Open Source Business Models

Open Source Business Models

Open-source business models are employed by companies that rely on development of open source software to make profit. These models are essential for these companies to remain economically viable. These companies are known as Commercial Open Source Software (COSS) or Professional Open Source Software (POSS). The following are some of the models that they use.

Dual Licensing: The POSS provide two different licenses for the same open source software. The software is available under both open source and commercial licenses. The POSS make profit by selling software under commercial license. It is important to understand why someone would choose to pay for software that is available for free. Under the open source GPL licensing, if the open source software is linked to proprietary software, the proprietary software also becomes open source. Consumers buy open source software to avoid this. MySql and SugarCRM are among the examples of POSS using dual licensing.

Split Open Source Software: The open source software is split into portions. The first part provides all the basic features and is available under the open source license. The other parts are extensions of the features of the first part. These extensions are available under commercial license and the company is making profit from selling them.

Product Specialization: In this model, the POSS provide the open source software for free. As the open source software has presence in many different domains, these companies provide training and consultancy on specific domains, earning significant revenue.

Platform Providers: With the introduction of service-oriented architecture we no longer buy software from one particular vendor. We build software using components from different vendors and integrate them into one system. There are various risks and issues that need to be considered if all these components are open source. Integrating components can be a challenging task as not all software has common requirements. Community support, resources required, integration, and finding the right version are among the issues that entail serious consideration. To avoid these overwhelming issues, consumers are willing to pay the company to deliver a platform that is tested and verified. A good example of platform-provider business model is Zend, a platform for developing PHP applications.

By Jake Rosenblum

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