Open Sources | Rodrigues & Urlocker » What I Learned in 2005...Lesson #4: Support is not a viable business model

December 26, 2005 | Comments: (0)

What I Learned in 2005...Lesson #4: Support is not a viable business model

TAGS: Open Source

There has been a pervasive myth in open source since its inception. The myth? That IT buyers will pay for support. A small percentage will, of course, but not enough to sustain a venture-backable company.

Think you know of some counterexamples? There are none. There are companies that appear to make a viable business off support (like Red Hat), but they're not really selling support. They're selling bits and bytes, disguised under the banner of "support." This isn't a matter of such companies being sneaky - it's a matter of them recognizing what customers will actually pay for.

Also of note, the closer vendors come to overtly selling software (instead of the support thereof), the easier the time they have. I think Red Hat is an incredible company and think its business/licensing model is absolutely brilliant: make source code available (though with difficulty) but lock down the compiled product, and lock it down further with a contract that keeps customers away from the certified version without payment. But word on the street is that Red Hat is having difficulty getting its customers to renew their "support" subscriptions, and is being forced to seriously discount in order to keep customers renewing. 40% or more.

In an ideal world, it wouldn't be this way. Customers would pay for value and wouldn't try to get something for nothing. But we don't live in that world, and if there's a way to use something for free, enterprises will.

I've written on this before. It's unfortunate, but it's true (and there's not a single significant open source company out there right now that hasn't had to grapple with this). Many enterprises either use open source software without support, or discontinue support after a year or two. They're rational beings (or collections of them), and won't pay if it's not a requirement to do so. I'm not talking theory here - I'm talking the day-to-day reality of advising open source startups and working for them (Alfresco now, Novell and Lineo before).

So what's the Right model? I don't know. I don't think anyone does. But it's not support alone. That much I know for absolute certain.

Posted by Matt Asay on December 26, 2005 09:50 PM

RATE THIS ARTICLE: