One place where it's very easy to compete OSS is in the enterprise. For an enterprise, the license cost of software is only part of the total cost, which includes:
* Piloting, operationalizing, and deploying the code.
* Staffing maintenance and support.
* Training.
* Tracking and deploying new revisions of the code.
In fact, I think a lot of people have had the same experience I have, which is that it can be easier to sell software to an enterprise than to give it away.
The flip side of this is that for business/enterprise software, there is very little risk in just making your code open source and then selling a commercial version. Prospects will download and play with your code. They'll pre-qualify themselves, calling you only when they're receptive to the software's value prop. The people who will operationalize the free version probably weren't good prospects to begin with.
One place where it's very easy to compete OSS is in the enterprise.
Another place is B2C. All of the following sell B2C software:
- User experience that doesn't hurt. (Have you ever put a non-technical user through getting software from sourceforge?)
- Marketing. (It isn't evil. Most of your customers know how to describe their pain to Google but they don't know how to conceive of the solution, and they probably don't know the computer can help them. Your mission, should you choose to accept it, is to explain how the link between unhappy present and happy future is use of the appropriate software -- YOUR software.)
- Speaking the users language (hint: "GPL", "XML", and "multimedia engine" are three words that my B2C page does not share in common with my OSS competitor.)
- Design. ($25 of stock icons doubled my sales back in the day. Most OSS projects do not have anyone who would care enough to secure the equivalent.)
- Answering emails such as "I can't email the hard drive to the download" with respect and patience rather than that special brand of community the question would get on most OSS mailing lists.
- A web site that sells the product/download/etc. Rather few B2C OSS sites are written by someone who sounds like they actually WANT you to hit that download button. They're like sculptors adding navels to statutes: they know it has to have one but the task is boring and detracts from the interesting parts of the project, so it is completed in as perfunctory a manner as possible. You'll never hear an OSS developer saying "This is the 47th iteration of our Download Now button. Its 350% more effective at getting the click than v1.0"
The flip side of this is that for business/enterprise
software, there is very little risk in just making
your code open source and then selling a
commercialversion.
What if your competitor takes your open source code, adds a little bit of value, and sells cheaper than your commercial version? Or, if there's some clever (algorithmic) thing you are doing, what if he uses your ideas to better compete with you?
I would actually say it's not that hard to compete with free software. Here are a few reasons:
- Open source is free (as in beer). This means that there's no support, no training and noone to blame if things go wrong. As anyone who has worked at a semi-large business will attest that is bad from a corporate buying perspective.
- The UI design of open-source software is often terrible. Open-source values code, not pretty design. I've never heard of an open-source solution that has gone through formal usability tests. Often customers don't care about pretty code, they care about a pretty UI.
- There's noone to turn to with feature requests, etc. And no, for most companies submitting a request to sourceforge or just coding it up yourself is not an option.
- There's no marketing for open-source software. Marketing sells producs, otherwise companies wouldn't spend trillions a year on it.
- You have no guarantee that your open-source software will be updated in the future. It might just be abandoned. And again, for most companies just doing it yourself is not an option.
In summary, using open-source software requires you to know what you are doing, being able to overcome installing and maintenance hurdles without support and living with the knowledge that the software might not be updated. And you'll have to actively go out looking for it, because noone will try to sell it to you.
Most business-types, who are the ones with money to spend, don't even know that there is such a thing as open-source software, and if they did many of them wouldn't use it for the reasons stated above.
-This means that there's no support,
Buy support! C/C++/SQL/Java are free with no support, but you don't choose to only program in JCL4800 because Burroughs sold it.
- The UI design of open-source software is often terrible.
Ever seen in house or enterprise software
- There's noone to turn to with feature requests
Yes because I have Bill's cell phone # for new windows features I want
- There's no marketing for open-source software.
Depends whether you look for software on the web or in the WSJ
- You have no guarantee that your open-source software will be updated in the future
Whereas you have a guarantee that MSFT will stop selling XP
- Most business-types, don't even know that there is such a thing as open-source software
That's why they have staff. They don't know how an IP datagram gets to their web server but they still have a web site. Or possibly they don't - they will be running DecNet or SNA because you can't trust this free TCP stuff.
- Open-sourcing has nothing much to do about being free. Using software is never free in terms of money and time, not even for end-users. However, open source software commoditises applications and removes an artificial barrier that prevents the program from evolving. It effectively de-values software by removing it from the hands of a single vendor and limited customer base in order to generate a greater value of it, to all people. It is possible to exploit the near-sighted greediness of people in order to sell more closed source programs _now_ rather than work towards a common goal together. I'm afraid this will end in a decade or two, though.
- As for support, I've used many open-source solutions with great support, and seen money move around there. Support is generally bad in any software but
as long as there's a company willing to give support, this is no problem for businesses. For example, Canonical provides support for thousands of programs available via their Ubuntu distributions. Many of them provide support of their own as well if there's need for a more in-depth support. But it's easier for a company with a marketing budget to advertise the illusion that they actually provide support eventhough it usually turns out to be worth nothing much.
- UIs tend to be mostly bad both in commercial and open-source programs. The problem is more in the general acceptance of how important a good user interface is. Both open-source and closer-source makers have an incentive to make good UIs if they choose to see the lack of them as a problem. Besides usability is generally so bad that you don't even need a trip to a damn usability laboratory to make the first leap a huge one. Just someone with interest and insight can do wonders and make the user interface tolerable for most people. Investing in a good is really not a competitive advantage against open source software: it's a cheap but greatly unharnessed competitive advantage against any software, available both to open source and closed source software.
- I would say that feature requests are much eagerly fulfilled in the open source world than with commercial closed source software. On the other hand, open source projects will make trivial enhancements and features often _too_ gladly. Closed source companies tend to evaluate the usefulness of a feature against development costs. Not really an advantage for commercial vendors, I would say.
- Marketing for most open-source solutions is non-existent. This is they key reason for open-source being a minor player. Marketing can make wonders in smoothing out all the issues you pointed out; the quality of the actual product then becomes tangential.
- You have absolutely no guarantee that a commercial company won't turn red in the near future. They usually take their software down with them and I've seen this happen so many times that this is actually one of the key reasons why many companies would turn into open source. Not really an advantage for closed source software, rather quite the opposite!
In summary, there's a huge market for companies that sell the missing pieces of open source software, channelling all support and commercial whatnot through a single desk and market it as such. The business-types really don't care what's running on their computers but they care about money. An open source codebase can afford these middlemen to sell the software cheaper and make a profit from it. Just let the companies battle in the realm of marketing and conveniently have them grow existing open source software better as a side-product. Everyone benefits from that.
The problems you're describing are independent of whether software is open-source or not. There's plenty of proprietary software with no support, no training, nobody to blame if things go wrong, with terrible UI design, no way to get new features you need, no marketing, and no guarantee of updates. Any random Computer Associates product from 1999 would qualify for nearly all of those, as would most custom software, and that's before we even get into proprietary shareware. And there's plenty of free software that's at the opposite end of the spectrum.
I think that Free Software, in all forms, has helped raise the bar for paid software. I remember paying for some really simple and crappy stuff (commercial software) back in the 80's and early 90's. A lot of it was stuff that has a comparable free counterpart today.
I do not believe that any legitimate valuable software product has lost a significant piece of their marketshare to free software. The free options HAVE required that the paid software have a true value though.
> I remember paying for some really simple and crappy stuff (commercial software) back in the 80's and early 90's.
My company is still paying for really crappy software instead of using free alternatives. They just slap the label 'Enterprise' on something crappy, and sadly companies just eat it up. Granted, there aren't really a lot of free alternatives to most enterprise software... most likely because ERP middleware is not fun to do in your spare time.
I do not believe that any legitimate valuable software product has lost a significant piece of their marketshare to free software. The free options HAVE required that the paid software have a true value though.
Which browser are you using?
Not only have open source browsers like Firefox gained huge market share, but if you remember back in the day, you had to pay for any browser until MS decided to start giving IE away.
We do both. Our company builds 90+% Open Source software, and a small chunk of proprietary code that sits on top.
Our Open Source products have millions of users.
Our proprietary software has thousands of users (well, actually one thousand and some hundreds...I don't think we've crossed the 2000 licenses sold mark, yet, but it's getting really close).
So, in one sense (raw numbers), we can't compete with Open Source. Even with our own software. But, when I look at the percentage of paying customers we have that we wouldn't have without the Open Source products, the math begins to look less depressing. Maybe we just have a really high marketing budget made up of lots of development hours spread over the past 11 years...and over time we'll convert more and more of those Open Source users into paying customers.
That said, it's definitely possible to convince people to pay for software. Just make it better, easier, better supported, and more predictable over time (make upgrades that work, for example; almost nobody gets upgrades right, including most Open Source software...so if you do, people will remember it and won't be nearly as tempted to try a new product every time a major upgrade or new system is needed).
Also, it matters who you target. We have some Open Source users who want our commercial products to be even cheaper, insisting that we would sell huge numbers if it just cost half as much. But, I know the reality is that the difference between free and $69 is almost as big as the difference between free and $138, in terms of how many people will make the leap. So, targeting the low end of the market for a product that has Open Source competition is insane. Target the high end, luxury end, or enterprise end. Power users, Apple users, professionals who make a lot of money by using your software, etc. We actually decide what goes into our Open Source vs. our proprietary product based on whether it helps someone make money. That's pretty much our only determining factor: Does it make money for the customer? If yes, it's proprietary software. If no, and there are lots of cool non-commercial uses for the feature, then it goes into the GPL version. That won't work for everyone...but it works for us, since our market is one that has a pretty clear divide in who uses the software and for what.
I hate the word "free", it always makes people think of free beer.
You can charge $$$ for Free Software and "open source" software.
One day I'm going to get pissed off enough to start selling the GIMP for $100 or something, just to prove this point. Maybe no one will buy it, but you can do it. And hey, maybe it'll encourage people to "pirate" it and increase the number of users?
Using the GIMP example...if you put together a manual for Photoshop users on how to use GIMP, you could probably charge $100 for the manual and the software and see some sales. Photoshop is costly, but if your staff is used to Photoshop, the leap to GIMP can be difficult and filled with searches for information.
A concrete example: a friend is a project manager at a local design shop. He is a designer by trade, so he knows his way around the Adobe suite. But, his employer doesn't have the budget for another Photoshop license, but I'm guessing they would shell out $100 for GIMP and a "GIMP for Photoshop Dummies" book.
The funny part about this is that the comments on the BoS board singled out developer tools as a place where it's impossible to compete with open source; in reality, developer tools are one of the places where commercial open source has been most successful. Just dual GPL/commercial license, like Sleepycat did, and charge the people who ship your code a tax to keep their code closed.
eBay is full of sellers charging money for Open Source software. They generally use misleading tactics, and use the name of the better known commercial alternative in the title ("Better than Microsoft Office!" for OpenOffice, for example.)
I don't think anyone is making a killing on that model, but I could be wrong.
I'm oriented around the "enterprise". The mainstream free software I work with tends to be powerful but difficult to learn to use effectively.
As far as I can tell it's reasonably difficult to find people who are able to work through simple network connectivity problems without paying a lot of money.
Here's a two minute business model for someone who aspires to start a mISV:
1. Learn how to methodically diagnose connectivity problems between points on tcp/ip networks.
2. Identify a niche with money that relies on connectivity.
3. Write some software for people in the space (or find some free stuff that does it that other people don't have time to learn how to learn)
4. Become known as a person who uses such software to solve problems.
I think its important not to think of free software as mutually exclusive with paid software.
It's been proven that you can create a profitable business by creating open-source/free software and building a business on top of that. Same goes for SaaS apps that have free plans.
Take a look at the article on Zimbra that was just posted. 40 million paid email boxes. Yet, there is an open-source version of Zimbra's software suite. Similar things going on for places like RedHat, MySQL, Google Apps, SugarCRM, etc.
You can create an open-source app and reap the benefits of it ... and still make money by:
Free software is a common bogeyman on the Business of Software forum. It's a handy scapegoat for when your new µISV experiences disappointing sales.
You'll note that the guy who asked the question was trying to find an excuse not to start a business, and how quickly cooler (and more experienced) heads prevail.
That paper has a (simplified) model for the economics of free and proprietary software in the same marketplace. It basically shows that the best programmers have incentives to work on free software. It also shows that the price that the proprietary software maker places on the product directly affects the number of programmers working on the free alternative. Very cool paper that I reviewed for an economics course.
The market is changing from: create something and try to sell it, to: get paid to create something. This has always been the case for programmers that work for a product company. They agree to a price(their salary) before implementing the software. Of course, this is nothing new, consulting practices have always operated this way. The ony way open source hurts devs is that open source encourages reuse. Devs are paid over and over again to create the same thing. This is a much more efficient(in terms of effort) way to do things. Companies will always need new features and custom integrations. Obviously this does hurt "product comapnies", but do we really care? If we don't need something anymore, let's throw it away. It's wasteful not to.
But for any software used by a business it seems pretty simple. You simply need to match the free software in features (or get pretty close) and compete on support.
The key question is "What if something goes wrong?"
Because a business owner can’t really use open source stuff unless they (a) know enough to edit the source competently or (b) can afford to hire someone who does. Assuming there’s a large market of founders who can’t edit source code themselves and don’t want to pay $100+ an hour to have someone else do it you end up with a pretty wide open market.
Corporate America will always be risk adverse which means the deck will always be stacked against free stuff. The trick to competing is just stoking the fires of that fear and then making your software look like the remedy to all of them.
I think that might depend on the value proposition of your product.
For the kinds of products that need the whole dance of vendor selection, budgeting, pilots, and rollouts, then yes: feature parity, or even a small feature deficit, is easy to overcome with a strong support pitch. That's because the sales process for these products gives you the opportunity to lay out a business case.
But a lot of software doesn't get deployed that way. They may have a more casual value proposition, they may be more "niche-y" (and thus less visible to the pointy hairs), or they may be early adopter products.
In this second category, I think it's harder to make a "support" pitch. If your prospect isn't 100% sold on the value of the product (and companies buy "phase 1" deployments of products to test the water all the time), they're a lot more likely to optimize for cost.
I think it's worth being cognizant of which category you fall in to. I think if you're in the second category, the right play might be to open source yourself. Again, just because you open up your code, doesn't mean enterprises will be significantly more resistant to pay for it.
If you look at all examples in this thread all the software they refer to is GUI based non-technical applications.
I think this highlights where Open Source competes the most, applications which the engineers build for themselves. Apache, for example, makes building a paid for web server pretty uneconomic (IIS is bundled).
When engineers doing Open Source are scratching their itch they tend to make world beating products, when they aren't scratching their own itch the momentum tails off because there isn't another driver (such as a wage, or a product manager).
If there is a lot of good free software to compete with you, it might be that you're trying to sell what is considered commodity. Usually the mature open source software projects are usually infrastructure ones. Unless you've come up with something to reinvent that product, it might be more prudent to build on top of open source software, and use it to your advantage instead.
FOSS lowers your revenue if you want it to or not, but if you play ball it can lower your costs so that you can make the same profit anyway. Aim for B2B sales of complex software over consumer - especially now - and the open source part won't actually cost sales while allowing students and hobbyists to learn your system for free.
Take the fact that many people who buy software can't use it without help...free software will never out compete "paid" software, where help is a major portion of the product.
It's a dude who thinks he wants to start a business, but he's saying "You can't do this." Is it a question, or is it an opinion?
And anyway, we all know, of course you can compete with free. Look at Microsoft. Look at Apple. Look at Adobe. Look at all the indie Mac devs and small shops. There are free alternatives to every one of their major products.
[+] [-] tptacek|17 years ago|reply
* Piloting, operationalizing, and deploying the code.
* Staffing maintenance and support.
* Training.
* Tracking and deploying new revisions of the code.
In fact, I think a lot of people have had the same experience I have, which is that it can be easier to sell software to an enterprise than to give it away.
The flip side of this is that for business/enterprise software, there is very little risk in just making your code open source and then selling a commercial version. Prospects will download and play with your code. They'll pre-qualify themselves, calling you only when they're receptive to the software's value prop. The people who will operationalize the free version probably weren't good prospects to begin with.
[+] [-] patio11|17 years ago|reply
Another place is B2C. All of the following sell B2C software:
- User experience that doesn't hurt. (Have you ever put a non-technical user through getting software from sourceforge?)
- Marketing. (It isn't evil. Most of your customers know how to describe their pain to Google but they don't know how to conceive of the solution, and they probably don't know the computer can help them. Your mission, should you choose to accept it, is to explain how the link between unhappy present and happy future is use of the appropriate software -- YOUR software.)
- Speaking the users language (hint: "GPL", "XML", and "multimedia engine" are three words that my B2C page does not share in common with my OSS competitor.)
- Design. ($25 of stock icons doubled my sales back in the day. Most OSS projects do not have anyone who would care enough to secure the equivalent.)
- Answering emails such as "I can't email the hard drive to the download" with respect and patience rather than that special brand of community the question would get on most OSS mailing lists.
- A web site that sells the product/download/etc. Rather few B2C OSS sites are written by someone who sounds like they actually WANT you to hit that download button. They're like sculptors adding navels to statutes: they know it has to have one but the task is boring and detracts from the interesting parts of the project, so it is completed in as perfunctory a manner as possible. You'll never hear an OSS developer saying "This is the 47th iteration of our Download Now button. Its 350% more effective at getting the click than v1.0"
[+] [-] critic|17 years ago|reply
[+] [-] mixmax|17 years ago|reply
- Open source is free (as in beer). This means that there's no support, no training and noone to blame if things go wrong. As anyone who has worked at a semi-large business will attest that is bad from a corporate buying perspective.
- The UI design of open-source software is often terrible. Open-source values code, not pretty design. I've never heard of an open-source solution that has gone through formal usability tests. Often customers don't care about pretty code, they care about a pretty UI.
- There's noone to turn to with feature requests, etc. And no, for most companies submitting a request to sourceforge or just coding it up yourself is not an option.
- There's no marketing for open-source software. Marketing sells producs, otherwise companies wouldn't spend trillions a year on it.
- You have no guarantee that your open-source software will be updated in the future. It might just be abandoned. And again, for most companies just doing it yourself is not an option.
In summary, using open-source software requires you to know what you are doing, being able to overcome installing and maintenance hurdles without support and living with the knowledge that the software might not be updated. And you'll have to actively go out looking for it, because noone will try to sell it to you.
Most business-types, who are the ones with money to spend, don't even know that there is such a thing as open-source software, and if they did many of them wouldn't use it for the reasons stated above.
[+] [-] edfrghjk|17 years ago|reply
- The UI design of open-source software is often terrible. Ever seen in house or enterprise software
- There's noone to turn to with feature requests Yes because I have Bill's cell phone # for new windows features I want
- There's no marketing for open-source software. Depends whether you look for software on the web or in the WSJ
- You have no guarantee that your open-source software will be updated in the future Whereas you have a guarantee that MSFT will stop selling XP
- Most business-types, don't even know that there is such a thing as open-source software That's why they have staff. They don't know how an IP datagram gets to their web server but they still have a web site. Or possibly they don't - they will be running DecNet or SNA because you can't trust this free TCP stuff.
[+] [-] ionfish|17 years ago|reply
WordPress has.
http://wordpress.org/development/2008/10/usability-testing-r...
[+] [-] yason|17 years ago|reply
- As for support, I've used many open-source solutions with great support, and seen money move around there. Support is generally bad in any software but as long as there's a company willing to give support, this is no problem for businesses. For example, Canonical provides support for thousands of programs available via their Ubuntu distributions. Many of them provide support of their own as well if there's need for a more in-depth support. But it's easier for a company with a marketing budget to advertise the illusion that they actually provide support eventhough it usually turns out to be worth nothing much.
- UIs tend to be mostly bad both in commercial and open-source programs. The problem is more in the general acceptance of how important a good user interface is. Both open-source and closer-source makers have an incentive to make good UIs if they choose to see the lack of them as a problem. Besides usability is generally so bad that you don't even need a trip to a damn usability laboratory to make the first leap a huge one. Just someone with interest and insight can do wonders and make the user interface tolerable for most people. Investing in a good is really not a competitive advantage against open source software: it's a cheap but greatly unharnessed competitive advantage against any software, available both to open source and closed source software.
- I would say that feature requests are much eagerly fulfilled in the open source world than with commercial closed source software. On the other hand, open source projects will make trivial enhancements and features often _too_ gladly. Closed source companies tend to evaluate the usefulness of a feature against development costs. Not really an advantage for commercial vendors, I would say.
- Marketing for most open-source solutions is non-existent. This is they key reason for open-source being a minor player. Marketing can make wonders in smoothing out all the issues you pointed out; the quality of the actual product then becomes tangential.
- You have absolutely no guarantee that a commercial company won't turn red in the near future. They usually take their software down with them and I've seen this happen so many times that this is actually one of the key reasons why many companies would turn into open source. Not really an advantage for closed source software, rather quite the opposite!
In summary, there's a huge market for companies that sell the missing pieces of open source software, channelling all support and commercial whatnot through a single desk and market it as such. The business-types really don't care what's running on their computers but they care about money. An open source codebase can afford these middlemen to sell the software cheaper and make a profit from it. Just let the companies battle in the realm of marketing and conveniently have them grow existing open source software better as a side-product. Everyone benefits from that.
[+] [-] kragen|17 years ago|reply
[+] [-] brk|17 years ago|reply
I think that Free Software, in all forms, has helped raise the bar for paid software. I remember paying for some really simple and crappy stuff (commercial software) back in the 80's and early 90's. A lot of it was stuff that has a comparable free counterpart today.
I do not believe that any legitimate valuable software product has lost a significant piece of their marketshare to free software. The free options HAVE required that the paid software have a true value though.
[+] [-] Xichekolas|17 years ago|reply
My company is still paying for really crappy software instead of using free alternatives. They just slap the label 'Enterprise' on something crappy, and sadly companies just eat it up. Granted, there aren't really a lot of free alternatives to most enterprise software... most likely because ERP middleware is not fun to do in your spare time.
[+] [-] RK|17 years ago|reply
Which browser are you using?
Not only have open source browsers like Firefox gained huge market share, but if you remember back in the day, you had to pay for any browser until MS decided to start giving IE away.
[+] [-] timf|17 years ago|reply
Linux is another exception, especially for servers. And Apache httpd.
[+] [-] scott_s|17 years ago|reply
There is no commercial market for compilers on Unix-based systems. Gcc is just too good.
[+] [-] SwellJoe|17 years ago|reply
Our Open Source products have millions of users.
Our proprietary software has thousands of users (well, actually one thousand and some hundreds...I don't think we've crossed the 2000 licenses sold mark, yet, but it's getting really close).
So, in one sense (raw numbers), we can't compete with Open Source. Even with our own software. But, when I look at the percentage of paying customers we have that we wouldn't have without the Open Source products, the math begins to look less depressing. Maybe we just have a really high marketing budget made up of lots of development hours spread over the past 11 years...and over time we'll convert more and more of those Open Source users into paying customers.
That said, it's definitely possible to convince people to pay for software. Just make it better, easier, better supported, and more predictable over time (make upgrades that work, for example; almost nobody gets upgrades right, including most Open Source software...so if you do, people will remember it and won't be nearly as tempted to try a new product every time a major upgrade or new system is needed).
Also, it matters who you target. We have some Open Source users who want our commercial products to be even cheaper, insisting that we would sell huge numbers if it just cost half as much. But, I know the reality is that the difference between free and $69 is almost as big as the difference between free and $138, in terms of how many people will make the leap. So, targeting the low end of the market for a product that has Open Source competition is insane. Target the high end, luxury end, or enterprise end. Power users, Apple users, professionals who make a lot of money by using your software, etc. We actually decide what goes into our Open Source vs. our proprietary product based on whether it helps someone make money. That's pretty much our only determining factor: Does it make money for the customer? If yes, it's proprietary software. If no, and there are lots of cool non-commercial uses for the feature, then it goes into the GPL version. That won't work for everyone...but it works for us, since our market is one that has a pretty clear divide in who uses the software and for what.
[+] [-] omouse|17 years ago|reply
You can charge $$$ for Free Software and "open source" software.
One day I'm going to get pissed off enough to start selling the GIMP for $100 or something, just to prove this point. Maybe no one will buy it, but you can do it. And hey, maybe it'll encourage people to "pirate" it and increase the number of users?
[+] [-] bmj|17 years ago|reply
A concrete example: a friend is a project manager at a local design shop. He is a designer by trade, so he knows his way around the Adobe suite. But, his employer doesn't have the budget for another Photoshop license, but I'm guessing they would shell out $100 for GIMP and a "GIMP for Photoshop Dummies" book.
[+] [-] tptacek|17 years ago|reply
[+] [-] gaius|17 years ago|reply
[+] [-] SwellJoe|17 years ago|reply
I don't think anyone is making a killing on that model, but I could be wrong.
[+] [-] cturner|17 years ago|reply
As far as I can tell it's reasonably difficult to find people who are able to work through simple network connectivity problems without paying a lot of money.
Here's a two minute business model for someone who aspires to start a mISV:
1. Learn how to methodically diagnose connectivity problems between points on tcp/ip networks.
2. Identify a niche with money that relies on connectivity.
3. Write some software for people in the space (or find some free stuff that does it that other people don't have time to learn how to learn)
4. Become known as a person who uses such software to solve problems.
5. Profit!
[+] [-] callmeed|17 years ago|reply
It's been proven that you can create a profitable business by creating open-source/free software and building a business on top of that. Same goes for SaaS apps that have free plans.
Take a look at the article on Zimbra that was just posted. 40 million paid email boxes. Yet, there is an open-source version of Zimbra's software suite. Similar things going on for places like RedHat, MySQL, Google Apps, SugarCRM, etc.
You can create an open-source app and reap the benefits of it ... and still make money by:
- selling premium versions
- selling support
- selling hosting with per-seat licensing
- selling add-ons and custom development services
[+] [-] patio11|17 years ago|reply
- using the OSS to power, sell, etc a closed source application
Anybody can come download my shopping cart any time they want. It still earned me a few hundred dollars this week.
See also Rails (open source framework powers immensely profitable closed source applications), etc.
[+] [-] jjs|17 years ago|reply
You'll note that the guy who asked the question was trying to find an excuse not to start a business, and how quickly cooler (and more experienced) heads prevail.
[+] [-] akincisor|17 years ago|reply
That paper has a (simplified) model for the economics of free and proprietary software in the same marketplace. It basically shows that the best programmers have incentives to work on free software. It also shows that the price that the proprietary software maker places on the product directly affects the number of programmers working on the free alternative. Very cool paper that I reviewed for an economics course.
[+] [-] doki_pen|17 years ago|reply
[+] [-] TomOfTTB|17 years ago|reply
The key question is "What if something goes wrong?"
Because a business owner can’t really use open source stuff unless they (a) know enough to edit the source competently or (b) can afford to hire someone who does. Assuming there’s a large market of founders who can’t edit source code themselves and don’t want to pay $100+ an hour to have someone else do it you end up with a pretty wide open market.
Corporate America will always be risk adverse which means the deck will always be stacked against free stuff. The trick to competing is just stoking the fires of that fear and then making your software look like the remedy to all of them.
[+] [-] tptacek|17 years ago|reply
For the kinds of products that need the whole dance of vendor selection, budgeting, pilots, and rollouts, then yes: feature parity, or even a small feature deficit, is easy to overcome with a strong support pitch. That's because the sales process for these products gives you the opportunity to lay out a business case.
But a lot of software doesn't get deployed that way. They may have a more casual value proposition, they may be more "niche-y" (and thus less visible to the pointy hairs), or they may be early adopter products.
In this second category, I think it's harder to make a "support" pitch. If your prospect isn't 100% sold on the value of the product (and companies buy "phase 1" deployments of products to test the water all the time), they're a lot more likely to optimize for cost.
I think it's worth being cognizant of which category you fall in to. I think if you're in the second category, the right play might be to open source yourself. Again, just because you open up your code, doesn't mean enterprises will be significantly more resistant to pay for it.
[+] [-] sh1mmer|17 years ago|reply
I think this highlights where Open Source competes the most, applications which the engineers build for themselves. Apache, for example, makes building a paid for web server pretty uneconomic (IIS is bundled).
When engineers doing Open Source are scratching their itch they tend to make world beating products, when they aren't scratching their own itch the momentum tails off because there isn't another driver (such as a wage, or a product manager).
[+] [-] iamwil|17 years ago|reply
[+] [-] krschultz|17 years ago|reply
[+] [-] yesimahuman|17 years ago|reply
[+] [-] ahoyhere|17 years ago|reply
It's a dude who thinks he wants to start a business, but he's saying "You can't do this." Is it a question, or is it an opinion?
And anyway, we all know, of course you can compete with free. Look at Microsoft. Look at Apple. Look at Adobe. Look at all the indie Mac devs and small shops. There are free alternatives to every one of their major products.