Open Source SoftwarePresentationIntroductionSlide 5FinancialsSlide 7Slide 8Accessorizing StrategyAccessorizingO’Reilly MediaSlide 12Slide 13Slide 14Industry FinancialsOSS Business ModelsOpen Source Open Source SoftwareSoftwareSticking it to the manSticking it to the manPresentationPresentationI.I.IntroductionIntroductionII.II.Support SellersSupport SellersI.I.Model, Example, financialModel, Example, financialIII.III.Loss Leaders Loss Leaders I.I.Model, Example, Financial Model, Example, Financial IV.IV.Accessorizers Accessorizers I.I.Model, ExampleModel, ExampleV.V.Widget FrostersWidget FrostersI.I.Model, Example, FinancialModel, Example, FinancialVI.VI.Why Companies are so Volatile Why Companies are so VolatileIntroductionIntroduction•Frank Hecker is the executive director of the Frank Hecker is the executive director of the Mozilla Foundation, which promotes choice and Mozilla Foundation, which promotes choice and innovation on the Internet. He was a key innovation on the Internet. He was a key contributor to Netscape's decision to release the contributor to Netscape's decision to release the source code for Netscape communicator> he source code for Netscape communicator> he believes that the challenges that software believes that the challenges that software companies face are interconnected and are companies face are interconnected and are functions of constrained resources functions of constrained resourcesSupport Sellers: Support Sellers: “the original free software “the original free software model”model”•original free software model by Richard Stallman in the GNU original free software model by Richard Stallman in the GNU manifesto, first implemented by Cygnus Solutions, a for profit manifesto, first implemented by Cygnus Solutions, a for profit company formed to provide support service for GNU tools, most company formed to provide support service for GNU tools, most of all the GNU compilers.of all the GNU compilers.•Revenue is generated in this model by selling two categories of Revenue is generated in this model by selling two categories of items: physical goods (media and hard-copy documentation) and items: physical goods (media and hard-copy documentation) and services (technical support) services (technical support) •distribution, branding, training, consulting, custom distribution, branding, training, consulting, custom development, and post sales support.development, and post sales support.•Vendors can differentiate themselves by using easier to use Vendors can differentiate themselves by using easier to use software distributions; this simplifies and improves the users software distributions; this simplifies and improves the users experience. They can also differentiate themselves by the quality experience. They can also differentiate themselves by the quality and pricing of their services. Most use the GNU general public and pricing of their services. Most use the GNU general public license, but most open source licenses would work for this license, but most open source licenses would work for this model.model.•limited ability to use value driven pricing, price determined by limited ability to use value driven pricing, price determined by the cost of goods and services. If a vendor has a good reputation the cost of goods and services. If a vendor has a good reputation then this could justify higher prices. then this could justify higher prices.•Red Hat Enterprise Linux and Red Hat Desktop Red Hat Enterprise Linux and Red Hat Desktop technologiestechnologies, an operating system used for enterprise computing, an operating system used for enterprise computing•Red Hat systems management solutionsRed Hat systems management solutions (RHN) provides (RHN) provides systems management and software delivery services for Red systems management and software delivery services for Red Hat enterprise technologies. Hat enterprise technologies. •Red Hat Enterprise Linux Red Hat DesktopRed Hat Enterprise Linux Red Hat Desktop, used for , used for deployments, software development, and engineering design. deployments, software development, and engineering design. • Red Hat enterprise technologiesRed Hat enterprise technologies include applications for include applications for managing Web content, software development, clusters of managing Web content, software development, clusters of Linux systems and storage, and authentication of users, Linux systems and storage, and authentication of users, directory sever services. directory sever services. •Red Hat’s RHNRed Hat’s RHN comprises modules to provide functionality comprises modules to provide functionality enhancements and upgrades to individual systemsenhancements and upgrades to individual systems•training coursestraining courses: system administration, advanced enterprise : system administration, advanced enterprise deployment, and development and securitydeployment, and development and security•products are soldproducts are sold directly through sales force and Web store; directly through sales force and Web store; and indirectly through distributors and resellers and indirectly through distributors and resellers •www.redhat.comwww.redhat.comFinancials Financials • Competitors include Competitors include Novell, Microsoft Corporation and SCO Novell, Microsoft Corporation and SCO groupgroup•Strategic relationships: Strategic relationships: Oracle Corporation; International Oracle Corporation; International Business Machines Corporation; Symantec; Sybase, Inc.; BEA Business Machines Corporation; Symantec; Sybase, Inc.; BEA Systems, Inc.; Dell, Inc.; Hewlett-Packard Company; Sun; Fujitsu Systems, Inc.; Dell, Inc.; Hewlett-Packard Company; Sun; Fujitsu Limited; Fujitsu Siemens Computers (Holding) BV; and NEC Limited; Fujitsu Siemens Computers (Holding) BV; and NEC Corporation.Corporation.Loss LeadersLoss Leaders•Personified by Netscape/MozillaPersonified by Netscape/Mozilla•Money is made by giving away one Money is made by giving away one product (Mozilla Firefox) to product (Mozilla Firefox) to support another (Netscape support another (Netscape Servers)Servers)•Revenue can still be made from Revenue can still be made from the free product using the support the free product using the support sellers modelsellers model•Must be careful of license “taint” Must be careful of license “taint”•Suffered during the browser wars of the late 90’sSuffered
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