Open Source Business: Model or Tactic?

by Ostatic Staff - Oct. 14, 2008

ReadWriteWeb points readers to a report released by the 451 Group stating that open source is not a true business model, but more of a "business tactic."

Traditionally, the "open source business model" is perceived as "free/open software, with paid support and configuration services." The report found, however, that many of the responding open source businesses incorporate some commercially licensed software in their product line. It also found that the "paid support/free software" idea -- while theoretically, at least, valid -- is multi-layered, complex, and highly variable between software product, software company, and industry.

The research included 114 open source vendors, including Red Hat, Alfresco, IBM and Oracle. Of all the vendors studied, 70% offered support services, but less than 8% called their support services their primary revenue stream. The 451 Group stated that they realized the inclusion of "proprietary vendors" (as opposed to the broader definition of "vendor," which could include those making open code available on a mirror) would possibly skew the results, so the research centered mainly on businesses specializing in open source.

It's not surprising that these vendors, which vary in size and customer base, use different methods to keep themselves afloat. It's not terribly surprising that licensing weighs heavily on how development, support, and revenue-generation strategies are formulated.

Is the 451 Group's determination that open source is not a "model" as much as a "tactic" a negative point? If the code base remains open, and licenses are adhered to, if any "proprietary add-ons" are optional and kept separate from the open code base, do the semantics of "model" versus "tactic" really change much?

In a perfect world, it would be wonderful to see "proprietary add-ons" disappear, and be offered openly. But there are trade-offs. Many end-users (whether they are companies, governments, or individuals) become aware of open source software and effectively use it for the first time through vendors who run "hybrid shops." It certainly seems these arrangements are necessary, at this point, for the further development and acceptance of open source software, for the companies offering supporting services, and for the consumer.