Open Source Business Model Broken, but Value Lies in Collaboration


In Monday's BusinessWeek, Stuart Cohen says the open source business model is broken. I have heard similar things before, but this time it's coming from the man who once served as the CEO of Open Source Development Labs (before it merged with the Free Standards Group to become the Linux Foundation). I don't think he would make an assertion like that lightly.


Cohen, who now serves as CEO of the Collaborative Software Initiative, argues essentially that the new economic reality will require open source companies to start viewing open source code as a means rather than an end. Similar to the assertion made by 451 Group's Matthew Aslett, Cohen says that open source is a tactic within a business model rather than a business model on its own:

Open-source code is generally great code, not requiring much support. So open-source companies that rely on support and service alone are not long for this world. The traditional open-source business model that relies solely on support and service revenue streams is failing to meet the expectations of investors.

By no means is he suggesting open source is dead. In fact, he goes on to laud the kind of collaboration from which open source is created:

[T]he value is in the collaboration ... Think about it like going in with others on a pizza. Too often, businesses need to develop software with the same "ingredients" as everyone else, and this offers no competitive advantage. If everyone wants the same pizza, why not share the cost? And by the way, let's not just share the cost; let's make it together so we get it just right and know what we're getting.