Free Software and business innovation

Karsten Gerloff<gerloff@fsfeurope.org>

PresidentFree Software Foundation Europe

November 12, 2010

Gartner: 100% adoption rate until November2009

“Adoption of open-source software (OSS) isbecoming pervasive, with 85 percent ofcompanies surveyed currently using OSS intheir enterprises and the remaining 15percent expecting to in the next 12 months,according to Gartner, Inc.”

Gartner Newsroom, 17 November, 2008

GNU/Linux is poised to become a 50 billiondollar ecosystem by 2011.

Linux Foundation

What is Free Software?

Free as in Freedom!

1. use

2. study

3. share

4. improve

What is Free Software?

Free as in Freedom!

1. use

2. study

3. share

4. improve

What is Free Software?

Free as in Freedom!

1. use

2. study

3. share

4. improve

What is Free Software?

Free as in Freedom!

1. use

2. study

3. share

4. improve

What is Free Software?

Free as in Freedom!

1. use

2. study

3. share

4. improve

How does this work?

I Software is covered by copyright

I Developer grants license

I (the right) license grants you Freedom

Commercial?

I Those who claim that Free Software is non-commercialI a) don’t know what they’re talking aboutI b) want to sell you non-Free softwareI c) both.

Commercial?

I Those who claim that Free Software is non-commercialI a) don’t know what they’re talking aboutI b) want to sell you non-Free softwareI c) both.

Commercial?

I Those who claim that Free Software is non-commercialI a) don’t know what they’re talking aboutI b) want to sell you non-Free softwareI c) both.

Commercial?

I Those who claim that Free Software is non-commercialI a) don’t know what they’re talking aboutI b) want to sell you non-Free softwareI c) both.

If it’s free, how can you earn money?

I Free as in freedom, not price

I Earn money in almost any way you can think of

I Software is not a business. It’s the foundation for a business.

Abbildung: Red Hat at JMP Securities Annual Research Conference, May11, 2010

Abbildung: Press release of German LinuxVerband, Dec. 17, 2009

Free Software and innovation

I Monopolies (copyright, patents) act as a tax on innovation

I Free Software = tax-free innovation

I Study: Free Software saves European industry 36% on R&D1

1Ghosh et al.: FLOSSImpact (2006), 11

Competition and cooperation

I Businesses can cooperate and compete at the same time

I Copyleft secures investment

I Working together to improve common platform

Competition and cooperation: Linux kernel

Abbildung: Top 10 contributors to 2.6.35 Linux kernel. GregKroah-Hartmann, LWN, July 14, 2010.http://lwn.net/Articles/395961/

Software model: Free vs proprietary

Development model: closed vs open

Revenue model

What about the license sales?

I Less than 20% of software revenue from proprietary packagedsoftware

I More than 80% of software revenue has nothing to do withlicense sales

I Most programmers are paid for their time, not for licenses

Innovation unshackled

I Free Software removes constraints on business innovation

I Free Software enables “deep” service and support

I Free Software builds skills and keeps spending local

Some business models

I Product specialist: “best knowledge here”

I Platform providers: quality, stability support

I Integrators: Customised solutions for clients

Some more business models

I Training and documentation

I Compliance engineering

I Dual licensing2

2Daffara, Carlo: Our definition of OSS-based business models.http://carlodaffara.conecta.it/?p=104

Those are just a few options.

Choose your own way

I Do you have to give the software away? No.

I Do you have to stick to a particular license?No. (Not if it’s your own software, anyway.)But choose your license wisely.

I Do you have to contribute back?No. But there are advantages:

I Better integration with the rest of the codebaseI Influence over the project’s direction

Choose your own way

I Do you have to give the software away? No.

I Do you have to stick to a particular license?No. (Not if it’s your own software, anyway.)But choose your license wisely.

I Do you have to contribute back?No. But there are advantages:

I Better integration with the rest of the codebaseI Influence over the project’s direction

Choose your own way

I Do you have to give the software away? No.

I Do you have to stick to a particular license?No. (Not if it’s your own software, anyway.)But choose your license wisely.

I Do you have to contribute back?No. But there are advantages:

I Better integration with the rest of the codebaseI Influence over the project’s direction

Choose your own way

I Do you have to give the software away? No.

I Do you have to stick to a particular license?No. (Not if it’s your own software, anyway.)But choose your license wisely.

I Do you have to contribute back?No. But there are advantages:

I Better integration with the rest of the codebaseI Influence over the project’s direction

Choose your own way

I Do you have to give the software away? No.

I Do you have to stick to a particular license?No. (Not if it’s your own software, anyway.)But choose your license wisely.

I Do you have to contribute back?No. But there are advantages:

I Better integration with the rest of the codebaseI Influence over the project’s direction

Choose your own way

I Do you have to give the software away? No.

I Do you have to stick to a particular license?No. (Not if it’s your own software, anyway.)But choose your license wisely.

I Do you have to contribute back?No. But there are advantages:

I Better integration with the rest of the codebaseI Influence over the project’s direction

Choose your own way

I Do you have to give the software away? No.

I Do you have to stick to a particular license?No. (Not if it’s your own software, anyway.)But choose your license wisely.

I Do you have to contribute back?No. But there are advantages:

I Better integration with the rest of the codebaseI Influence over the project’s direction

But how about selling licenses anyway?

I “Open core” is a bait-and-switch:I Distribute basic version gratisI Sell non-free license for features

I Vendor keeps benefits of Free Software for himself...

I ...while the customer doesn’t enjoy any freedom

I Watchwords: “Community / Enterprise version”

Takeaways for businesspeople

I Think clearly.

I Where do you add value?

I What basis do you build upon?

I What are your constraints?

I What are your opportunities?

Takeaways for businesspeople

I Think clearly.

I Where do you add value?

I What basis do you build upon?

I What are your constraints?

I What are your opportunities?

Takeaways for businesspeople

I Think clearly.

I Where do you add value?

I What basis do you build upon?

I What are your constraints?

I What are your opportunities?

Takeaways for businesspeople

I Think clearly.

I Where do you add value?

I What basis do you build upon?

I What are your constraints?

I What are your opportunities?

Takeaways for businesspeople

I Think clearly.

I Where do you add value?

I What basis do you build upon?

I What are your constraints?

I What are your opportunities?

Takeaways for businesspeople

I Think togetherI Can you cooperate with others to take on a bigger task?

I Think aheadI Governance: making your project lastI Invest in suppliers?

Takeaways for policymakers

I Please don’t block the road.I Fix public procurement!

I Stick to the rulesI Ask for control: Free Software, Open StandardsI invest for the long term

I Use Free Software strategically to help new businesses togrow.

I Free up public sector software.

More ideas for policymakers

I Oppose software patents.

I Be creative about regional development

I Tax credits for Free Software R&D?

If you don’t do it, others will.

http://fsfe.org

gerloff@fsfeurope.org