Open Source Is a Tactic, Not a Business Model


Early this week, The 451 Group released its latest open source report, "Open Source Is Not a Business Model." In his blog, 451 analyst Matthew Aslett says of the findings:

The line between proprietary software and open source software is becoming increasingly blurred as open source software is embedded in broader proprietary hardware and software products and proprietary extensions are used to attract more customers....[T]he fact is, there are few vendors generating revenue from open source software that are following a pure open source approach when it comes to developing all of their code in the open and licensing all of their software under open source licenses.

Open source is more a business tactic than a business model, he said. The study analyzed the open source strategies of 114 companies, ranging from Red Hat to IBM and Oracle. Researchers looked at development model, vendor licensing strategy and primary revenue triggers for each company, Aslett said, and there are more than 80 combinations of those three things being employed today.

Key findings, according to Aslett, include:

  • The majority of open source vendors utilize some form of commercial licensing to distribute, or generate revenue from, open source software.
  • Half the vendors assessed are using hybrid development models -- combining code developed via open source projects with software developed out-of-sight of open source project members.
  • Vendors using hybrid development and licensing models are balancing higher development and marketing costs with the ability to increase revenue-generation opportunities from commercially licensed software.