The Business of Open-Source Software

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Essay

Here’s how an open-source development model can help commercial sof t ware companies overcome many of the challenges they face in growing their business.

Setting Up Shop: The Business of Open-Source Software

Frank Hecker, Netscape

oftware companies face many challenges in growing their businesses. Product lines must evolve—new products and add-ons to existing products are essential to bring in new incremental revenue. Product quality must be monitored and improved. Engineering must support current and older releases while still driving innovation. Employees must be motivated by interesting opportunities and more than standard incentives. Many companies must also recruit third-party developers and integrators, who in effect help sell the company’s products by increasing their value to customers. These software business challenges are interconnected in two ways. First, most if not all are functions of constrained resources. Few companies have enough people, money, or time to do everything that needs doing, especially when competing against larger companies with greater resources. Second, a strategy exists to address all these challenges at once: turning some (or in exceptional cases all) of a company’s software products into open-source ones.

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0740-7459/99/$10.00 © 1999 IEEE

January/ February 1999

IEEE Software

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Making a product open-source means making the source code for that product freely available under liberal licensing terms, and with no licensing fees. Others are free to take that software, make changes to it, and use or distribute the resulting modified versions as they see fit. When a

A company can choose to make source code freely available and still serve its own business interests as a for-profit organization.

company makes the right products open-source and chooses an appropriate business model, it can ultimately benefit in ways that more than offset any short-term loss of profits that might stem from no...