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Open Source Business Model Is 'Broken.' Really?

Stuart Cohen declared in the Dec. 1 issue of BusinessWeek: "Open Source, The Model Is Broken." I disagree. Open source was never a business model per se, any more than it was a programmer's religion, despite the fervor that sometimes surrounds it. Rather, it was, and is, a better way to develop and distribute software.
Stuart Cohen declared in the Dec. 1 issue of BusinessWeek: "Open Source, The Model Is Broken." I disagree. Open source was never a business model per se, any more than it was a programmer's religion, despite the fervor that sometimes surrounds it. Rather, it was, and is, a better way to develop and distribute software.Stuart Cohen is the former CEO of the Open Source Development Labs, a vendor-sponsored Linux development group. When that organization was folded into The Linux Foundation, Cohen founded and became CEO of the Collaborative Software Initiative, which sponsors vertical industry collaboration projects. His new company is based on shared, open source development methodologies, but he seems overeager to put down those who think they can make a business out of supporting a piece of open source code. Open source code doesn't require much support, he says, which makes open source support a self-defeating business. He bows to Red Hat, which is "arguably the most successful open source company" because it adds value on top of support. Then he genuflects to MySQL, although he allows there won't be many more $1 billion acquisitions. But what about XenSource, which spent much less time on the development path than MySQL and sold for $500 million? Or Zimbra, likewise, which sold for $350 million? InformationWeek cited these examples in its story on what happens to open source once its acquired by a large company. These and others represent returns on investment that many for-profit companies, built around traditional business models, would die for. XenSource and Zimbra succeeded, not in spite of being open source producers, but because of it.

Cohen concludes: "For anyone who hasn't been paying attention to the software industry lately, I have some bad news. The open-source business model is broken." This is a mistaken premise, but let's let it stand for the moment.

Cohen returns to his preferred value of open source later in his column: "The value is in the collaboration, not in open source itself." This is still a mistaken premise, but he's at least acknowledging one of the virtues of open source projects. He goes on to describe it in rather pedestrian terms. "Think about it like going in with others on a pizza. Too often, businesses need to develop software with the same "ingredients" as everyone else, and this offers no competitive advantage. If everyone wants the same pizza, why not share the cost? And by the way, let's not just share the cost; let's make it together so we get it just right and know what we're getting," he wrote.

That much I can agree with. But he's missed the fact that self-selecting groups of skilled programmers often bring a sense of what needs to be done next to advance the state of the art; then they proceed to execute. There's value in finding a new solution that antecedents, including commercial ones, have missed.

Sometimes it is a refocusing function, as when MySQL concentrated the power of relational database on rapid Web page serving. But often it is a leading-edge function, such as the aspect-oriented programming that JBoss brought to the application server or the simplified framework SpringSource brought to Java development. And once open source embodies innovation, its practitioners can not only charge for support but can charge for added value on top of basic function.

In that sense, open source is not like ordering a pizza. The value is in the advances captured in the code itself as well as the collaboration.

What's more, open source provides an unbeatable distribution model. Free download is only the start of open source adoption, but it's a crucial enabling step. Some projects that produce innovative code can convert this step into a business; it's a wide-open distribution mechanism betting all on gaining mindshare and, ultimately, market share.

Open source leads to a failed business model? Don't tell that to Terracotta, JasperSoft, MuleSource, or SpringSource. They each have a shot at becoming a dominate vendor in a field they have defined in their own way. Granted, each engaged in some kind of core programmer collaboration, but Cohen is too preoccupied with the lessons of collaboration -- what his firm is specializing in. There's great value in open source innovation and additional value in the community-building distribution mechanism. Wise businesses know how to put both to work to sustain an ongoing company.