SXSW Day Three – Revisting Open Source Business Models

Monday morning started with a panel on “Revisiting Commercial Open Source Business Models.

It was moderated by Edward Cavazos (Fish & Richardson PC) and panelists were:

The panel was fairly freeform. They started by polling the audience a bit – asking people what kinds of questions they wanted to hear about. Broke out pretty clearly that there were lots of folks who wanted to know how to leverage open source in their businesses but weren’t sure how. Panel distinguished between open source users (people who download, install, and use software under open source licenses) and software developers who are building products which include (one way or another) open source components.

Because of the wide variety of different kinds of folks in the audience, I didn’t feel like the discussion advanced very far. I suppose that is a sign that the understanding of the various mechanisms by which open source projects are imagined, created, coded, maintained, and licensed is not as broadly spread as I had come to think. Still an awful lot of confusion about what can and can’t be done with something found in the open source world.

So much of this still comes back to the fundamental “free as in beer” versus “free as in freedom” discussion – guess I’m too insulated in a community that just gets that and forget that to many “open source” still means “free as in beer” and they can’t figure out how anyone can make money in open source software, or what the value is in the control that access to modify source code gives you.

(Actually, though, it isn’t fair to say that people “in the community” get it, and other people don’t – there’s been a fairly active and vigorous discussion on the Drupal Consulting mailing list over the last week or two about Drupal modules and what you can and can’t do with modules given that Drupal is GPL v2 licensed).

My raw notes:

Shimel – it isn’t the consumer of open source – it is the software development or product development shop which is using components and making money off of them. This is where the excitement / heat is concentrated on – it makes a lot of sense to separate those who basically resell software which contains open source from those who just consume open source as a user.

Fisher – there are people who create open source and distribute it under different conditions, generous or not, and there are people who consume open source as licensees.

Increasingly, you can make better money by leveraging open source in the sense that you have better leverage because you are more cost effective. It levels the playing field and can make you equal to many larger companies quickly.

Some of concern from internal lawyers about open source is related to Y2K – when people did code audits for y2k they discovered enormous amounts of open source in places where they did not expect to find it, and places where they had not know it existed. Since they may not be very savvy about the issues, that was scary to them, and some have tried to respond through “bans” on open source, which ultimately are ineffective.

One of the business models around leveraging open source – succeeding at the margins – we’re going to bet on ourselves – we will be the best at implementing this technology. We will outsource our R&D effort and support effort by leveraging the community – but
we’re going to know it better than anyone else and be the center of the community.

Adina from SocialText – VP of Product Management. Open Source has been part of our business strategy from the beginning. Adopted a developer and project called kwiki – a lot of our developers come from the open source community and have their own projects that they do and contribute to.

She was from Vignette. The question of open source for us is like Weather – you can’t really fight it but you work with it. You have plants, you want plants that work well with the community.

Jarrell – We work alot with companies which are evolving – gradually moving more and more of their functions into the open source version, leaving only the core differentiating pieces proprietary. This has evolved to the point at which several different companies are using the same
base code set and build proprietary extensions on top of it.

Quality of open development efforts, security as a center of open source. This is one of the places where open source has been the most effective.

Open source actually came into security – open source is widely accepted and used in the security marketplace.

Three Cs for VCs who are looking at companies which produce open source software, or release parts of their solution as open source: Community, Commodity, Cushion (what’s the gap between the proprietary and the commercial solutions).

Jarrell – ultimately software is just software. There are more commonalities than differences.

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