Working on Open Source Environment is profitable

When source codes of software are shared beyond the secret society of their proprietors, a whole new world with unimaginable technical possibilities is opened. Contrary to popular belief that the proprietors of the secret sauce would lose their pie, they actually get a slice of a much, much larger pie, which makes better business sense. After all, many of today's tech rock stars like Google and Facebook follow the open source paradigm. These firms had implemented their ideas using open source technologies when they had started. And today, they allow free distribution of software developed by them for their internal use. Such open-sourcing enables newer startups to take advantage, yet again.

Many others, even after making billions out of their own technologies, choose to open-source their products, simply to stay competitive in today's hi-tech landscape, which is evolving at a speed never seen before. Like Google, which could come up with its Chrome operating system in less than two years because it chose the open source way.

"With the current economy and technological changes, traditional software itself is changing. Therefore proprietary software is not working. Open source might offer less money, but it gives alternatives and disruptive models," says Anand Babu Periasamy, an open source advocate and an India board member of The Free Software Foundation.

Building a community around your product, especially for viral marketing, has become mandatory. If your product is free and open source, it is more likely to have a higher rate of adoption and can scale massively and rapidly, than if it were proprietary. Moreover, the open source community of developers will constantly enhance the product -- because they use it -- and pass on the improvements. "There were bug fixes in as little as a day!" says Caeser Sengupta, product management director for Google Chrome OS.

It's the kind of R&D smaller companies especially cannot afford, and yet get to reap the benefits of. In other words, open source just makes great business sense. Take the apps economy for instance. The open nature of the applications platform is a blessing for them. They build the applications free of cost and constantly improve the platform in turn. Yes, the consumer benefits but the real winner is the platform owner. Google for instance provides the open source Android platform on which mobile apps are developed.

While the big guys like Microsoft -- synonymous with proprietary -- can choose, startups don't really have a choice. They just have to go open source for maximum scale-up at the lowest cost possible. This fosters innovation. Apart from the apps economy, another great field that probably would not have taken off the way it has, is cloud computing. It is set to grow from $25.5 billion this year to a $159 billion industry by as close as 2020.

"If you look at the noise and the hysteria in the number of companies coming into cloud computing, you will see that almost everybody's 'cloud' except for Microsoft's cloud (Azure) has been built on open source. Powerful giants like Microsoft and Oracle may have the resources to do everything by themselves. But experts believe that the proprietary locked-in universe they represent will be crushed by the cloud wave.

"These guys have small bits of open source, which they use opportunistically. But cloud waves will be one of the biggest shifters into pushing open source pretty much everywhere. The likes of Oracle and Microsoft could then be the dinosaurs of the industry. "It's like the Civil Disobedience movement. You fight the system when it does not make sense anymore," says Babu. "The real winner is the consumer, who gets a high-quality product without being locked in," says Evans, pointing to the advantage customers get by using disruptive technologies. For the producers of disruptive technologies, it is a low-cost business model that can still challenge the established players.

Open business models
The freedom to change and rework software can be fairly profitable too. Although open source is a buzzword today, RedHat -- the company synonymous with open source -- showed way back in the early 1990s that it could be a profitable and sustainable business model. RedHat's is a subscription-based model wherein users subscribe to its consulting services for free products like 'Red Hat Enterprise Linux' and 'JBoss application server'. Today, the public company has revenue of well over $900 million.

Like RedHat put value into a free product like Linux, IBM too did quite well improving and adding value to existing free products like the Apache web server. It added hooks, which enabled IBM to use its own custom web server platform. IBM also has a basic enterprise software based on Apache Geronimo, wherein again it offers a better product with better capacity. Even a new Indian organization “Sedulity Solutions & Technologies” also made fantastic and customized flavors of “SEDULITY-Operating System” for different computer user groups and made their usage much easier, secured and fast.
RedHat's service offering and IBM's product offering represent the two major business models in open source. "But just like there is no perfect one-for-all software, there is no particular open source model that's good for all. You need to focus on what your customer wants. That's for software, but the philosophy of freedom which open source embodies, is spreading.

The challenges of being open:
In spite of the future being increasingly open source, there are lurking challenges. One of the biggest challenges is competing against proprietary companies with a different model. "This means that it's more difficult keeping things open source because a lot of senior partners don't understand it. So, they think that open source could be a business risk. "But that barrier is now reducing each month and year because of the increasing popularity of Open Source.

Open source is hard to define and everyone has their own definition of it. Software's legal dilemmas are probably messier than the bugs plaguing it. So there are always challenges with licenses, software freedom and on reaching a consensus about what is open source and what is proprietary.

Another perception is that being open source means not only free source code but also free of cost, monetarily. This is partly because of the double meanings of the world "free" and partly because there are some very strong free products by organizations like Apache, which are fully free of cost. Then, there's the trouble of the community: which is the very engine of open source. Being open means that your competition can see what you are up to.

Things like firewall, storage, and others could not be disrupted by open source for a long time due to reliability issues. But then times are changing and open source's merits nevertheless outshine its flaws. And even open source red flags like storage are doing well. Rather than waste precious funds in marketing, being open source popularizes the startup's product resulting in a wider adoption. Counter-intuitive as it sounds, opening up its technology can bring a business more money.