Its extremely difficult to make money with open source. With the notable exception of Red Hat there aren't a lot of open source companies that are known to be consistently profitable.
Most of the bigger companies raised money when VC's believed in the open source business model and are still operating on those funds. That's an avenue that is no longer open to today's open source entrepreneurs.
One possible exception might be the WordPress model of offering hosting.
The way you make money with open-source is by not trying to sell the open-source product. Apple releases lots of stuff as open-source, but it's not a problem because they don't want to sell you Clang. Similarly, Red Hat aims to sell big corporate contracts, not licenses to their open-source software.
> The way you make money with open-source is by not trying to sell the open-source product. Apple releases lots of stuff as open-source, but it's not a problem because they don't want to sell you Clang.
In other words, the way you make money with open source is by not making money with open source. The downside of this is that you don't make money with open source.
Unless you count using open source (as it contributes to the development and monetization of the non-open-source software you make money with). But then you could say everyone is using open source to make money, which I think misses the point the article is trying to make.
>But then you could say everyone is using open source to make money, which I think misses the point the article is trying to make.
Which is that you can't make money by selling open source software? That's pretty obvious. I think the point of the article is to discuss possible ways (or whether it is ultimately impossible) to make money for a company that produces open source software, which is not something everyone can claim to be doing.
Right, you make money off open source software by monetizing its complements. Intel pays for Linux kernel developers because having a quality Linux kernel means that companies are more likely to buy some commodity x86 box than they are to buy a commercial Unix running on SPARC or POWER. Red Hat spends money on all kinds of Linux development because they can monetize their support effort. This works well for some kinds of software that have complements that lend themselves well to monetization by the same people who are funding development. Other kinds of projects aren't as lucky.
It should be clear by now that this is a fallacy, many open source projects have attempted to sell support but there's just not that much demand. A good product does not need to offer much support, and consulting doesn't scale. iText is a good example of an open source library that has tried pretty much every open strategy and reverted to closed-source.
By definition you're not going to make money through open source selling licenses, but you're also not going to make any real money selling something else, unless you keep some aspect of it closed, like Google do with their search indexes.
The open source software which most companies publish has nothing to do with how they make money, it's usually some implementation detail of their infrastructure that represents an incremental improvement on some similar open software which came before it.
I'm not sure how profitable they are, but puppetlabs is a very fast growing company that offers an open source product. The 'pay for support' model works well with certain open source products.
I'd say it's an example of the opposite, the partly closed-source Puppet Enterprise is where the primary focus is now, support and training are still available but more of a sideshow. Also Puppet Labs got their initial funding almost 10 years ago now, back when investors believed in open source, as the parent comment observes. They've received around $85m to date, half of that since their pivot to Puppet Enterprise.
If you take away licensing restrictions, then those business models that depend on licensing revenue are naturally going to suffer. But that's almost a mathematical truth and fairly obvious.
But there are lots of other businesses out there that make heavy use of open source software to make a lot of money selling something other than licenses. And those businesses often recognize an interest in contributing to the software upon which they depend.
... 90% of its revenue, yes, we all know this. The uppost was basically saying that its revenue is derived at least partially from the use of open source (not in the selling of services around the use of open source by its customers, as say Red Hat does). IT's a digression from the point of the original article, but in short: many very successful commercial enterprises depend heavily on open source to get their work done. It wouldn't make sense any other way- the licensing costs to assemble the equivalent of GNU/Linux and the code that runs on top of it, using only proprietary software, would be ruinous, and in many cases, there just aren't superior commercial equivalents anyway.
Most of the bigger companies raised money when VC's believed in the open source business model and are still operating on those funds. That's an avenue that is no longer open to today's open source entrepreneurs.
One possible exception might be the WordPress model of offering hosting.