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Greed is good: 9 open source secrets to making money

Peter Wayner | Oct. 16, 2013
Low-cost marketing, hard bargains, keeping competitors in check -- profiteering abounds in the open source community

Open source profiteering strategy No. 4: Open-sourcing code to push back against a rival
When Google launched its Android OS, Apple's iPhone controlled an overwhelming amount of the smartphone market. Giving Android away as an open source platform made it easier for Google to work together with the other phone manufacturers to create a flourishing platform that could support apps that everyone could use. The open source license made each company an equal partner in the project by giving them access to the source code and control. They could feel secure in choosing it because they knew that Google couldn't revoke access.

This shared process is growing more common. OpenStack, a project sponsored by Rackspace, lets smaller cloud companies band together and offer a common platform that will be more attractive than the dominant cloud from Amazon. Not only can the customers choose between multiple companies, they can also install the cloud tools in their own data center. The same basic structure is found in all of the clouds, and the scripts work the same everywhere.

Open source profiteering strategy No. 5: Tapping open source to launch a competitor
The open source license makes one thing simple: Starting up a rival. All it takes to create a new company from scratch is access to the source code repository. After you download it, you can hang your shingle and start competing from the first day — heck, the first few minutes.

Starting up a competitor, though, is far different from sustaining the effort. Downloading the code is easy, but gaining even the basic competence takes months. Becoming a true expert can take years. Really competing means building a team that can offer real expertise.

This is why competition only appears in rapidly burgeoning areas where demand far exceeds supply. When interest in Hadoop exploded several years ago, new startups appeared quickly. All began with the same Hadoop core, but they quickly began to specialize by offering their own special add-ons.

Open source profiteering strategy No. 6: Open-source to keep competition in check
Competition in the world of open source is a two-way street. While anyone can come along and snarf source code in seconds, they are often bound by a license that forces them to contribute all of their innovations back. If the new competitor does anything clever, all of the old teams also gain access to everything. Some of the most popular licenses like the GPL guarantee that everyone must share alike.

This share-and-share-alike rule makes it hard for any upstart to challenge an effective leader. Any neat innovations that come from the upstart can be absorbed by the leader, making it hard for the upstart to gain any real traction. The rule that makes it easy to start up a competitor also makes it impossible for the competition to flourish.


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