BusinessBusinessAround Open-source Around Open-source

SoftwareSoftware

Marco TabiniMarco Tabiniphp|architectphp|architect

A Bit About Myself

Publisher of php|architectMonthly magazine in English dedicated

exclusively to PHP.Published in PDF and distributed

worldwideNow in its fifth month of publication

The Traditional Model

Software Companies Develop Software.They:Hire developers to write softwareOwn the “intellectual property”Control all aspects of development and

brandingAttempt to create and control a community

of users and developers around their products

The Traditional Model

The Software Development Company: Incurs the high costs of maintaining a full

staff of developers whose only job is creating the software

“Forces” the development process in a direction that might not be in-sync with the true needs of the community

The Traditional Model

The Software Development Company:Needs to provide a certain amount of

customer support (either for free or at a cost)

Incurs high costs in marketing and promoting its products

Must provide 100% of the funds required to create and maintain all aspects of the products

The Traditional Model

The community It's difficult to create a community around a

commercial product because of the costs involved

People have no direct incentive to create a community until a critical mass is reached

Reaching the critical mass can only take place through significant investments in resources and funds

The Traditional Model

The community Once the community has been formed, it must be

“policed” by the company to ensure that no breach of “intellectual property” takes place

The scope of the community's actions must be strategically limited to limit dilution of intellectual property

However, the products themselves must be limited so that external companies have enough of an incentive to participate

The Traditional Model

An example: Active Server Pages The platform is controlled by Microsoft It provides a minimum set of functionality that is

expandable but not expanded This allows Microsoft to attract a community of 3rd

party developers that create “plug-ins” for the platform

However, this makes writing complex projects with the platform difficult and expensive because of all the external products required

The Traditional Model

The Role of the Community:Provide peer-to-peer supportProvide paid-for supportCreate “add-on” tools for the productsProvide additional documentation (e.g.:

books, magazines, websites, etc.) either commercially or for free

The Traditional Model

Advantages of the commercial model:Unified strategy for the products ensures

longer-term stabilityCommercial presence behind the products

usually means a higher level of customer support and accountability

A higher entry cost sometimes causes a more “professional” community to be built, with elements like training and certification

The Traditional Model

Disadvantages of the commercial model:Higher costs for the software producerClosed source means everything in control

of one entityClosed source means that bugs are fixed at

the developer's whimLimitations in the platform leave you no

choice but to pay for add-ins—therefore the overall cost of ownership is higher

The Traditional Model

Disadvantages of the commercial model: If the software producer discontinues the

product, you forfeit your entire investment in the software

The Open-Source Model

Product is usually initiated by the community The product's features are dictated by the

community itself There is no need for investment in the

development of the software, and the “intellectual property” rests with the public

The quality of the product and the needs of the market automatically generate the critical mass needed to build a community around it

The Open-Source Model

The development community:Guides the evolution of the product through

a natural path that reflects the needs of the user community

Is composed of volunteers who dedicate their time to the product for free

Does not usually represent the interests of any particular commercial entity (but not always)

The Open-Source Model

The Community:Creates peer-to-peer support groups that

offer assistance at no cost Is motivated by the desire to share

informationProvides free add-ons when they are

required by lots of people

The Open-Source Model

Commercial activities:Are guided by the needs of the communityUsually fulfill more specialized niche

requirementsProvide add-ons and paid supportCreate additional documentation and

reference resources (e.g.: magazines, books, websites, etc.)

The Open-Source Model

Commercial activities:The lack of a clear “owner” of the product

makes it difficult to create some commercial collaterals, such as

Certification programsTraining coursesAny “official” material

The Open-Source Model

Advantages of OSS The development is in the hands of developers The software follows a natural evolution in

response to real requirements Products are usually more feature-rich (particularly

where large communities exist) Support is more readily available If something you need isn't there, you can add it

yourself

The Open-Source Model

Advantages of OSSEven if development of the product stops,

you can always pick it up because the source code is available

There is no “development” cost that must be shared by the users of the product

The product is free!Finding developers is generally easier and

less expensive

The Open-Source Model

Disadvantages of OSS The development is in the hands of developers The evolution of the product can be led astray be

lack of business focus The lack of a single “official” point of references

robs the community of opportunities like certifications and training, which, in turn, reduce the commercial viability of the platform

The Open-Source Model

Disadvantages of OSSThe freedom of OSS can actually “scare”

some prospective clients awayMost OSS products do not have a

marketing strategy behind them, so that clients find it difficult to focus

For example: PHP 2.0 vs. PHP 4.0

Building an OSS-Based Business

Types of businesses:Consultants (~93%)Software developers (~2%)Support providers (~5%)

Many provide at least two of the aboveFor example, most S/w developers and

support providers are also consultants

Building an OSS-Based Business

Consultants: Usually represent the largest commercial users of

OSS technologies Build customized products based on the OSS

“base” Lure clients by offering:

An underlying product of superior quality at no cost A solution that does not force them to depend on a single

provider Solutions that are less expensive than their commercial

counterparts

Building an OSS-Based Business

Tips for consultants:No-one does the marketing for you

Clients expect a proper marketing pushPreparing the proper marketing material should

be the focus of your investment in OSSYou should have marketing material that is at

least as good as or better than your commercial rivals

Building an OSS-Based Business

Tips for consultants:Do not ignore commercial software

Knowing commercial software makes for better ammo when convincing clients

Running a business is not about advocacy Integration is the key to get in the door with a

broader range of clientsClients can be converted over to OSS, but

gradually

Building an OSS-Based Business

Tips for consultants:Make what you are selling clear

You’re not selling software—you’re selling knowledge

OSS is about independence. Your goal is to provide the client with the best solution, not to sell a particular product

You are on the client’s side

Building an OSS-Based Business

Software developers:Are usually the smallest commercial

interests of the OSS modelDevelop “niche” products that attend to

special interestsComplement the OSS model by providing

products that satisfy specific needs

Building an OSS-Based Business

Tips for software developers:Your role is to expand the capability of the

OSS platform, not to stifle its developmentYour products must address an immediate

and obvious need that cannot easily be addressed by the platform itself

Building an OSS-Based Business

You must reinvest in the communityProvide support to the OSS platform itself

through development efforts that flow directly into it

Provide financial incentives to further the development of the platform

Provide additional marketing materials for users of the platforms and of your products

Building an OSS-Based Business

You must reinvest in the communityNot just a matter of “corporate

responsibility”Good business sense:

Investing in the platform gives you a level of control over it

Making the community more powerful strengthens your market

Building an OSS-Based Business

Support providersAre a pillar of the communityProvide assistance to the community

Through websitesThrough print publicationsThrough electronic publicationsThrough paid support services

Building an OSS-Based Business

Tips for support providers:Establish from the onset what you are

sellingKnowledge Information

Building an OSS-Based Business

Tips for support providers:Establish a value for what you are selling

There is no such thing as a free lunchOSS is about free software, not about free

knowledge If you do not establish a value, it will be very

difficult to make money from what you sell

Building an OSS-Based Business

An example: electronic publishingEven though what you sell doesn’t have a

weight, it does have a valueGreat advantages:

Lower costs—make money the right wayMore timeliness InteractivityLower and more uniform prices to the public

Building an OSS-Based Business

An example: electronic publishing:Great disadvantages

The world is not ready yet, but slowly turningBroadband penetration still slow, particularly

outside North AmericaPeople are disconnected from the traditional

model

Building an OSS-Based Business

A final considerationOSS is built on trust

Consistency, integrity and ethics It’s easy for negative impressions to reflect on

OSS in general, because there is no “central authority”

You have no-one to back up your own reputation but yourself… and you reputation!

“Applause”

(and your questions)

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