Free Lunches

There is a homestead rush, a stake-your-claim-in-the-ground in the Free Lunch market. Be the first entrant in an Open Source or Linux free software market and you have the advantage of setting the “standards” or business model of how “free” software will be distributed in Linux or broader platform segments. RedHat has that advantage in the Enterprise Linux Server space. MySQL and PostgreSQL have that advantage in the medium to large scale open database arena. Actuate/BIRT and Pentaho appear to be leading the charge in the BI-Business Intelligence and Reporting services segment. Xara and GIMP seem to be leading the way in the vector and bitmap graphics software markets.

But all of this scrambling may be for naught if the market is not suited to Open Source business models. Open Source collects its fees on distribution, support, and other services including education, training and consulting. In cases of high volume software like OS, databases, graphics, and others there is enough volume or “sales” to support one or more vendors on distribution revenues alone. Or the distribution price is low enough to support impulse purchases like shareware or utility software. But in other cases, the volume of business is just not enough at the $10-50 distro price range to sustain an organization. In this case support, training and other services have to make up the gap.

The problem here is the free-riders phenomenon. On the desktop conumer side, there are too many people that want a free lunch. Individual PC users are notorious freeloaders. People know they should pay but just dont because they expect others to pick up the tab – ask any of the thousands of share-ware vendors. In contrast, server software which a group or organization relies on for some portion of their operations – these users value highly such functionality and are therefore more willing to pay for support and other services.

So there is no “one best way” to do Open Source despite what some of the Open Source evangelists imply. Rather there may have to be Open Sourcers, especially those in medium size and consumer PC markets, who may have to pick up a few tricks from their freeware and shareware colleagues to make things go. And in general, expect Open Source software providers to develop some rather novel fee models to make a go of the Free Lunch business. For starters take a look at what Actuate/BIRT, Zend/PHP, Poseidon UML, and Xara Xtreme Linux are doing. Let me assure you, as editor of Keep an Open Eye, I know firsthand about the trials of making OpenSourcery ends meet.

(c)JBSurveyer 2006