(Stanford BUS-21)Martin Westhead

Mastering Marketing

Open Source

How to make money by giving things away

Overview

What is Open Source Open Source companies

- How can you make money when you give away your IP?

Examples and adoption Open Source Licenses Open Source creations and hardware Future of Open Source

What is Open Source?

Extension of free Free so far:

- Give away product or service Open Source:

- Give away the Intellectual Property- Allows others to

- Read the code- Fix bugs and add features- Sell the software or service

Uses other meaning free (Libra)- Free as in Speech

EXAMPLES

Linux

Free, Open Source Operating System Created by Linus Torvalds Licensed under GNU GPL Originally PC only Now ported to more platforms than any other OS 95% of top 500 fastest computers use Linux Many Distributions

- Ubuntu- Debian- Red Hat / Fedora- SUSE

Andoid

Linux-based mobile operating system Most popular Mobile OS

- 83% smart phone market- 1 million apps published- 50B apps downloaded- 1B Android devices activated

Acquired by Google 2005 2007 Nov - Open Handset Alliance

- Google, Samsung, HTC, Sony, Sprint Nextel, T-Mobile, Qualcomm, Texas Instruments

2008 Oct - HTC Dream

Apache Server

Originally based on NCSA HTTPd

2005 - Work started 2009 - first to serve

100 million websites Today – Powers 54.2%

active websites - Followed by Microsoft

16%

MySQL

Most popular OSS server DB Defacto standard for Web

development Powers many big websites Company bought by sun and

now Oracle Developers left and forked

the code: MariaDB

Libraries

Developer tools

Eclipse

IDEA Intelij

LibreOffice

Writer

Calc

Impress

Draw

Math

Base

Gimp

GNU Image Manipulation Program

Open Source Photoshop

Firefox / Chromium

Why do people use it?

800 vendor and non vendor respondents1. Quality2. Freedom from lock-in3. Flexibility of access to

large software libraries4. Scalability5. Superior security6. Pace of innovaton7. Lower cost8. Access to source code

"It's been recognized that software is eating the world,” said Michael Skok, general partner at North Bridge Venture Partners. “Our survey points to the fact that open source is eating the software world."

http://www.pcworld.com/article/2035651/open-source-is-taking-over-the-software-world-survey-says.html

Open Source Adoption“We migrated key functions from Windows to Linux because we needed an operating system that was stable and reliable -- one that would give us in-house control. So if we needed to patch, adjust, or adapt, we could.”

United Space Alliance,Manages computer systems for the International Space Station

"Every license for Office plus Windows in Brazil - a country in which 22 million people are starving - means we have to export 60 sacks of soybeans," says Marcelo D'Elia Branco, coordinator of the country’s Free Software Project

Open Source Adoption

Major websites all run on open source- Facebook- Twitter- Linkedin- Google- Amazon- Wikipedia

Virgin America (in-flight entertainment) KLM – Web services London stock exchange – trading platform New York stock exchange – trading applications Banco do Brasil – biggest bank in Brazil, desktops, ATMs French Parliament moved to Ubuntu on desktop PCs in 2007 French Gendarmerie Nationale switch to Ubuntu by 2015

http://en.wikipedia.org/wiki/List_of_Linux_adopters

Linux Ecosystem is around $30B [IDC]- Red Hat- Ubuntu- IBM’s open source

consulting

Where did it come from?

Richard Stallman- Software fredom activist- Free Software Foundation- GNU project- “Information SHOULD be free”

Linus Torvalis- Creator of Linux- Most pervasive OSS project

Apache foundation- Founded 1999- Community collaboration- Apache server- Apache license- OSS brand

"open source is an intellectual property destroyer. I can't imagine something that could be worse than this for the software business and the intellectual-property business.”- Jim Allchin Microsoft executive (2001)

Open Source origins

1998 Netscape public release of browser

- Was Navigator became Firefox

Meeting convened by Tim O’Reilly

New term: Open Source

- Avoided “free” muddied by Stallman ideology

Why would anyone do it?

Corporations Everyone uses open source

- Except small number of Windows only shops

- Software involves solving the same problems over and over

- Open source means someone solves is right once and everyone else uses it

- Sharing makes sense for non-competitive features

Attracting top talent- Developers go to places that

support it

Developers Way to make a name

- Celebrity developers- Proven abilities- High salaries

Even pre-celebrity- Create a portfolio- Good for job seeking

How can you make money from OSS?

Ownership comes from- Knowledge of code base- Active development- Community support- Brand

Can sell- Pro version / Close source add-ons (i.e. Freemium model)

- IDEA Intellij,

- A SaaS service using the software (usually Freemium) - e.g. Wordpress, Suger Sync

- Other services- Custom development services- Support and maintenance

Customers(Users)

Traditional Company

Partners

IP

Engineering

Sales and Marketing

The Company

Open Source Company

Partners

Engineering

Company StaffCustomers and Partners

Intellectual Property

Users

Sales and Marketing

OSS Licenses

PermissiveConstrained

BSDApacheGNU GPL

Lesser GNU GPLMozilla

Netscape

Viral: Requires modifications are open sourced under the same license“Copy Left”

Non-Viral: No restrictions on the

publication of modifications

Implied license of patents

Creative Commons

OS licenses for creative works “The Flower of Scotland”

- CC license License control

- Distribution- Attribution- Derivative works

- Sharing- Commercial/Non-commercial

Open Source Hardware

Open source hardware designs Benefit from community input Business models leverage Brand Popular in emerging areas

- 3d printers- Arial drones- Robotics

RepRap 3D printer

Future

Prediction: Within 10 years all broadly adopted software will be either Open Source or SaaS

Why?- Free is an economic force of gravity

- Reproducing software has zero marginal cost

- For every piece of broadly adopted software today, someone is making an Open Source version- Many of these are getting better and better- Once its good enough the free version will win

Will Paid software continue to exist?- Yes – High end needs, niche functionality

Summary

What is Open Source Open Source companies

- How can you make money when you give away your IP?

Examples and adoption Open Source Licenses Open Source creations and hardware Future of Open Source