The Linux Business Model

[anacron]

Fine, but...

 

Would you invest, say, $50,000 in a Linux software development startup?

 

Probably not, because there's no money in Linux software development. You have to find some way to add value to the software, and then sell that.

[Gowator]

I dont see why not, except it would need to be a viable product not already covered. (i.e not something that would be FREE ...)

 

Take databases.... Oracle put a lot on money into it. OK it was hardly a startup but they did put a lot of money in.

I honestly dont think the cost or otherwise of the infrastructure is important for scientific software etc. (actually it tends to be but only becuase people beleive if its free its crap)

 

Alternatively would I invest in a Wifi infrastructure run over linux or a web company run iover linux etc.

Google are a good example.... they wrote the SW and made a service.

 

I think this differentiates linux from windows. In linux you need a service to go with the product not just an empty box.with a CD ..???

[anacron]

I think this differentiates linux from windows. In linux you need a service to go with the product not just an empty box.with a CD ..???

True. So, if the enterprise is going to be profitable, it has to bundle a service (that is of value to consumers) with the software. That's the kind of thing that worries me about Mandrake's viability. I'm not sure it has that yet, and I haven't heard about them moving in that direction.

[zero0w]

MS survives by stopping the customers talking to its partners and by threatening its partners. 

Slowly the 'partners' realise they will be screwed long term and are looking for alternatives and the 'customers' especially big co's are already being screwed over...

Microsoft is NOT trustable as a business partner, that's for sure.

 

The question is whether we have real alternatives to the tool set and software chain people depending on for their business and daily operations?

 

I don't see we have back in 1999-2001 (the time the anti-trust trial started, at one point Microsoft was threatening to pull Windows 9x and 2000 off the retail shelves if it is forced to separate IE browser from the OS). Now I clearly see we do have alternatives. The problem is the level of service, can we match Microsoft in the level of support? And can new software be developed faster using the open source tool chain?

 

On the server side, the answer is probably yes (look at the Apache, Tomcat and the recent Geronimo opensource J2EE server release). On the desktop side, well that's a question we need to ask ourselves.

Edited May 5, 2004 by zero0w

[bvc]

 

get all the big distributions to merge, throwing all their resources into the hat, call the distro

LINUX

and you're done.

[anacron]

You haven't solved the biggest problem: How will the new consortium (with all of its overhead) make a profit?

 

The software will be GPLed, so what are they going to make money from?

[Gowator]

 

get all the big distributions to merge, throwing all their resources into the hat, call the distro

LINUX

and you're done.

Im not sure.

I always seem to think that the competition across distros is healthy.

 

Also the different models such as Debian provide a headless or at least multiheaded hydra for MS to attack.

 

If lots of stuff is illegal in the US Debian can distribute non-US BECUASE its non profit and cant be attacked financially. Mandrake cant provide this becuase it would be closed down in the US.

 

 

The software will be GPLed, so what are they going to make money from?

 

Why would they want to make money from the software ?

 

No seriously, why not make the money from value added services etc.

For instance take an internet cafe.

 

I go in and pay for bandwidth, coffee etc.

REAL TANGILBE THINGS

No one breaks down the bill and says thats $xx for rental of IE and xx for windows. Im not saying its not factored in but its no more expressed than electricity or lighting.

 

So think about it.

The Operatig system is the underlying infrastructure and certain programs are FREE. However these programs can generate revenue...

 

Examples are GOOGLE. GOOGLE is free but generates a lot of advertising revenue. Yahoo Mail is FREE ... Opera Free edition (:D) is FREE

 

However you can also BUY GOOGLE for indexing your organisation ... You can buy extra storage ion Yahoo Mail and pay to get rid of adds in Opera.

 

We are largely stuck in the paradigm that software must cost money. But google and Yahoo manage to make large sums without charging.

Also they both use FREE Operating systems.

Since they use GPL'd and BSD license SW repsectively they also contribute back into the code base. So they make money and the coders get payed.

 

Oracle/SGI/IBM are now also starting this path. They support KDE/Gnome etc. and donate code and concepts (XFS,JFS,DFS) to find a common link.

 

Oracle uses apache for jsp pages if not tomcat and Sun java.

 

All of these companies are making money....

and most of them have much happier clients and partners than MS.

[Darkelve]

Now here's a guy who explains things with a lot of common sense.

 

http://my.core.com/~mrkurt/epinions/grygus.html

 

And he speaks plain English too!

[anacron]

For instance take an internet cafe.

 

I go in and pay for bandwidth, coffee etc.

REAL TANGILBE THINGS

No one breaks down the bill and says thats $xx for rental of IE and xx for windows. Im not saying its not factored in but its no more expressed than electricity or lighting.

 

So think about it.

The Operatig system is the underlying infrastructure and certain programs are FREE. However these programs can generate revenue...

 

Examples are GOOGLE. GOOGLE is free but generates a lot of advertising revenue. Yahoo Mail is FREE ... Opera Free edition (:D) is FREE

 

However you can also BUY GOOGLE for indexing your organisation ... You can buy extra storage ion Yahoo Mail and pay to get rid of adds in Opera.

 

We are largely stuck in the paradigm that software must cost money. But google and Yahoo manage to make large sums without charging.

Also they both use FREE Operating systems.

Since they use GPL'd and BSD license SW repsectively they also contribute back into the code base. So they make money and the coders get payed.

 

Oracle/SGI/IBM are now also starting this path. They support KDE/Gnome etc. and donate code and concepts (XFS,JFS,DFS) to find a common link.

 

Oracle uses apache for jsp pages if not tomcat and Sun java.

 

All of these companies are making money....

and most of them have much happier clients and partners than MS.

Google or an internet cafe aren't spending money on developing the OS or the apps that run on it. They are benefactors of the R&D of others (which they, like everyone else, did not have to pay for). But if we want developers to make Linux better, smarter, faster, etc., how are we going to compensate them? Volunteerism & community spirit will only get you so much, especially in an industry as dynamic as software development.

 

There has to be a way for SOFTWARE DEVELOPERS to make money from Linux, if Linux is ever going to have the market penetration that Windows has. That's why we're seeing a progression to high-end bundling of services and hardware with Linux. Companies are wrestling with the cost/benefit possibilities of Linux.

[Gowator]

Google spends a small fortune developing the APPS

 

Check out their site .. click on the more...

 

http://www.google.com/options/index.html

 

But also it depends on what software....

 

Email clients etc. are hard to make money on. professional video editing however probably isnt.

 

MS are squeezig out competition in windsows apps but in opensource eveeryone is helping everyone else.

 

Even KDE and Gnome are working together on the common desktop,

 

MS has the market for crap covered. Its got a crap DB's (Access and MSSQL server) and crap photo edit etc. ..

 

but that does nt stop thoise who want buying photoshop or oracle

more importantly in opensource the heavyweight SW can be made to interface with the FREE (as in beer) SW.

i.e. using common components for back office apps.

 

Server companies will get support contracts (like the RH thread) etc. etc. all in all people will only pay for value added.

 

MS makes you pay for minimal ... then pay more for rubbish. Lots of free/shareware is available BUT longhorn aims to do away with that.

 

In fact MS is 'pushing' its product on people who never wanted it.

 

Back to the internet cafe. Lets say I want my internet cafe to have a customized browser etc. I might pay for opera and then pay a local company to customise my settings and make a billing system etc..

all this is easy under GPL'd OS...

 

Lets say the company want to use a distro then they might pay extra for a distro that has support since they are supporting the client they can get heavy weight support from the vendor.

 

 

Here are some linux products I use professionally.

http://www.tarantella.com

http://www.thinanywhere.com

 

these are heavy products where millions of $ were spent on development.

 

I agree on Mandrake ... its a shame but they have no business sense !

[Darkelve]

Why do software developers have to be able to make a profit from Linux? I thought it was only a kernel.

 

Shouldn't software developers be able to make money from their software? I still have doubts about Lindows/Linspire's approach, but browsing through their forums, you can clearly see there are quite a few N00b users, who get along quite fine. They are actually BUYING games for Linux, e.g. from garagegames. Methinks that if I really want to support Linux, I should not be ashamed to open my wallet once in a while. Which I've done for Mandrake, which I'm going to do again for SuSe. Which I might do for certain products like Opera (I know its not OS) or Limewire. (See also http://www.linuxandmain.com/comment/dep031002.html ).

 

I am not really into software development, so I can't answer in detail. But I know that Red Hat makes profit, as does SuSe, as does Mandrake (at this moment). WineX, object to it if you want to, is profitable as well.

 

Mind you, you do not HAVE to make your software GPL, but you CAN if you want to.

 

Say you are an independent game developer ( http://www.the-underdogs.org/scratch.php ) it would be an excellent idea to develop your game for Linux. I'm not kidding. Or release your game engine and/or authoring set under the GPL, but at the same time release your 'killer' game with it. There will be no other games using the engine for quite some time yet and you can offer e.g. detailed documentation, or artwork that can be used, ... for the game engine for a reasonable price. And you'll probably get free debugging to boot. A game that is properly debugged even AFTER its release. Now THAT's something I'd actually pay for!

 

I don't think WinXP is such a bad OS, but morally I won't be comfortable using it, knowing how much M$ screwed people over. It's bad karma dude ;) same for DRM, same for the game industry (see scratchware link) etc. With GNU/Linux and Open Source, this situation will actually be possible to turn around! The real problem is that Linux is often seen as yet another hype (kind of understandable after the IT&internet bubble burst), not really looking worth into. And I believe that in an Open Source 'world', there is room for everyone. In a Microsoft world, there is room for, ... wel, let's just say "there can only be one" :P

Edited May 5, 2004 by Darkelve

[Pzatch]

I bet a linux common game environment that ran on top of the GPL stuff and didn't include any GPL would make good money for someone who could sell it to the game developers. Your not selling to the general public but instead your selling to someone who is selling to the general public.

 

Didn't windows have something like this?

[Gowator]

Oooh - yuck your right.

 

 

Seriously though I think we are all used to looking at software sales in a certain way. In fact it wasnt always like that ... in the dark days before MS.

 

For instance when you got the old atari/radio shack TRS-80's etc. the came with basic interpreters etc. it was expected. It wasnt until MS started to sell DOS seperately we actually got used to [paying for an OS.

 

Even then we still look at it. Ask people if they use linux and an average room might have X%, then ask people if they use google and its likely to be HIGHER. However google is an application running on Linux so they all use linux, we just need to get into the paradigm of remote applications.

 

Are you paying to use google ? Yes and No because its got ads so in a way your paying. Another example is lots of people use linux mail servers with WebMail attached. This might just about be classed as an 'application' in itself but its all part of the groupware stuff. No reason not to use a WProc or SSHEET etc.

 

In fact last night a friend was telling me they have another virus... can I fix it ... dah dah... I said yep but the problem is they are using Windows .. not even using outlook (thank goodness) ...

 

It came to me that if you use webmail then the attachments are not affecting your PC but sooner or later you need to edit them. She's a translator and receives her work by email so its important. So ... my idea was whay not provide a linux service where people can use StarOffice etc. remotely to edit the document. Thus never giving it the chance to contain a virus....

 

The OS/browser just effectively run as thin clients.

Here's another way that someone can make money.

Course they might need to do some programming on OO or Kword etc. to get it working and then since its GPL that goes back... but the idea is to make money form the service NOT from the programme sales.

 

MS effectively killed ASP's by naming its web service .asp. I wonder, was that an accident? Imagine noone needing WORD/EXCEL etc.

[Ixthusdan]

I make signs.

 

In the course of making a sign, I have to purchase materials that do not look like a sign. I turn them into a sign. I also purchase software for bucks that are not signs. They are layered Photoshop files that I can disassemble and alter in any way I choose, no royalty problems. Again, these patches of graphics are not signs, I turn them into signs.

 

So, the os is not where the money is. That is the Microduffy way. It is made on the way to offering a complete product:service, deployment, customization.

 

It is correct to understand that the end result, what the cuastomer sees, is what they will pay for. If the end product does not get enough money in the market, then it is not a viable business. I think it will, because people already pay bonkers for Gates' house and car. (I think they pay for his wife and kid as well! :D )

[Gowator]

good analogy Ix...

I could get the same photoshop stuff and produce real crap because Im as artisitc as ... well tux the penguin with a hangover.

 

The point is you DO SOMETHING with these files and if you pay or they are free is of no consequence... only what you do with em.

 

MS Os's are not renowned for stability etc. and MS started off selling a cheap and cheerful DOS, at the time without any market dominance it wasnt the sort of thing anyone could make money supporting ...

 

So the business model became SELL the OS.

 

We have all been conditioned to think that OS's are something you must buy. That applications will only work right if they are made from the same supplier as the OS....

 

but this is just conditioning... its been drummed into us for so long we dont question it.

 

MS has started the LEASE model. This is how it actually took business from Big iron IBM in the first place. YOU CAN OWN YOUR OWN OS.

Now after licensing VI companies can no longer get official support unless they LEASE. Its full circle .....

 

Now MS is selling support, customisation, consultancy etc. etc. BUT they use the OS as the lever. If you want support then you MUST LEASE. If you dont you get buggy SWARE and no support.

 

But you can go to a third party.... of course but the 3rd party cant support it like MS becuase they dont have the source !

 

In fact MS claims not to have the osurce, at lease when the DOJ asked them to produce it they said it was too diseminated round the company.

 

DOH it would take mandrake 15 minutes to find all the source and that would include thousands off applications too. Any ANYONE can get Mandrake source so ANYONE can support it or build third party etc.

 

This might seem like how to make money but in fact it just stops single monopolies like MS existing. Everyone can make decent amounts of money but noone can dominate.

 

Mandrake technically deserve to make money its only their negative marketing that stops them.