show me the money
DESCRIPTION
I’ll be talking about ways of driving revenue that are not so obvious and not so talked and written about so please join me. I’m Steffano Maffulli and I am Community Manager at Funambol. When it comes to business models, open source developers can relate to Tom Cruise in the infamous “Show me the Money!” scene from Jerry Maguire: On the 28th I’ll be illustrating the most popular dual-licensing and services models of open source companies, and discuss their applicability to other projects. I’ll also discuss how Software as a Service (SaaS) is both a major opportunity for commercial open source projects as well as a challenge. The talk shares the experience of how Funambol, a popular mobile open source project, has adapted its business model over time to uniquely make money from mobile service providers, while not attempting to monetize its developers or users, yet still gaining significant value from its community. The talk will be of interest to anyone trying to figure out a successful business model for mobile open source.TRANSCRIPT
“Show Me The Money”Stefano Maffulli
Community Manager
Funambol This document is licensed under the Creative Commons BY-SA 3.0 license.
© 2009 Dirk Riehle, Stefano Maffulli http://dirkriehle.com. Some Rights Reserved.
Summary
Where is the money How to get the money Why Open Source is good for you How Funambol does it Conclusions
The bad news
The IT market is exiting its worst year ever with spending dropping a
projected 5.2 percent from 2008 to 2009. 2010 is about balancing the
focus on cost, risk and growth. For more than 50 percent of CIOs, the IT budget will be zero percent or less in
growth terms. It will only slowly improve in 2011.
The good news
More good news
IDC's latest studies, "Asia/Pacific (Excluding Japan) Open Source Software Adoption in
2009" … reveal that organizations have started to evaluate open source software
(OSS) as a viable alternative while they are trying to find ways to reduce their
operational expenses.
Where is the money?
At least some of it!
A bit of history
Richard Stallman1985
Linus Torvalds1996
Eric Raymond et al.Open Source Initiative
2001
What is Open Source anyway?
A marketing pitch for Free/Libre Software
What is Free/Libre Software then?
Four simple principles A user of software must be free to:
Run the program for any purpose Study the program and adapt to new uses (need
source) Modify the program to suit her needs (need source) Distribute copies, gratis or for a fee, to help others
Embedded in legally binding documents The declaration of independence for a
digital society
Commercial or non-commercial?
There is no such thing All Free/Libre Open Source Software
is commercial
Free/Libre Software can be sold Stallman sold copies of GNU to support himself Only further copies cannot be limited
Money is in Open Source.
But how to get it out of thereif further copies cannot be stopped?
What changes in Commercial Open Source?
Community It's crucial, can make the difference
Revenue streams and business models Cannot count copies, cannot sell 'per copy'
Copyright, patents, trademark and secrets “Intellectual property” is treated differently
Benefits of a User Community
Sales Prospect is already a user Process is faster and easier
Sales funnel for Commercial Open Source
Download Install Use Lead Prospect Customer
Sale
Benefits of a User Community
Marketing Can turn users into evangelists Creates credible testimonials
Product Management Get feedback rapidly from users / market
Get almost-free market research
Community is source of innovation
Benefits of a User Community
Engineering Fast feedback about bugs, performance Wide testing in unusual circumstances Software code
Extensions and add-ons
Pre-screening of potential employees
Benefits of a User Community
Support User community is self sustaining
Fast source of support at any time, in any language Web searchable content Maintains its own documentation
Reduced support costs
Three macro business models
Three macro sources of revenues
Revenue Streams / Business Models
“Pure Free/Libre” “Added Value”“Dual licensing”
More Respect of users freedoms Less
Indirect revenues
Direct revenues (mostly)
Mixed direct and indirect revenues
The “pure” model
Also known as “Service Model” Commercialization of support, training,
assurance, consulting Can (or not) monetize software developed
internally
Example: RedHat Variant: service delivered over a network
Cloud computing or SaaS Can be tricky to balance openness and avoid
free-riding
The “Dual licensing” model
One code base with two licenses A free software license, usually copyleft A non-free software license
Useful to segment customers Free/libre version creates a community Those afraid of copyleft can buy a different
license
Example: Trolltech, Sleepycat
The “Added Value” model
Also known as “freedom deprived” or “open core” Commodity free/libre core available gratis Revenues from non-free extra software
A way to directly monetize development Need careful management of copyright Need careful management of community
Contributors to core can feel expropriated
Example: MySQL, SugarCRM
The “Intellectual Property” issue
In brief: Know the existing licenses
http://www.fsf.org/licensing/licenses Don't invent a new one
http://opensource.org/licenses It's not that complex, but it's a different game Especially for embedded systems: be careful
http://www.fsfe.org/projects/ftf/
Deserves a dedicated session
CompanyAcquirer /
IPOExit / IPO
DateValue on that Date
Open Source License
Business model
Red Hat IPO Aug 99 ~$1BSame as upstream
OSS + Services
Suse Novell Nov 03 $210MOpen Source
LicenseOSS +
Services
Innobase OY Oracle Oct 05 undisclosed GPL2Dual
license
Sleepycat Oracle Feb 06 $50M?Sleepycat
License (copyleft license)
Dual license
JBoss Red Hat Apr 06 $350M LGPLOSS +
Services
Zimbra Yahoo! Sep 07 $350MZimbra PL
(Based on MPL)Dual
license
XenSource Citrix Oct 07 $500M GPL2OSS +
Services
MySQL Sun Jan 08 $1B GPL2Dual
license
SugarCRM TBD TBD TBDSugar PL (based
on MPL)Dual
license
Funambol TBD TBD $1B ;-) AGPLv3Dual
license
The leading provider of Open Source mobile cloud sync
Based on open standard OMA DS (SyncML) Cross platform push and synchronization
Supports most handsets
Funambol
Funambol's way to dual licensing
Two segments Funambol Community Edition, for enterprises
Affero GPLv3, copyleft, closes the SaaS loophole
Funambol Carrier Edition, for large installations Proprietary license and add-ons
“Do not upsell your community” guideline Do not sell anything to our open source community Nope, do not even sell them support
The (Mobile) Cloud is the future
• Revenues will come from – Software usage (e.g. per user per year,
based on bandwidth consumption or a similar model)
– Recurring revenues are sustainable (and the market likes them)
• Advertising – the software is free, the ads pay for it– Advertising is what made the Internet
Companies
Conclusions
There is money in Open Source It doesn't come for free There are many ways to profit respecting
user's freedom Identify your revenue stream Love your community
Resources
The 451 Group: http://blogs.the451group.com/opensource/
Open-Core Licensing: http://bit.ly/1IOZpG
Making Billions with Open Source, Revisited http://bit.ly/FkqrR
Top Commercial Reasons Why Open Source Communities Matterhttp://bit.ly/42FwB4
On open source business strategies (again) http://bit.ly/1N69fA
Dirk Riehle: Open Source Economics - The Economic Motivation of Open Source Software: Stakeholder Perspectives http://bit.ly/isuiG
Roberto Galoppini: Commercial Open Source is a Juggling act http://bit.ly/1qLfS
Document license: CC-BY-SA 3.0 unported
You are free:
to Share — to copy, distribute and transmit the work
to Remix — to adapt the work
Under the following conditions:
Attribution — You must attribute the work in the manner specified by the author or licensor (but not in any way that suggests that they endorse you or your use of the work).
Share Alike — If you alter, transform, or build upon this work, you may distribute the resulting work only under the same, similar or a compatible license.
http://creativecommons.org/licenses/by-sa/3.0/
© 2009 Dirk Riehle and Stefano Maffulli
Photo © Ben Fournier, John Leach http://www.flickr.com/photos/destruct_photo_design/3267960065/
http://geekz.co.uk/lovesraymond/