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Open source VS Proprietary sales

Posted: Thu Nov 22, 2007 12:33 pm
by alex.barylski
Interesting article I just read:

http://www.businessweek.com/technology/ ... tc_218.htm

Especially this statement:
But revenue continues to be a problem. While open-source companies trumpet hundreds of thousands of downloads, on average just about 2% of those customers are actually paying any money. After all, just because every piece of software companies rely on to run their businesses can be replicated with open-source alternatives, that doesn't mean there's a market for it, caution analysts
2% is certainly a small number of paying clients/download. Sure if you have a popular OSS project I suppose there is security in volume but for most projects wishing to turn profit...I'm thinking OSS is not likely the way to go. :P

I wonder what the ratio between commercially successful OSS projects and commercial projects is?

Everytime I read an article like this I just boil. I want more than anything to believe OSS is a good move for a business, but everytime I read an article on SugarCRM or similar it always seems they are funded by VC's and not really making serious profit. Especially under the context of PHP applications - not considering MySQL, etc.

I imagine that some businesses make a decent living selling customizations but I dought that is any way to make a business.

Thought I'd share. :)

Posted: Thu Nov 22, 2007 1:12 pm
by feyd
The software itself, isn't for profit.. that's pretty much the meaning behind the movement. It's done for, generally speaking, altruistic reasons, not financial incentive for oneself.

You also have to factor in where the bigger guys get their payments. A small amount comes from donations, but the money for a lot of people is at support levels (if that's not free) or in the author/lecture circuits.

Businesses can also make decent money via the dual (or more) license sets.

Posted: Thu Nov 22, 2007 2:13 pm
by alex.barylski
feyd wrote:The software itself, isn't for profit.. that's pretty much the meaning behind the movement. It's done for, generally speaking, altruistic reasons, not financial incentive for oneself.
That is a good point, however I feel it applies more to FSF rather OSS. OSS is usually advertised as an alternative business model to proprietary models. Whenever I hear "business" I think personal benefit or financial incentive.

I just feel, open source proponents typically want you to believe ( at least IMHO) that it's the better business model (both socially *and* financially) where it is clearly not the superior model when it comes to making money.

Posted: Fri Nov 23, 2007 5:26 am
by Jenk
Dude.. open source has never been about making money. That's is so clearly obvious, I am actually shocked you have even asked. :?

Posted: Fri Nov 23, 2007 5:59 am
by Chris Corbyn
Open source for me has nothing to do with money except the odd donation which is just a bit of pocket money. I have a job to make all the money I need. It's about exposure and "showing off" if you like. I have nothing to hide.

I've never heard of anyone suggesting OSS is a better business model financially.

Posted: Fri Nov 23, 2007 7:46 am
by Maugrim_The_Reaper
I think you need to focus on a few things. Like how a company which writes open source does make money (it's hard to say open source is not a money spinner - it depends on what the business strategy is). It's not the same wisdom as the 90s when everything came in a cardboard box (Microsoft aside ;)). A lot of companies out there are making far more money from selling services - support, consulting, etc. than on the nuts and bolts source code itself independently.

On the SugarCRM mention - they're opening an office just down the road here in Dublin. Maybe I should apply? ;)