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Business Models of
Open Source Software
Nov. 2017
Prof. Kim, Jong Bae(Ph.D.)
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Professor
Name: Kim Jong Bae
Department: Graduate School of Software, Soongsil University
E-mail: [email protected]
<Books>
- Open Source 2.0(2010)- Open Source Software: A Survey from 10,000 Feet(2013, Translation Book)- The Definitive ANTLR4 Reference(2014, Translation Book)- Agile Technologies in Open Source Development(2015, Translation Book)- Software Development: An Open Source Approach(2016, Translation Book)- An Introduction to R for Spatial Analsis & Mapping(2016, Translation Book)- The Business Model for Open Source Software(2017)
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Value? Use Vs. Mystical
Use Value: "The utility of a thing makes it a use value.... Use-values become a reality only by use or consumption."
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Use Value Vs. Exchange(Sale) Value
Exchange Value: a relation, "as the proportion in which values in use of one sort are exchanged for those of another sort," an equation of commensurability... and then some.
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Value ≠ Price
profit
manufacturer
consumer
extra value
A product in the eyes of the manufacturer
A product in the eyes of the consumer
cost
s
price
price
valu
e
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Value & Price
"Price is what you pay. Value is what you get." -Warren Buffett
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Market share for top Web servers across all domains according to Netcraft (http://www.netcraft.com)
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Evolution of Open Source Software
Linux
OS & Web Server
• OS: FreeBSDLinux – RedHat,
SuSE• WS: Apache
Linux Linux
MySQL
Tomcat Servlet EngineJboss J2EE Container
Apache HTTP Server
MySQL/PostgreSQL
Tomcat Servlet EngineJboss J2EE Container
SASH
Apache HTTP ServerSta
ck M
anagem
ent
Secu
rity T
ool
Linux
MySQL/PostgreSQL
Tomcat Servlet EngineJboss J2EE Container
SASH
Apache HTTP Server
Sta
ck M
anagem
ent
Secu
rity T
ool
XenSecure
BI
BPM
CM
S
CRM
LD
AP
Middleware
• WAS: JBOSS, Jonas, Geronimo• DB: MySQL, PostGres, Cloudscape, Ingres,
SAPdb, BerkeleyDB• Development Tool: Eclipse• Stack Mgmt Tools: OpenPKG, Integration• SASH: Spring, Axis, Struts, Hibernate
Applications
• BI: Pentaho• BPM: JBPM• CMS: Alfresco• LDAP: OpenLDAP• ERP: Compiere• CRM: SugarCRM, Compiere• Healthcare: MedSphere• Management: Nagio, OpenNMS
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User base and community
Market placement and competition
Revenue stream and financials
• User base development
• Information about market
• Innovation dissemination
• Productivity increase• Access to customer
needs• External developers
use• Access to new skills
and Practices
• Approach restricted markets
• Increase reputation• Attack competitors• Preempt
development of closed standards
• Embrace underdog • mentality• Escape from vendor
lock-in
• Enable new services• Increase demand for
complementary services
• Reduce development costs
• Lower break-even points
• Introduce new revenue Streams
Business and Strategic Advantages of Moving into OSS
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Actors of OSS Project Communities
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Typical OSS Business Models & OSS Ecosystem Players by Stephanos Androutsellis-Theotokis
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Business Opportunities with Software(1/2)
requirements
gathering
purchas
e & acq
uisition
develop
ment
installati
on
integrati
ontest training
mainten
ance
migratio
n
design
"Process of technology adoption"
identification of solutions
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Business Opportunities with Software(2/2)
SW1 SW2 SW3 … SWn
Development X X
(Sales &) Installation X X
Integration X X
Certification X X
Training X X
Maintenance & support X X
Migration X X
SW1 SW2 SW3 … SWn
Development
(Sales &) Installation
Integration
Certification
Training X X X … X
Maintenance & support X X X … X
Migration
"Vertical specialisationor
Horizontal specialisation"
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Business Models of Open Source Software
OSS biz.
Models
Development
Pure Product Models
Use Value AcquisitionCost Sharing
Risk Sharing
Distributed Sale
Mixed Models
Dual Licensing
OSS-Proprietary
Accessories
Provision of Services
Platform Distribution
Consulting/SI
Training/Support &
Maintenance
Development-Service
Hybrid
OSS-Specialist
OSS-SaaS
Ancillary Markets
(H/W)
Other Ancillary
Markets
Community & De
velopment
Legal Certification
Sale of Books
Merchandising
Advertising
- Apach
- Cisco
Funambol, MySQL, Sleepycat DB, TrollTech
Sendmail, Hyperic, Sourcefire, Zimbra
SourceLabs, Spikesource, Red Hat
IBM , Ayamon, Enomaly, Navica
Easter-eggs
Alfresco, Compiere, vTiger, Openbravo
Collabnet, SugarCRM, SocialText, JasperSoft
SourceForge, CollabNet
Black Duck, Palamida
O'Reilly
ThinkGeek
Mozila, Digium
IBM, Digium, Avanzada7, Chumby
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Prerequisites, Deciding Factors and Concerns
Evaluate the Market for the Target Product
Determine Development Community Interest
Decide what Parts of the Product to Open-Source
Balance Short Term Switching Costs
Consider New Processes, Infrastructure and Environment
Ensure the Correct Mentality is Present
Sanitize Code
Select Appropriate Business Model
Select Appropriate License
Decide on Marketing Approach
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Conclusions
Q & A
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THANK YOU!