for the software itself and all parties involved. However, I would say it will probably take a decade before sound business models based on open source are really understood and start to become mainstream.
At this point in time, (as most people) I still think it is considerably harder/trickier to make money developing software as open source than it is with closed source. At least for small companies. A few reasons:
- reduced barrier to entry for new competitors as they can easily leverage the fruits of your hard work. Even more so if you choose a more liberal license such as a BSD, EPL or Apache (JBoss and MySQL use GPL, for instance).
- lower profit margins, if you decide to adopt a services-based business model instead of one based on selling product licenses, which is a common approach.
- the overhead of maintaining the open source software while developing the closed source extensions or providing the related services, the very activities that will actually make money, could be unbearable.
The TextUML Toolkit is open source (EPL) since release 1.1. The decision of making the TextUML Toolkit open source was based on the fact that I (a.k.a. Abstratt Technologies) never intended to make any money directly off of it, wanted to attract external contributions and maybe get some visibility to other future offerings. But I wouldn’t have done it if I had any plans of selling the TextUML Toolkit as a product on its own.
Well, I am interested in your thoughts. Do you know of cases of small companies making good money from developing and selling open source software (using liberal licenses such as the EPL)?