OSS Business ModelIntroductionOpen Source Business ModelsBusiness ModelsRed HatRed Hat StockRed Hat’s Financial DevelopmentBusiness ModelNetscapeIBMIBM StockIBM FinancesIBM OutlookSlide 14Silicon GraphicsSilicon GraphicsSilicon Graphics OutlookSlide 18O’Reilly & AssociatesSlide 20Other OSS Business ModelsSlide 22Venture CapitalBenefitsDisadvantages and RisksConclusionSourcesOSS Business ModelOSS Business ModelPresented By:Presented By:Tyler MurdochTyler MurdochHien NguyenHien NguyenWolfgang MaderWolfgang MaderIntroductionIntroductionIdentify Key Models Identify Key Models Explanation of how each model Explanation of how each model works within a businessworks within a businessExamples of businesses that are Examples of businesses that are both successful and unsuccessful both successful and unsuccessful using these modelsusing these modelsFinancial standpoint Financial standpoint The sustainability of the modelsThe sustainability of the modelsOpen Source Business Open Source Business ModelsModelsThere are 8 widely used open source There are 8 widely used open source business modelsbusiness models–Support SellerSupport Seller–Loss LeaderLoss Leader–Widget FrostingWidget Frosting–AccessorizingAccessorizing–Service EnablerService Enabler–Sell it, Free itSell it, Free it–Brand LicensingBrand Licensing–Software franchisingSoftware franchisingBusiness ModelsBusiness ModelsSupport Sellers:Support Sellers: aka ("Give Away the Recipe, aka ("Give Away the Recipe, Open A Restaurant“)Open A Restaurant“)–In this model, you (In this model, you (effectivelyeffectively) give away ) give away the software product, but sell distribution, the software product, but sell distribution, branding, and after-sale service branding, and after-sale service –Induce demand based on effectiveness of Induce demand based on effectiveness of the distribution of your softwarethe distribution of your software–Good example is Red HatGood example is Red HatRed HatRed HatProvide enterprise operating systems, and Provide enterprise operating systems, and related software and services based on Linux related software and services based on Linux open source technology for various enterprises.open source technology for various enterprises.Enables its Red Hat enterprise technologies to be Enables its Red Hat enterprise technologies to be updated, configured, provisioned, and monitored. updated, configured, provisioned, and monitored. In addition, the company offers various training In addition, the company offers various training courses, consulting services for IT deployment, courses, consulting services for IT deployment, production support, technical account production support, technical account management, and custom engineering and management, and custom engineering and support services. support services.Red Hat StockRed Hat Stock5 Year Chart of Red Hat’s StockYearsRed Hat’s Financial Red Hat’s Financial DevelopmentDevelopmentBusiness ModelBusiness ModelLoss Leader:Loss Leader:–In this model, you give away open-source In this model, you give away open-source as a loss-leader and market positioner for as a loss-leader and market positioner for closed software closed software –Use OSS to draw customers in while Use OSS to draw customers in while advertising closed softwareadvertising closed software–Example of this is Mozilla by Netscape and Example of this is Mozilla by Netscape and IBM’s software suitesIBM’s software suitesNetscape Netscape This model has been used by Netscape through This model has been used by Netscape through Netscape Communicator and it provided the source Netscape Communicator and it provided the source code for the browser to the Mozilla communitycode for the browser to the Mozilla communityThe open-source product generates little or no revenue, The open-source product generates little or no revenue, but providing the product makes it likely that customers but providing the product makes it likely that customers will buy other products that are sold in the will buy other products that are sold in the Communicator suite Communicator suite Unfortunately Netscape’s managers had a ‘Just show Unfortunately Netscape’s managers had a ‘Just show up’ attitude while Microsoft's internet explorer was up’ attitude while Microsoft's internet explorer was becoming more reliable and equip with better featuresbecoming more reliable and equip with better featuresIn 1999, Netscape announced that they had been In 1999, Netscape announced that they had been bought out by AOLbought out by AOLIBMIBMIn mid-June 1998, IBM chose the open-In mid-June 1998, IBM chose the open-source Apache webserver to support and source Apache webserver to support and bundle with its WebSphere suite bundle with its WebSphere suite Since that time, IBM's commitment to Since that time, IBM's commitment to open source has grown substantially, from open source has grown substantially, from contributing a new journalled file system contributing a new journalled file system to Linux kernel development, to makingC to Linux kernel development, to makingC Linux the primary operating system on all Linux the primary operating system on all their high end mainframe servers their high end mainframe serversIBM StockIBM Stock5 year chart of IBM’s stockIBM FinancesIBM FinancesIBM OutlookIBM OutlookIBM is continuing to incorporate open source IBM is continuing to incorporate open source internally throughout the company as well as internally throughout the company as well as externally through open source softwareexternally through open source softwareIn 2005, IBM announced that they were going In 2005, IBM announced that they were going to open source 500 software patents to people to open source 500 software patents to people and groups working on open source softwareand groups working on open source softwareThis bold move is a strategy to bring in This bold move is a strategy to bring in customers, using the loss leader model.customers, using the loss leader model.Business ModelBusiness ModelWidget Frosting:Widget Frosting:–A hardware company (for which software is a A hardware company (for which software is a necessary adjunct but strictly a cost rather than necessary adjunct but strictly a cost rather than profit center) goes open-source in order to get profit center) goes open-source in order to get better drivers and