About open source business strategies

31 January, 2011

strategyA few weeks ago, the 451 group posted an update for their open source business strategy framework, which summarizes the different strategies that can be put in place by an open source vendor in aspects like license, copyright, development and business model.

The framework is comprehensive but at the same time condensed, and it is quite self-explanatory for anyone in the open source business. However, I wonder whether it would make more sense to extend the framework to apply to any software vendor, including also the strategies that could be implemented by a business choosing not to open up the source code. I believe it would be very interesting to be able to grasp at a single glance what are the different options a software vendor can choose regarding revenue, licenses and development models, without having to be previously categorized into open source or closed source vendor.


One reason to support a more generic vendor approach is that it is very hard to implement a purely open source strategy, when most of the possible options are just a combination of open and closed source licensing: dual licensing, open core, open platform, etc. So, the limits between an open source-based business strategy and a closed source one are at least fuzzy. How much different would be, let’s say, a business developing an open core product under a cathedral development model from another business not publishing any of its code but giving away a trial version for free? They might execute differently, but the results would be reasonably similar: they would both find it hard to have a developers community but they would both have good chances to create a successful users community. Just remember that the largest users community is that of Photoshop, not quite open source I would say.

Another reason is that a company needs to be able to explain its strategy to very different audiences, from customers, partners and media to community members and investors, and not all of them are open source savvy. Sadly, one generation after the first release of Linux, a large part of the market and influencers still see open source as a geek, idealistic, non-commercial movement. Explaining the plan of action of an open source-based business as a natural set of decisions within a generic software vendor strategy framework would do much to overcome their initial prejudices.

And finally, if you have a look at the 451 group’s framework, there are actually few modifications required to make it work for a generic software vendor. For example, the list of revenue generators are valid for almost any software company, from Google to Microsoft, from Oracle to Facebook, from IBM to RedHat, or from a system integrator to a local reseller.

I believe the 451 group is doing a great job in analyzing and modeling different viable strategies for open source-based companies. But I also believe that there is a risk in assuming that their management and direction are completely different from more “traditional” software companies. In my opinion there are way more similarities than dissimilarities and there is a lot to learn from, let’s say Microsoft, but I leave that for another post.

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