ResearchHow Can Open Source Make Money?
The title of this article is one of the chief objections to the open source business model, invariably made by people who still do business the old way. How can your software company make money if it gives the source code away for free? Anybody can grab it and compile it for themselves! Because this question is sometimes difficult to answer clearly, I'm going to propose a thought experiment:
What if Microsoft released their source code? Same box, same software. Just when you get your Windows XP copy home, you find an extra disk in the box with source code on it. Let's even push it so far as that you could also find just the source code, like some documentation, posted on the Internet for download. Would Windows still make money?
Of course! Remember that the average user is still held back by the same constraints as always. Grandma gets frustrated because her printer won't plug and play! Do you think that the second she gets her hands on Microsoft source code, Grandma is going to fire up her Visual C++ Studio (enterprise edition) and stay up hacking all night and getting it to compile and install without errors and never pay for Windows software again? No, that's silly. The average user wants something that "just works", and that's what they're paying for. This works in similar fashion to automotive repair; there's nothing to stop you from doing your own repairs on your car, but mechanics still make a nice living.
Now for the non-average user: of course here, some would get the code for free and not pay for Windows. But wait, we have people getting Windows for free right now: they're called "pirates"! About the same number of people who currently pirate Windows would compile Windows to get it free - after all, it's about as difficult to run a compiler as it is to crack copy-protection. And of course, you'd have a legitimate user or two who knows what they're doing compiling the source and getting it free, too. That's not a business loss, because that same user currently does the same thing with Linux, BSD, and Solaris, and turns up their nose at Windows.
Last, there's the special case of somebody who can compile the code into a working system and burn it to CDs and sell their own copies of Windows. But there's open source licenses right now that prevent commercial redistribution in binary form - in fact, there is an open source license available for every need. It is that simple; just give people the right to freely trade and share it in source code form only - binary copies still have to be bought from Microsoft.
Now, Microsoft would make a lot of people very happy this way. Users who have to depend on Microsoft but complain about the stability and security problems could now fix it themselves; they could then submit their fixes back to Microsoft. Microsoft gets free development, free publicity, and much of the criticism about them would vanish. They need never fear another anti-trust government lawsuit again!
It is precisely the same rules for companies who are not Microsoft, and in fact the business model I have just described is in large part what open source software companies use. In addition, open source technology workers can sell service and support - it is frequently pointed out that only a small portion of developer's dollars come from creating original software, the rest comes from maintenance and enterprise support. A recent (2006) IDC report indicates that the majority of software companies are now using the open source method. Contrasted with the public perception, open source software is actually creating jobs, instead of taking them away.