Report on Open Source Strategies

The 451 Group has published a new report titled ‘Open Source is Not a Business Model’. It is one of the best surveys and analysis that detail how software companies have integrated open source into their product strategies.

The survey analyzes the approaches of over 100 different ISVs ranging from IBM, Oracle, Red Hat to less known (at least to me) Jitterbit, DimDim.  It categorizes decisions and impact of OS license choice, development model (community vs sole vendor), licensing strategy and sources of revenue.

Some of the key findings in the report support how we see ISVs participating in the Eclipse ecosystem, including:

– The majority of vendors utilize some form of commercial licensing to distribute or generate revenue from open source software.   This supports the Eclipse approach of creating vendor neutral open source projects but also encouraging commercialization of the Eclipse technology.

– Vendor-led projects tend to adopt reciprocal license (GPL) vs mixed models of community and vendor tend to permissive licenses (APL, EPL, etc)

– Subscriptions appear to be the most important source of revenues, followed by commercial licensing.  Service and support is secondary source of revenue for the majority of the companies.

– ‘open-core’ licensing has become the chosen model to achieve the benefits of open source development and commercial license revenue.  ‘open-core’ licensing refers to a strategy of developing the core platform in open source but then adding commercial value on top.  This is really where we see success in the Eclipse community.

The report is not cheap but if you are working on a corporate open source strategy, this report provides a very useful framework for considering the different options.  I would highly recommend it.

The one thing it doesn’t do is analyze the success of the different options, ie what are the more profitable strategies.   Hopefully this is something for a future report.

3 Responses to Report on Open Source Strategies

  1. Matt Aslett says:

    Thanks Ian, glad you liked the report and appreciate the feedback.

    I agree we didn’t cover the benefits of each model and how they relate to things like profitability as much as we could, but this report was more about putting a stake in the ground in terms of categorization of the various strategies.

    I’m already thinking about how we could move on to address the use of the various models and how they relate to successes and failures, such as
    today’s post over on the CAOS blog. There’s certainly scope for further research and analysis.

  2. Ian says:

    I’m very confused (as is often the case)🙂. The site you point to has a report titled:
    Open Source Is *Not* a Business Model. That seems very different than Open Source is *Now* a Business Model.

  3. Ian Skerrett says:

    Ian,

    You aren’t confused; I just can’t type. I’ve corrected the typo in the original post to say ‘Not’.

    Thanks for pointing it out.

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