open source business models
TRANSCRIPT
Outline� Open Source Software
� License Goals
� Open Source Licenses � Open Source Licenses
� Open Source Software Freedoms
� Open Source Business Models
� Can I make Business from Open Source (Can I Relicense)?
� Conclusions & Recommendations 2
Open Source
It’s “impossible to avoid”It’s “impossible to avoid”- Gartner 2007 Study
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Open Source
By 2011, 80% of all
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By 2011, 80% of allcommercial software
will contain open source code.
Open Source
SourceForge
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SourceForge300,000+
Commercial Support
�IBM
�Sun
Intel
�Novell
�Oracle
Motorola�Intel
�Apple
�HP
�Dell
�Motorola
�Yahoo
�Microsoft6
…and make its own open source ecosystem
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Free software must respect 4 freedoms:
� The freedom to launch software for any use.
� The freedom to study the way software works and thus to
freely access its source code.
� The freedom to redistribute and sell copies.
� The freedom to enhance software and publish the results.
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Free of use vs. free of charge:
Open sources licenses fulfill 10 criteria
� Free redistribution
� Access to the source code
� Right to change the source code and develop derived works
� Respect of the integrity of the author’s source code.Respect of the integrity of the author’s source code.
� Forbidding discrimination against persons and groups
� Forbidding discrimination against fields of endeavor
� Universality of the rights attached to the program.
� Protection of the program, and not of the product
� Lack of contamination of other products containing a protected source code
� Technological neutrality. The license cannot discriminate against any technology or style of interface. 9
License Goals� Ensure certain code remains open source
� Reserve control
� Build a commercial coalition
� Encourage third-party marketplace
� Challenge competitors
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OSI Approved Licenses Academic Free License
Adaptive Public License
Apache Software License
Apache License, 2.0
Apple Public Source License
Artistic license
Artistic license 2.0
Attribution Assurance Licenses
New BSD license
Computer Associates Trusted Open Source License 1.1
Common Development and Distribution License
Common Public Attribution License 1.0 (CPAL)
Common Public License 1.0
CUA Office Public License Version 1.0
EU DataGrid Software License
Lucent Public License (Plan9)
Lucent Public License Version 1.02
Microsoft Public License (Ms-PL)
Microsoft Reciprocal License (Ms-RL)
MIT license
MITRE Collaborative Virtual Workspace License (CVW License)
Motosoto License
Mozilla Public License 1.0 (MPL)
Mozilla Public License 1.1 (MPL)
NASA Open Source Agreement 1.3
Naumen Public License
Nethack General Public License
Nokia Open Source License
OCLC Research Public License 2.0
Open Group Test Suite License
Open Software LicenseEU DataGrid Software License
Eclipse Public License
Educational Community License, Version 2.0
Eiffel Forum License
Eiffel Forum License V2.0
Entessa Public License
Fair License
Frameworx License
GNU General Public License (GPL)
GNU General Public License version 3.0 (GPLv3)
GNU Library or "Lesser" General Public License (LGPL)
GNU Library or "Lesser" General Public License version 3.0 (LGPLv3)
Historical Permission Notice and Disclaimer
IBM Public License
Intel Open Source License
Jabber Open Source License
Open Software License
PHP License
Python license (CNRI Python License)
Python Software Foundation License
Qt Public License (QPL)
RealNetworks Public Source License V1.0
Reciprocal Public License
Ricoh Source Code Public License
Sleepycat License
Sun Industry Standards Source License (SISSL)
Sun Public License
Sybase Open Watcom Public License 1.0
University of Illinois/NCSA Open Source License
Vovida Software License v. 1.0
W3C License
wxWindows Library License
X.Net License
Zope Public License
zlib/libpng license 11
The copyleft� The "reversed "c" in a full circle" is the copyleft symbol.
� It is the copyright symbol mirrored.
� Unlike the copyright symbol, it has no legal meaning.
� Copyleft is a play on the word copyright to describe the practice of using copyright law to remove restrictions on practice of using copyright law to remove restrictions on distributing copies and modified versions of a work for others and requiring that the same freedoms be preserved in modified versions.
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kinds of licenses can be identified
according to their permissiveness
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Licenses compatibility
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Can I make business from Open Source?
Can I
Relicense ?
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Relicense ?
License Scope
AL MPL/LGPL GPL
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Can I Relicense? Example 1
Open Source Code
Open Source Code
Open Source Code
Copy & Paste
Copy & Paste
17AL MPL/LGPL GPL
My code My code My code
!
sub-licensing under a proprietary license
requires all combined works to remain open
require the originally licensed code to remain open but that the code can be (under certain conditions) used in a larger, proprietary licensed work.
Can I Relicense? Example 2
Module 1
Module 2
Open Source Code
Open Source Code
Open Source Code
Proprietary Proprietary Proprietary
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Module 2 Proprietary Code
Proprietary Code
Proprietary Code
AL MPL/LGPL GPL
sub-licensing under a proprietary license
requires all combined works to remain open
require the originally licensed code to remain open but that the code can be used in a larger, proprietary licensed work.
Can I Relicense? Example 3
Module 1
Module 2
Open Source Code
Open Source Code
Open Source Code
Proprietary Code
Proprietary Code
Proprietary CodeOpen
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Module 2Code Code
AL MPL/LGPL GPL
sub-licensing under a proprietary license
requires all combined works to remain open
Open Source Code
!
require the originally licensed code to remain open but that the code can be (under certain conditions) used in a larger, proprietary licensed work. (same as example 1)
Why Community: Commercial Software
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Why Community: Open Source Software
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Why Community: Open Source Software
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Why Community: Open Source Software
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Why Community: Open Source Software
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My Experience
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My Experience
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Microsoft and Open Source: Public Perceptions
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Microsoft and Open Source: Public Perceptions
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Microsoft’s Perspective on Open Source“We at Microsoft respectand appreciate the important role that opensource software plays in our industry. We respect and we appreciate the passion and the great passion and the great contribution that open source developers make in our industry… That is not what you have always heard from us, and I recognize that….”
Brad Smith, SVP, General Counsel & Corporate Secretary, Microsoft CorporationOSBC (Open Source Business Conference), San Francisco, 3/25/08
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Business Models� The revenue model:
� Value creation: definition of the offer generating the highest willingness to pay.
� Capture of the value created through:� The sale of rights (sale of patents, licenses or even client files).
� The sale of products.
The sale of services.� The sale of services.
� The cost structure:
� Definition according to the cost categories (raw materials, marketing, R&D, administrative) and their types (fixed or variable).
� Identification of the company’s specific skills which give a competitive advantage.
� Determination of the capital sources.
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Typology of different business models
The services or indirect valorisation
model
The services or indirect valorisation
model
The value added distribution model
The value added distribution model
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modelmodel
The double licenseorcommercial open
source license model
The double licenseorcommercial open
source license model
The mutualizationmodel
The mutualizationmodel
Business Model
Business Model
The service model
Simple service model Indirect monetization model
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The service model� The simple service model is commercialization of services that have no
link to a specific product. � The simple service model relies on two opposite levers; extending the
number of services offered, and Specializing the services offered to develop a competitive advantage.
� The indirect service model is commercialization of services associated to software developed or packaged internally. The success of this model relies on two levers; relies on two levers; � increasing the size of the market by preferring a wide diffusion of the
solutions� increasing the monetization rate by offering services to a maximum number
of users.
� The services offered are of different types like surveillance, technical assistance, tests and grantees, training ….
� An example of a company offering a service model: Spikesource. The Spikesource Company is specialized in the testing, the certification and the integration of LAMP open source software and the different applications that may use it.
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The value added distribution model
� The value added distribution model consists in selling a standard version of an existing product.
� The “sale” is generally made as a yearly subscription to the product and a set of attached services. This model offers a triple client value:triple client value:
� Save time
� Transfer of the risks related to the use of open source solutions, from the client to the firm
� Tested, certified and guaranteed versions.
� Indemnification in case of serious problems.
� Technical assistance services integrated in the packaging.
� Regularly obtain new patches and updates 34
The value added distribution model
� Red Hat. Red Hat specializes in the distribution of Linux. It reported for the 2006 financial year revenue of $401 million and a year revenue of $401 million and a net income of $59, 9 million.
� RH offer is made of 2 versions
� The Enterprise version, which is tested and whose interoperability is warranted.
� The «community» version (Fedora).
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The double (Dual) license model� The double license model relies on a discrimination of the
users.
� Double license system: � An open source license for the standard product
� A license that is more protected which comes with a guarantee and is generally linked to a product that offers more functionality. A license that is more protected which comes with a guarantee and is generally linked to a product that offers more functionality.
� The open source license has to be proliferate copylefted because every enterprise wishing to integrate the source code to a larger set of products and keep it under proprietary license will then have to buy the commercial version of the solution offered.
� This solution allows the combination of the free licenses’ advantages � creating a community of programmers
� fast diffusion to benefit from network effects36
The double (Dual) license model
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The double (Dual) license model: Examples
• PENTAHO, The leader in Open Source Business Intelligence (BI).
– In September 2006, Pentaho acquires the Weka project (exclusive license and SF.net page).
– Weka will be used/integrated as data mining component in their BI suite.
– Weka will be still available as GPL open source software.
– PENTAHO offers 2 editions: Community edition, and BI oriented edition.
• Rapid Miner, the world-wide leading open-source data mining solution due • Rapid Miner, the world-wide leading open-source data mining solution due to the combination of its leading-edge technologies and its functional range.
– It is available in two versions: community version which licensed under GPL, and Enterprise version which licensed under proprietary licenses.
– Community version is supported by community while the Enterprise version has official support.
– Rapid – I also offers a set of services such as professional training, consultation, data analysis. So, it can fall in service / value added business model too.
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The mutualization model• The mutualization model rests on the successive
development of several modules.
• Consists in the development of a relatively simple version of the basic product and the subsequent development of modules on demand.
� OpenTrust is an open
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� OpenTrust is an open
source company
specialized in
information security
software.
� It internally develops a
basic PublicKey
Infrastructure module.
The mutualization model:
Variation of revenue configuration of companies
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Synthesis of different business models
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Business / monetization model for the well
known companies
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Conclusions & Recommendations
� We presented the importance of open software in software
industry growth and acceleration.
� Presented open source business models. � Presented open source business models.
� Discussed the importance of choosing software licenses for
different business models.
� Guide IT graduates and professionals to the way to make their own
business. (make business from open source).43
References� Dahlander L. ,“Appropriation and approbility in Open Source Software”, International Journal of Innovation Management Vol.9 No. 3
pp. 259-285, Sept. 2005� Gosh Rishab Ayier, MERIT (2006), “Economic Impact of FLOSS on innovation and competitiveness of the EUICT, sector”,
http://ec.europa.eu/enterprise/ict/policy/doc/2006-11-20-flossimpact.pdf� Goulde, M. et Mulligan, J.A. (2007), “How to Turn an Open Source Product into a Commercial Business”, Forrester Research, January
23th 2007� Goulde, M. (2005), “Open Source Usage is up, but Concerns Linger”, Forrester Research Paper, June 23th 2005� Iansiti Marcoand Richards Gregory L. (2006), “The Business of Free Software: Enterprise Incentives, Investment, and Motivation in
the Open Source Community”, Working paper, Harvard Business School, http://www.hbs.edu/research/pdf/07-028.pdf� J Aaron Farr, Making Open Source Work, ApacheCon Europe 2008. Sep 2008� Krishnamurhty Sandeep (2003), «An Analysis of Open Source Business Models», Working paper, University of Washington ,Bothell� Lerner, J. and Tirole, J. (2000), “The Simple Economics of Open Source”, NBER Working Paper, No.7600� Lerner, J. and Tirole, J. (2001), “The Open Source Movement: Key Research Questions”, European Economic Review, 45:819-826� Lerner, J. and Tirole, J. (2001), “The Open Source Movement: Key Research Questions”, European Economic Review, 45:819-826� MuselliL. (2007), “Business models and the payment of open-source software publishers. Mutualisation: an original business model
”Conférence“ The diffusion of FLOSS and the Organisation of the Software Industry: From Social Networks to Economic and Legal Models”, Nice-Sophia Antipolis, May 31th and June 1st 2007
� Pal, N. et Madanmohan, T. (2002), “Competing on Open Source: Strategies and Practise”, MIT Working Paper� Schiff Aaron (2002), «The Economics of Open Source Software: A Survey of the Early Literature», Review of Network Economics,
Vol.1, Isssue1- March 2002� Stürmer, M. (2005), «Open Source Community Building», Working Paper, Open Source Community, MIT,
http://opensource.mit.edu/papers/sturmer.pdf� Välimäki, M. (2003), «Dual Licensing in Open Source Software Industry», Système sd’ Information et Management, 8(1), 63-75� Walli, S., GynnD. Etvon RotzB. ,(2005): ”The Growth of Open Source Software in Organizations”, Optaros White paper,
http://www.optaros.com/en/publications/white_papers_reports� XU, J., GaoY., Christley ,S. et MadeyG. (2005), “A Topological Analysis of the Open Source Software Development Community”,
Proceedings of the 38th Hawaii International Conference on System Sciences, 2005� faberNovel Consulting 2007, “Business models of open source software and free software: a few landmarks”, September 2007� J Aaron farr, “Making Open Source Work”, September 2008.� J Aaron farr, “Making Sense of Open Source Licenses”, ApacheCon Europe 2008
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