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Open Source Business Models

Jive LogoWhy did you open source your Jabber library and server?
I asked this question to the great guys over at Jive Software during their open house last month. To my suprise I learned that their flag ship product Jive Forums began life as an open source application but was re-written as a closed source application when Sun showed an interest in using it to power the Sun developer forums.

Today Jive runs jivesoftware.org on which they host a number of projects based around Jabber. Although I am sure they all feel a need to give back to the OSS community given their own beginnings it also makes business sense for them. Their Live Assistant product is based on the XMPP (Jabber) standard and as such if they are able to help that community grow and get corporations to deploy IM systems using Jabber, then when the time comes to pick a Live Assistant product Jives Live Assistant will be the first choice.

It makes business sense: it helps generate revenue, grows a community around a technology that have developers familiar with, and they have also hired a few developers over the years who have been significant contributers to their open source products.

Now this is by no means the only way in which a company can make money off of open source.

Atlassian and BitMover both have give/gave their product gratis to open source projects as a way of gaining good will in the community. This works in a few different ways:

  1. Most open source developers also work for a company that has a budget and their own closed source products. If an employee is pleased with the product, he will want to use it at work too
  2. Good ol’ grass roots advertisement, these tools are going to get alot of press. Before BKBits.net, no one had heard of BitKeeper, and without the help of Linus’ star power I can’t imagine that would have changed
  3. Testing and bug reports. There is no distributed software development project bigger than the Kernel, if BitKeeper could handle it, it could handle anything. Not only that but open source developers have a tendency to tell it how it is and report truthful and helpful bug reports that are not sensitive to any political or organizational choices. At the end of the day the company is going to get an improved product.

And of course their is always pay for support model. This is what I think of as the classic open source business model that has been adopted by Red Hat, Mandriva, Progeny and the rest.

Why am I so interested?
Last week I visited a “Pitch Night” with a few of the people at Oregon Venture Partners and they said that one of the areas that they have been investing in is open source software. But, they aren’t a philanthropic group, and some sort of business model needs to exist to run a company.

When I was asked to put down my career goals for my scholarship application I stated my wish to create a company around open source software:

It is the blending of both the open source application work with the customer specific consulting that will help me succeed both in my experiences here and once I have graduated from Oregon State University.

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