Why Making Money from Free Software Matters (The H)

Posted Apr 27, 2010 11:52 UTC (Tue) by dskoll (subscriber, #1630)
In reply to: Why Making Money from Free Software Matters (The H) by Hanno
Parent article: Why Making Money from Free Software Matters (The H)

But how does that promote the idea that you can make money from free software?

Why Making Money from Free Software Matters (The H)

Posted Apr 27, 2010 11:57 UTC (Tue) by Hanno (guest, #41730) [Link] (6 responses)

But how does that promote the idea that you can make money from free software?

We seem to be misunderstanding each other. OSS developers are being paid for their work, so they are making money. What is your point?

Why Making Money from Free Software Matters (The H)

Posted Apr 27, 2010 14:24 UTC (Tue) by dskoll (subscriber, #1630) [Link] (5 responses)

What is your point?

My point is that it is anywhere from 50X to over 10,000X as profitable to write and sell proprietary software than to attempt to profit from producing free software. (Note that I'm restricting this discussion to organizations that produce software as the final end product. I'm not considering the case of embedded software where the end product is not purely software.)

And unless people's psychology changes or the laws of economics are overturned, I can't see this changing.

Why Making Money from Free Software Matters (The H)

Posted Apr 27, 2010 17:05 UTC (Tue) by chromatic (guest, #26207) [Link] (4 responses)

Are you accounting for all of the proprietary software that fails to generate profit?

Why Making Money from Free Software Matters (The H)

Posted Apr 27, 2010 17:36 UTC (Tue) by dskoll (subscriber, #1630) [Link] (3 responses)

If proprietary software fails to make a profit, you go out of business. Free software is almost guaranteed to be unprofitable. (Note that I'm specifically concentrating on companies whose end-product is software. I realize that most software is for in-house use only and is a cost, not a revenue source. I'm also not considering consulting and development revenues, because those are labour-intensive and low-margin.)

I just don't see how free software can leverage the enormous magnification of effort that proprietary software does. Lots of people have tried to come up with creative, profitable business models built around free software, but few have succeeded, and certainly they've never had anywhere near the financial success of proprietary software vendors.

Free software is enormously successful in infrastructure, because everyone needs it and it doesn't really hurt anyone to release the code for free. It's less successful at the application level (if Sun hadn't purchased StarOffice, I doubt we'd see and open-source OpenOffice). And it's completely unsuccessful where large development costs combine with a short product lifecycle and no possibility of support revenue (video games, for example.)

Why Making Money from Free Software Matters (The H)

Posted Apr 27, 2010 20:16 UTC (Tue) by tzafrir (subscriber, #11501) [Link] (1 responses)

So how could a large software company like Sun ever fail if the software business is so profitable?

As for OpenOffice:

1. And if there was no OpenOffice, many more efforts would have gone into "GNOME Office" and KOffice
2. Office Suits are "basic infrastructure"? So how come StarDivision (and later on: Sun) were selling licences of them? In fact, MSOffice it was a major source of income for Microsoft at the time.

Also:
"Short product lifecycle" for proprietary video games are mainly because they are proprietary.

Why Making Money from Free Software Matters (The H)

Posted Apr 27, 2010 22:04 UTC (Tue) by dskoll (subscriber, #1630) [Link]

Sun was not a software company; it was a hardware and software company. Any company can suffer from management or other problems; while proprietary software can be hugely profitable, it doesn't mean it must be. However, free software is never hugely profitable, certainly not at the levels proprietary software has reached.

Office suites are not basic infrastructure... that was my point. I've never used KOffice, and I don't know if "GNOME Office" even exists. I get the impression, though, that OpenOffice is by far the biggest and most capable free office suite.

And video games have a short life cycle because of the nature of the product. Video game fads come and go; some video games last about as long as movies. It has nothing to do with the fact that they're proprietary.

A couple of points

Posted Apr 28, 2010 6:22 UTC (Wed) by man_ls (guest, #15091) [Link]

I'm also not considering consulting and development revenues, because those are labour-intensive and low-margin.

Consulting is definitely labour-intensive, but not low-margin -- you can ask Oracle or SAP, or even Red Hat. Their hourly bills are easily above 300% what a fully-loaded senior consultor makes. Good consulting (straight from the software publisher) is very well paid.

Also, not all games have a short product lifecycle; online games like WoW or Second Life last for decades, and it is for them where free software makes more sense. But here your argument still stands (for other games free software has not succeeded).