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Open Sources | Rodrigues & Urlocker » Will the Support Business Model Survive?

November 02, 2007 | Comments: (0)

Will the Support Business Model Survive?

A while ago Shaun Connolly at JBoss posted an entry titled "What's in a Subscription". Shaun states:

"Put simply, a Subscription is comprised of: 1. Software bits 2. Patches and updates to the bits 3. Support in the use of the bits 4. Legal assurance"

I am beginning to wonder if, in the long term, the only truly scalable business model for OSS is one that incorporates #1 & #2 on Shaun's list. When you think about it objectively, purchasing a 'subscription' to get "Software bits" and "Patches and updates to the bits" is the model the software industry has been using for decades. The only difference with OSS is that 99% of your users are doing so without paying for the product.

Heresy, yes I know.

But look at the successful OSS vendors & their products (RHEL, SLES, SugarCRM, JBoss AS, and MySQL Enterprise) in the market today. Isn't financial success driven by access and updates to (specialized) software bits? Maybe other things were important to these vendors in the past, but at this point in their maturity, the major revenue driver is (simplified) access to (specialized) products baby!

If "Support in the use of the bits" was so critical to customers then a larger % of production users would be paying customers. OSS vendors wouldn't need to direct customers to a paid subscription as a means by which to get (a specialized version) of #1 and #2.

I'm beginning to think that Support *was* the key method to get customers to the table. Now that customers are more comfortable with OSS, Support by itself is not reason enough to purchase (or renew) a Subscription.

As I discussed in a prior post, things like copyrights & patents are vendor issues and should not become customer issues.

Anywho, my (draft) thesis is that, in the long term, the only truly scalable OSS business model starts with gated access to binaries/code and the patches/upgrades to said binaries/code.

Is the enterprise software business model the future of the OSS business model?

PS: I should state: "The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions."

Posted by Savio Rodrigues on November 2, 2007 06:26 PM


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What is the catch behind all of the "free" things upfront?
Will it cost more on the long run?

At first, I thought OSS will be a great way to fight digital divide...
Now many has turned into rebellious uprising against so called big enterprise...
And some OSS projects targets one particular company you know who...

Funny...
Starting free, then they turned into an enterprise themselves...
Will business runs smoothly for OSS?
Will OSS business one day make them no longer an OSS and trap the users?
How many profit really is when compared head to head, running an OSS business model compared to proprietary based demos or betas to attract customers?
I already wonder since 10 years ago...

Posted by: David Yacobus at November 6, 2007 04:43 PM

Anyone who has personally used OSS for very long knows that things don't always work perfectly, AND that the creators of the software don't often have time to listen to your particular gripe. What does that mean? It means you either live with your dissatisfaction, or you become part of the development process.

The imperfection of the raw material of OSS land is not acceptable for many companies. This, of course, creates a market niche for the service providers, who guarantee satisfaction. Guaranteed satisfaction in an OSS platform is something many companies will always, to a greater or lesser extent, be willing to outsource. This "greater or lesser extent" I mention is the factor, I suppose, that determines the scalability of the service provider business model.

The author's make a point that many of the high profile players in the OSS world offer some closed source elements as part of their value added service. It's important to notice that this illustrates that the OSS paradigm is not incompatible with closed source software vending. This leads me to ask if it matters whether the pure service provider business model is scalable. Does any successful business in the world adhere entirely to a single strategy? It's a good-to-know tidbit for those entering the market, but otherwise: who cares?

What really matters, when it comes to OSS, is the freedom and flexibility it offers. Teenagers can get their hands on something very powerful, at zero expense and learn from it. One always has to look at the next generation to see where the trends will lead. This free (as in beer) access is a powerful driver for youngsters. (It was one of Linus Torvalds's primary motivations.) How will money be made? Some 14 year old (today) kid will be answering that question in unexpected ways 10 years from now.

Posted by: Ana J. at November 7, 2007 11:24 AM

Anna, I don't disagree with anything you've said. I'm talking about the business model that OSS vendors are using today.

A support-driven business model for OSS is not going to work in the long run. The leading OSS vendors today have figured that out...

Posted by: Savio Rodrigues at November 7, 2007 11:34 AM

I disagree with your premise; I think the support in the use of the bits is EXACTLY the value proposition that drives most Corporate customers to the subscription model. The bits and their updates are already freely available, there is (or certainly should be) no need to pay for them. Look at CentOS if you question that.

What Corporate customers want in the support model is qualified assistance in making the bits work correctly when something breaks, and ideally, the proverbial 'one throat to choke' to provide it all to them.

Harry Sutton
Master Technologist
Hewlett-Packard Company

Posted by: Harry Sutton at December 8, 2007 08:51 AM

Harry, if that is the case, why do Red Hat, JBoss and MySQL, arguably the 3 best known OSS companies, choose to sell products (under the guise of a subscription)?

This post may clear up my points:

http://weblog.infoworld.com/openresource/archives/2007/12/estd_converting.html

Posted by: Savio Rodrigues at December 10, 2007 06:21 AM

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