Open Source Software - How It Works
A Hub in response to the question "Open Source Software, A Non-Techy Explanation And The Popular Sites That Use It" asked by Ryan Hupfer.
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The beauty of open source software is that the source code that makes up the software is open to the public and can be altered by the end user to meet their specific needs. It is possible to build a personal computer or server entirely out of open source applications. In fact, there is almost no limit to the type of system that can be created using only open source. A large percentage of websites are using it for at least some of their software needs. Many websites run on Apache servers, which may use any number of open source software components. Furthermore, in many cases the underlying operating system is also comprised of open source software like Linux, or Free BSD. Even companies like Microsoft, IBM, Novell, and Oracle are on-board, and in the near future who knows what companies may join the growing trend of offering open source software and code. It is possible for open source companies to be very profitable, in fact in some situations it may be more so than selling software licenses.
Open source software is quickly becoming a leader in today’s market place. Not only does it offer lower initial investment, but also offers faster access to updates and patches for your system. Many companies have recently come to the forefront of technology using open source software. Whether offering full versions of their software and selling support and services or releasing free versions with limited functionality, and selling full versions with more functions; companies are realizing that open source is quite profitable, sometimes more so than selling licensing for their software.
One thing a company must consider when deciding how to distribute their software is the cost of licensing and enforcing those licensing conditions; compared to the cost of using open source. The process of licensing itself can be time consuming and expensive, then you must consider enforcing the licensing terms. Not that every entity is involved in immoral activity, but attaining licensed software in today’s technologically advanced world has become quite easy. Furthermore, locating and reprimanding the users that partake in making said software available has become increasingly difficult. It is relay quite a task for companies to trace every version and individual copy of their software, and insure that it isn't being used without proper licensing. Not only does this require resources and trained staff, but it is also more costly during development and at each update interval.
There are five open source business models that are commonly identified. The first model (selling support services) is part of most business plans, but can not usually support a growing business by its self. The second model is called (build or run hardware) and involves developing open source software to run various hardware made by the company. The third model (proprietary components) offers open source software for basic functions, and sells versions that offer more options. The fourth model (dual licensing) allows the same software available via open source to be licensed and sold. The fifth is (advertising), which offers a method of being paid for advertising provided through the open source download sites, or through the software itself. Each of these methods provides a different approach to making open source software a source of income. Combining multiple methods is common and will probably become even more common, as open source gains popularity and becomes more user-friendly.
The Five Models
Model one (selling support services) is used by most open source companies as a way of generating income. This definitely makes sense because no matter what type of open source software you develop, there are bound to be individuals that want support options for that software. There will most likely be multiple users of the software that run in to trouble at some point and need support from the distributor. This puts distributors in a good position to offer those services and profit from doing so.
Model two (build hardware) is not very widely used, probably because other companies can easily offer the same software.
Model three (proprietary components) has become popular for many startups. This model is based on the idea of offering a taste of what the software can do for free and selling the software or plug-ins to the software that add options or functionality to it. Of course, there is a great deal of variance to how degraded the free version or open source software is when compared to the licensed or purchased version. I have gotten some open source software that was nearly worthless on its own, then purchased the full version and found it to be very powerful in comparison. On the other hand I have used free software then purchased the full version and found that there was very little difference between the two. So I guess it depends on the situation and the particular distributors decisions on how they do business.
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Model four (dual licensing) is when a company offers the same software and source code for free and also for a fee. Some people and or companies feel more comfortable using software that is purchased, so why wouldn't companies accommodate them. Of course, there is usually some sort of perk for purchasing the software, for example you may get technical support, access to downloads, and patches for a specified period of time automatically when you purchase the software rather than downloading the free version.
Model five (advertising) is probably becoming the most commonly used method for open source developers to cash in on the money being exchanged through technology. Advertising other services on the download sites of open source software, or really any site at all has become the going trend on the web today. Of course, open source developers are going to opt in.
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