Free beer!

But before we get onto that I have a story about some software in search of a license.

Meet Dave. His employer is developing some software for a niche market and is trying to pitch an open source license to investors. This is exciting because there are several pieces of entrenched software in this (large) but niche-y industry, all of which cost several hundred British pounds per seat, per year. These products are all old and poorly maintained. Support is terrible. The industry is global and potentially very lucrative.

Q: How can Dave convince his employer of the capacity for revenue streams using an open source model to return the development investment and more besides. Essentially said employer is concerned that someone else will simply take the software and re-sell it.

Free beer when I finally make it to a FUDCON. Sorry I can’t say more but am under NDA.

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5 thoughts on “Free beer!

  1. Great to see you blogging again. I dont understand anything you are talking about, however foreign languages are best taught by immersion. Soon enough I will be fluent in Linux and open Source.

  2. Simple enough. Yes, anyone *can* take the product for free and resell it. Yes, you are operating in a global market. Yes, you are going to expose every last single bit of source code to anyone in the world. Let’s look at some practical points though.

    Disclaimer: I work for Red Hat, and drink from the big kool-aid fountain in the main lobby nearly daily. My bias is clear here. Still, i beg you to be successful, it worked for Red Hat.

    1) The company with the best know-how about this product is Dave’s company. For anyone else to go and resell this product, they would have to know quite a bit about the product too. This requires a level of involvement that keeps the common rabble away from just ‘reselling’.

    Example: Very few people offer clones of RHEL at a price point. The ones that do, do this out of a marketing gimmick, and have shown little real success. The only ‘reselling’ of the bits is CentOS, which is composed from the effort and labor of people very intimately familiar with RHEL and also drives sales to Red Hat.

    2) Dave’s company is poised to support the product, with a market plan, market research, marketing, support, customer service, etc… Anyone using this product would most likely require these services. This sets up a second barrier against anyone just reselling the product.

    Example: Two major market players offer RHEL clones, Oracle and Novell. They both use it to feed other market plans. So far history has shown that Red Hat is the only large enterprise to work with RHEL and derivatives. Furthemore, only Red Hat can provide the top tier technical support in order to run RHEL as a critical component on Wall Street.

    3) Open sourcing the product will make it easier for users of the proprietary software to test a deployment. By providing easy instructions on how to test it for free, your product will get more immediate exposure. This translates to long term market growth.

    Example: Both Fedora and CentOS provide potential customers the way to test out Red Hat software before they buy. Eventually, they come to Red Hat because they need the contract.

    4) Open Source inspires a certain confidence, especially when you can claim zero vendor lock-in and be one hundred percent honest. This is a great sales point, especially in today’s economy.

    Example: Red Hat is debt free, not running a vicious cycle of layoffs, and seeing an increased revenue. By focusing on the values behind Open Source, Red Hat is succeeding.

    5) Going open source lets you get your product out the the entire world. You mentioned this is a global market. Open Source is a global participation exercise. (I like to see it as a game i can play with anyone in the world.)

    Example: Linux, ’nuff said.

    6) You’re going after multi hundered/thousand pound contracts it seems, but you have a global market. Other parts of the world will never be able to afford your contract anyways. Going open source will at least get exposure and participation from other members of the global market. They will eventually be able to afford your product, and having it entrenched in their markets will only prove fruitful in the future, or…

    Example: Linux, ’nuff said.

    7) Either in England (you said ‘pounds’, right?), or somewhere else in the world, another business may actually espouse the same Open Source values. They may even try to go into your market and sell your product. They will only widen the market for both of you. Eventually one of you gets to be rich enough to buy the other out. Everyone makes money. Everyone except for those losers who are still selling proprietary junk.

    Example: Linux, ’nuff said.

    Hope to see you at the next FUDCon!

  3. @Rob – You’re already talking my language. Look forward to hearing about your adventures. Get yourself a copy of Fedora 10 and you can’t really go wrong. Moving to Linux is a bit like weaning yourself off crack – going cold turkey is best. You get a free upgrade every six months too! If you’re getting a new PC just try and get one with an ATI or Intel graphics card – steer clear of Nvidia.

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