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Linux-related business plans

By yannick in Technology
Fri May 25, 2001 at 09:59:42 PM EST
Tags: Software (all tags)
Software

The recent demise of Eazel has gotten me thinking about how a company could possibly make money off of Linux. Prima facie, it seems easy enough, but I have some serious doubts...


I've been brainstorming about possible ways of making money off of Linux. I've come up with a few possibilities, but no viable business plans.

1. What could be easier than taking free software, repackaging it and distributing it? Theoretically, this seems like a rather easy way of making a tremendous profit. Several Linux resellers are doing this already - they download and burn ISOs of various Linux distributions and sell them at a profit.

But competition in this line of work seems to be pretty fierce. Why should I buy a Debian disc from Company X for $20 when I can buy it for $5 from Company Y, or get it from a friend, or download it free myself? So we can eliminate this type of business.

2. The next business model I came up with is that of Red Hat, Mandrake et al. These companies sell value-added versions of Linux. They include additional programs and utilities to the stock Linux kernel to make the operating system more complete and useable. Again, the profit margins of such companies are depressed by the fact that I can go out and duplicate a friend's copy of their product, or download ISOs and burn them myself.

3. Then there are companies like LinuxCare. Now LinuxCare and its ilk scare the living daylights out of me, and should set off alarm klaxons in the minds of anyone considering Linux. LinuxCare makes its money providing support for Linux. If Linux were perfect, or nearly perfect, there would be no need for outside support. Things would be smooth and intuitive. The tiny percentage of people needing help with complex or low-level tweaking would not go to a company like LinuxCare for assistance. They would seek out support of like-minded individuals on IRC, or in person. So, at least in my mind, Linux is so difficult to use or is so unpredictable that an entire industry has cropped to provide support for frustrated users. Do you really believe CTOs will feel compelled to adopt Linux when they see thins like that?

4. Moving away from the operating system itself, I thought of two additional ways of making money: writing software and writing drivers. It is more profitable to do these for Windows, because it has the biggest marketshare.

So now I'm stuck. I really want to see Linux-related businesses succeed, but how does one build a business model around something like this? What do you all think?

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Poll
Can money be made off Linux?
o Yes! Loads and loads of it! 29%
o Yes, but only a little. 20%
o Maybe, if you're lucky. 30%
o No, it's not very likely. 10%
o Not a hope. 8%

Votes: 78
Results | Other Polls

Related Links
o recent demise of Eazel
o Red Hat
o Mandrake
o LinuxCare
o Also by yannick


Display: Sort:
Linux-related business plans | 74 comments (70 topical, 4 editorial, 0 hidden)
Depends (4.16 / 6) (#2)
by slaytanic killer on Thu May 17, 2001 at 07:13:33 AM EST

Depends on what you mean by "business." Are you talking about immense-growth businesses that can corner a market, or a lucrative but small business? The latter is common, for the reason that it is hard to scale good people. As for the former.. that is an undertaking that requires very good operations. The best people have to be found for your subdivisions.. a headache. Most people do not scale to large overminds because we were not born that way.

As for your 3rd point, why does Linuxcare disturb you? (Aside from losing Kernel Traffic?) I've played with databases that need an even higher level of support.

It's difficult (3.83 / 6) (#3)
by lucas on Thu May 17, 2001 at 08:38:30 AM EST

In order to build a Linux business, you should probably look at who uses it.

In terms of drivers, most users of free software I know would rather buy a peripheral or video card with an established set of drivers than buy something and then buy drivers... unless you're talking about offbeat video cards which most people don't use. The other thing is that, if you were to make money and the company decide to provide free drivers, your business can go under within a month or two.

Software is really iffy right now because around 60% - 70% of Windows titles don't apply to the free software users. There aren't any design niches, no home niche, no marketing data. We all know they're used for enterprise stuff. Beyond that, it's anyone's guess.

Writing free software as a loss-leader and expecting to make money off of it is suicidal... aside from that, the community will eat you. It's like the dot-coms giving out stuff for free. Close the source and sell the product if you're doing something commercial; don't dick around with people by coming up with your own funky license that tries to blend your ideas about software with the GPL because it is confusing to the people who use it. viz. the plight of KDE and how selling commercial apps requires a paid qtlib whereas the "noncommercial" version is compatible with the GPL.

There are not a whole lot of ways to make money with free software. I've talked to a lot of people who have tried different schemes that have failed.

Kurt Keville of GNU and I have talked about building simple, cheap Linux devices based on open hardware designs (e.g., the "Simputer", for instance). In our case, it is for our nonprofit organization. Something like this would be cool, but it has been on the back burner. So, there is a good idea that you could possibly pursue which IMHO would be cool. It would be cool to have a bunch of commercial vendors adhering to open hardware standards and building a common, standardized Linux device. It is pipedreamish, though worth mentioning.

I'm not sure Trolltech makes a good example (none / 0) (#69)
by air on Wed May 30, 2001 at 12:57:09 AM EST

Trolltech is hardly a good example of the dangers of mixing proprietary licenses and GPL on your product. I think that with Qt they have actually found the true sweetspot free software licensing scheme.

The GPL version gives them acceptance among Free Software developers, lends them 'millions of eyeballs' and produces lots of programmers competent with their product. The proprietary version generates them wads of cash from closed-source companies wanting to use their stuff.

Sure the scheme might prevent Qt from being the 'de facto' toolkit in the long run, but at least it's making them millions of $ now, enabling them to hire tens of full-time developers to work on it (GTK has, what, three?) and labeling them A Free Software Company at the same time.

[ Parent ]

Give it up (3.11 / 9) (#4)
by darthaya on Thu May 17, 2001 at 08:46:22 AM EST

Because, let's face it, if you can download the software for free, who would want to pay for it?

Redhat, IMO, should not have allowed people to leech ISOs off their websites. They can redistribute the source code. But heh, nothing in GPL requires them to redistribute the ISOs. If you like, you can custom build a redhat system yourself.

Software should not be Free as in beer, period. It is a work of many, many man hours. and those man hours should somehow be compensated. Not everyone is as famous as RMS that can live off his fame without actually getting paid for working for some corporations.

That's your opinion and *only* your opinion (none / 0) (#51)
by tzanger on Fri May 25, 2001 at 10:41:00 PM EST

Thank god.

Software should not be Free as in beer, period. It is a work of many, many man hours. and those man hours should somehow be compensated. Not everyone is as famous as RMS that can live off his fame without actually getting paid for working for some corporations.

Ever hear of support companies? You know, those companies which train extensively on the sytems they will be supporting and stand between the programming houses and the masses which use the software from those houses?

Because, let's face it, if you can download the software for free, who would want to pay for it?

For the support. So they can call someone and scream at them for a fix at 3am instead of hacking it out themselves. So they don't have to pay someone $40k in order to make sure they have the latest updates and fixes. You seem totally ignorant of the software support industry.

One in particular that I'm recently familliar with is CA Plus. They do software support for AccPac and MiSYS. They have no actual code of their own yet seem to be making a pretty decent living. We recently paid them CDN$135 an hour to upgrade our AccPac and MiSYS systems from an older version. They're now about $5k richer because of just one company and just one upgrade. I fail to see how this type of company would work any less well in a free as in beer, free as in liberty Open Source environment.



[ Parent ]
Support (4.42 / 7) (#6)
by RangerBob on Thu May 17, 2001 at 08:56:32 AM EST

I don't think the support thing means that companies will necessarily be scared off. There are a lot of places that can't afford an IT staff. For these places, they rely on support contracts to fix things when they have problems.

Also, all of the commercial Unices have support contracts from the vendor or from an approved support center. Where I work, we have Solaris, Irix, and SCO systems in addition to Linux. All the commercial ones have support contracts even though we have an IT staff on hand. This way, if something is really wrong, the local staff doesn't have to worry about fixing it. Someone comes in and will fix it under the support contract. Having a company that sells support isn't really that unusual, and doesn't degrade Linux in the least bit.

Absolutely (4.00 / 3) (#8)
by RocketJeff on Thu May 17, 2001 at 09:23:26 AM EST

I agree, having support contracts available doesn't mean that the product is crap, it means that more companies will (possibly) adopt it.

I worked for a company that was making the switch from SCO Xenix 286 to SCO Unix. Back then (don't know about now) the C compiler SCO sold 2 was based on an older version of the Microsoft C compiler. We looked at moving to GCC but there wasn't commercial support available so we stuck with the SCO compiler.

Yes, we could get the source for GCC but we (the company) didn't want to have to rely on the good will of volunteers to fix problems/answer questions about a critical piece of our environment. Paid support isn't always the greatest, but you don't have to hope someone finds the problem 'interesting' enough to work on.

[ Parent ]

Excellent support with GCC vs. MS, Borland (4.00 / 2) (#31)
by pavlos on Thu May 17, 2001 at 10:43:43 PM EST

About two years ago, I was developing a C++ library for my employer. I hit what appeared to be a rather obscure bug in GCC triggered by a strange combination of templates and inheritance (hey, it happens to everyone).

I mailed a GCC bug report, not expecting to see it addressed for at least a few months. After all it was a rather obscure usage. The next day I received a personal reply by a knowledgeable developer, informing me that what I observed was not in fact a bug but a subtle change in the ANSI C++ behaviour, and explaining the new correct usage. I have never seen an example of better support for anything.

By copmarison, at about the same time, we discovered that the Microsoft Visual C++ 4 compiler yielded variable performance because we were using a lot of 8-byte local variables and the compiler would only align the stack to 4 bytes. The code would run fast for about 50% of the time, when you got 8-byte alignment by chance. It took 7-8 emails with two staff members of MS tech support to explain this problem, before we gave up and aligned the variables ourselves.

Borland, about 4 years ago, had by far the worst technical support regarding compilers. We had discussions like this:

  • Us: Your compiler produces slow code.
  • Borland: You mean it runs slowly?
  • Us: No, it runs fast, as your advers say, but produces slow code.
  • Borland: What do you mean?
  • Us: Well, I put our source through your compiler and the resulting program runs slower that when we use other compilers.
  • Borland: How much memory have you got?
  • Us: What difference does it make?
  • Borland: Well, our compiler requires X megabytes.
  • Us: Argh!

    Pavlos

    [ Parent ]

  • viable business (4.75 / 12) (#7)
    by Speare on Thu May 17, 2001 at 09:05:22 AM EST

    This is not a flame of Linux or Open Source, but I hope my pointed arguments illustrate the problems you've posed, by highlighting the bad business thinking that's gone into Linux businesses to date.

    Take these examples, and see if you can think of existing distributions that suffer these problems. For that matter, compare these problems to other dot-com failures like WebVan or Pets.com.

    • There's little or no barrier to entry here. Decide what to box, use some search and replace, and release your own distro. A viable business does something that nobody else would find it easy to do, so nobody else will follow you and do it faster and steal the profits.
    • There's little or no market differentiation here. The only thing different between two distributions are a few neato graphics, web designs and culture fashion. It's hard to charge more than the other guy when you're offering exactly the same product. And if he lowers his price, your price becomes vulnerable because you're offering exactly the same product.
    • There's little or no profit potential here. All of the value-added propositions are heavy expenses. You want to position your costs for shorter and more manageable terms, not something you'll need to keep paying over the long haul. Something that costs a lot to support every month after release is a sure way of killing yourself. Superior testing on every release is good customer value, but costs money. Better support for newcomers is good customer value, but costs money. Professional issue management is good customer value, but costs money. High bandwidth downloads are good customer value, but cost money. Additional features not found in other distros is good customer value, but costs money.
    • There's little or no market protection here. If you find a group of customers, what will keep them with you, instead of going to your competitor? A good business finds a customer that doesn't want to switch suppliers, and keeps it that way. If your competitor knows your product inside and out, they may be able to do your job better than you can, and they're just waiting to prove it to you.
    To sum up, you need to find something that only you can do (barrier to entry), which sets you apart (product differentiation), that won't break your back in costs (profit potential), and will keep your customer coming back to you (market protections).

    How is Linux different from trucking rocks? A granite rock quarry packages "free" content for distribution to end-users, just like many Linux companies. Choose a nice hillside and bring some tools. Produce the obvious gravel and slabs and concrete mixes. Replace the broken tools next month. The only thing that keeps rock quarries in business is market saturation: few towns need more than one rock quarry, but few towns want to truck rocks from distant neighbors. Linux has no such market protections. Analysis: Boxing Linux is a worse business than trucking rocks.

    This is exactly the reason that the Closed Source world has been able to dominate for 25 years: you make a unique product up front, and let the money roll in from your invested customers. Nobody can reproduce the work, so you can stabilize your segment of the market and expand from there.
     
    [ e d @ e x p l o r a t i . c o m ]

    See Linux is a commodity business (4.50 / 2) (#66)
    by Nomad on Mon May 28, 2001 at 10:21:08 AM EST

    You've shown that Linux is a commodity business.

    And to take a point from Warren Buffett, the guru investor, in commodity businesses, management has to be excellent.

    In other words, you make sure your supply chain works without a hitch and you keep costs to a minimum. The sort of businesses which do this are the pile it high sell it cheap types. Like Wal-Mart.

    Because of this there is probably only room for 2 (maybe 3) Linux distros.

    Consulting is less of a commodity, but if you take this path, you may find yourself competing with IBM and RedHat who both have growing Linux consultancy businesses.

    So there is no easy answer to your question. And let's face it, if there was, almost everyone commenting here would already be doing it. :)

    [ Parent ]

    Who is actually making money on Linux? (4.55 / 9) (#9)
    by Anonymous 242 on Thu May 17, 2001 at 09:38:43 AM EST

    • Ebiz/Linux Mall - retailer of commodity hardware and software
    • Cobalt Network - commodity hardware vendor
    • TiVO - commodity hardware vendor
    • Rebel - commodity hardware vendor
    • IBM - commodity hardware and software vendor
    See a trend yet?

    Did I miss anyone? Is Penguin making money yet? VA Linux isn't. Redhat isn't (at best Red Hat broke even last quarter, but even then they can only ge said to have broke even because their loss works out to less than a penny per share). I don't know whether SGI has stopped bleeding yet or not.

    Slackware is said to have always been profitable, but apparently this has something to do with an almost complete lack of corporate overhead. Someone correct me if I'm wrong.

    I predict that the next group of companies to make money on Linux will be the plam sized PC and embedded systems folks. It is possible to make money on Linux, but the secret is to attempt to do so in a manner where one is not competing with Linux. Linux makes it easier for hardware vendors and vertical systems to make money, but makes it harder for the traditional retail software shop to make money, which is why Microsoft is scared. The Microsoft shareholders problably woundn't like it very much if the mighty, mighty MSFT were reduced to only a mouse and keyboard company.

    Tell it, Lee (4.50 / 2) (#13)
    by rusty on Thu May 17, 2001 at 01:54:09 PM EST

    That's exactly what I was thinking, reading through this. I see no good way to run a software business using Linux. If anything, it makes the software market harder to survive in for everyone.

    Hardware businesses, on the other hand, would still seem to be a pretty good bet. Especially embedded devices. Say you want to sell a TiVO-like set-top box. You've got some hardware, for which, chances are, there's already a linux port. You need it to do a few simple things, and not crash much, if ever. And your margin is pretty thin anyway, so you really benefit from not paying the microsoft tax by putting CE on there. Hire one or two guys who know how to write a kernel module or two for whatever special devices you might have, release the code (cause you're not selling that), and get some free publicity on slashdot to boot.

    I honestly don't expect to see many new linux-based software businesses anytime soon (or many successful ones, anyway). I do think we'll continue to see "appliance" businesses adopting linux as their platform. I think the way to go with software will probably follow the Gnome Foundation/Apache Foundation model. Basically, software will be developed by volunteers and a small core of paid staff, who are primarily funded by hardware companies who think they can profit from the results.

    In case it's not clear, I think all of the above are good things, too. :-)

    ____
    Not the real rusty
    [ Parent ]

    using (4.00 / 2) (#15)
    by alprazolam on Thu May 17, 2001 at 02:35:32 PM EST

    I see no good way to run a software business using Linux

    Do you mean selling Linux as opposed to using Linux? This has been repeated many times, but the way to make money off open source software isn't repackaging it and selling it. It's using it to lower your costs. On the other hand...if Linux was used as widely as windows, could you be profitable by selling incredibly cheap copies of it (~$5)?

    [ Parent ]

    Yes. you're right (none / 0) (#27)
    by rusty on Thu May 17, 2001 at 09:38:35 PM EST

    That line was unclear. I meant selling Linux, or developing software for the linux platform. Of course, the gist of my comment was that using linux is the way to go. Which made the phrasing unfortunate.

    ____
    Not the real rusty
    [ Parent ]
    precisely. (none / 0) (#19)
    by rebelcool on Thu May 17, 2001 at 05:21:43 PM EST

    Though this does mean the death of mainstream linux as a computer operating system for desktops. Which isn't such a bad thing, since it was never really designed for that anyway.

    In specially tailored systems (such as a devices), it's a simple enough OS it works well there.

    Same for servers. It's simple enough that it can reliably run servers for weeks and weeks.

    COG. Build your own community. Free, easy, powerful. Demo site
    [ Parent ]

    Not being profitable doesn't mean failure (4.25 / 4) (#21)
    by Begbie on Thu May 17, 2001 at 07:27:40 PM EST

    Though this does mean the death of mainstream linux as a computer operating system for desktops.

    Why do people have to measure success by the amount of money something can generate? Is Internet Explorer a failure because it is free? Not at all!

    When web browsers became free, it meant the end of the companies selling browser as a commercial product (Opera is the notable exception), and the begining of its life as just another tool that everyone can use. It would be suicide to base your business model on trying to sell (distribute) a free browser ..... however it can be very profitable to create services/addons/etc to keep all of those free browsers busy.

    If Linux is able to continue to keep up it's tremendous growth rate, it could soon overtake Windows/Mac/whatever as the best OS on the planet (very simular to how IE over took Netscape a couple of years ago) and will effectively torpedo the now profitable market for OSs.

    The way to make money will be to sell services (custom apps perhaps), tools, games, and other goodies (After Dark for Linux anyone?)



    [ Parent ]
    No. (4.50 / 2) (#28)
    by rebelcool on Thu May 17, 2001 at 10:07:41 PM EST

    The success of an operating system is determined by the company behind it. The only place where a piece of free software has been truly successful, is where it got there first, before commercial products. Think Apache.

    Linux did not get there first. Linux most likely will never be able to compete with companies for the home market, simply because it takes a gazillion dollars to develop and test a good user interface. Volunteer organizations simply dont have the ability to overtake the commercial ones (they are FAR behind), much less surpass them and claim victory.

    Face it. Linux's place is already being sorted out, and it's on the embedded device and server market. For homes, it's just a hobby.

    COG. Build your own community. Free, easy, powerful. Demo site
    [ Parent ]

    What you don't take into account (4.50 / 2) (#37)
    by Anonymous 242 on Fri May 18, 2001 at 12:52:49 PM EST

    Linux did not get there first. Linux most likely will never be able to compete with companies for the home market, simply because it takes a gazillion dollars to develop and test a good user interface. Volunteer organizations simply dont have the ability to overtake the commercial ones (they are FAR behind), much less surpass them and claim victory.
    Hardware manufacturers of desktop PC's have a vested interested in funding development of Linux (or some other free OS) as a viable desktop alternative. It doesn't take a whole lot of genius for someone at Dell, HP, Compaq, IBM, etc. to realize that funding Gnome development at a reasonable rate is vastly less expensive than buying a Windows license to go the hundreds of thousands of PCs that are going out the door.

    And Sun seems to be following just that strategy as we speak. Gnome 2.0 will have a whole new Accessiblity subsystem that was funded and tested largely by Sun.

    [ Parent ]

    fundamental problems (2.66 / 3) (#38)
    by rebelcool on Fri May 18, 2001 at 03:05:13 PM EST

    it would take millions, upon millions, of dollars to bring gnome and the like up to the level where windows and mac GUI's are today. Not to mention porting all the common features that you see for home users, and webbrowsers. Hell, Linux still hasnt even got a decently working java yet, mainly due to linux's antiquated thread model.

    It would be a monumental task to bring all that to linux, and by the time it's done, I think the only GPL'd part of it that would still exist would be the kernel. It's not something that can be done by volunteer organizations, and do you really think corporations are going to pump millions of dollars into something only to GPL it? Nah.

    Linux has a market - servers are the big one. Devices are up and coming. Home desktops seems rather difficult to do, given that the market there is already consumed by windows and mac, and linux is technologically years behind in that respect.

    So, in conclusion, it would take millions (if not billions) to bring it up to speed where Joe Blow would even consider using it, and by the time that's done, the only people who could make the software, is for-profit corporations, who are most certainly not going to GPL the thing because they need a decent return on their considerable investment.

    Is that the linux you want? Is that really linux at all?

    COG. Build your own community. Free, easy, powerful. Demo site
    [ Parent ]

    Do you even read the news? (4.66 / 3) (#39)
    by Anonymous 242 on Fri May 18, 2001 at 03:48:36 PM EST

    It's not something that can be done by volunteer organizations, and do you really think corporations are going to pump millions of dollars into something only to GPL it?
    IBM has already dumped millions into Linux.

    Sun has already dumped millions into Gnome. Although Gnome is (IIRC) licensed under the LGPL and not the GPL.

    the only people who could make the software, is for-profit corporations, who are most certainly not going to GPL the thing because they need a decent return on their considerable investment.
    You completely sidestepped my previous point. Do the math. IBM ships how many desktop systems per month? What percentage of each sale goes to MS? It is in IBM's long term interest to see Linux become a viable desktop OS. Ditto for Sun. Ditto for Dell. Ditto for Gateway. Ditto for just about every hardware vendor in the world.

    The point your missing is that systems software is a loss center for most hardware companies, not a profit center. Investing in Linux allows companies to distribute that loss among their competitors.

    [ Parent ]

    heh.. (2.50 / 2) (#40)
    by rebelcool on Fri May 18, 2001 at 04:08:49 PM EST

    ibm's focusing mainly on the server market, because thats where linux shines.

    I do read the news (several times a day), and ive never heard anything about sun's investment into gnome. Go figure.

    and while it may be in the hardware vendor's interest, it is also in their interest to have a system that normal people can use. And if you're going to pump millions of dollars into something, chances are, you're not going to just give it away. And lets face it, you need more than hardware vendors to make software.

    COG. Build your own community. Free, easy, powerful. Demo site
    [ Parent ]

    your refute yourself (4.66 / 3) (#41)
    by Anonymous 242 on Fri May 18, 2001 at 04:29:46 PM EST

    And if you're going to pump millions of dollars into something, chances are, you're not going to just give it away.
    Yet you admit that IBM does just that.
    I do read the news (several times a day), and ive never heard anything about sun's investment into gnome. Go figure.
    Apparently you do not follow the news concerning free software very closely. You are perhaps unaware that Sun is going to use Gnome as the default Solaris desktop for its workstations beginning with Gnome 2.0. Consider reading Talking with John Heard of Sun about GNOME on LinuxPower. Among other resources, Sun has a Gnome group in its Desktop division headquartered in Ireland. This group is working on some core Gnome features, including usability testing, especially around the Accessibility features planned for Gnome 2.0.
    ibm's focusing mainly on the server market
    IBM is also heavily investing in Linux on the desktop. Among other projects, IBM is working to get it's OMNI printer drivers that were developed for OS/2 integrated into the gnome-print system. Their involvement is not restricted only to this, though. From Talking with IBM's Daniel Frye about GNOME
    Christian: Do IBM have anyone working full-time on GNOME related development?
    DF: We have more than 200 developers that work in the open source community. Some of those people work in and around GNOME.


    [ Parent ]
    amusing (1.50 / 2) (#42)
    by rebelcool on Fri May 18, 2001 at 05:03:41 PM EST

    heh, all the articles specify "we will do this, this and this!".

    They'd better get cracking, time's not stopping for them to catch up to present GUI specs. I'll believe it when I see it.

    COG. Build your own community. Free, easy, powerful. Demo site
    [ Parent ]

    The problem with you youngsters (5.00 / 5) (#43)
    by Anonymous 242 on Sat May 19, 2001 at 09:03:08 AM EST

    Aside from not being able to admit when your wrong when you've demonstrably been shown to be, and aside from thinking you know everything, the problem with many (not all) folks your age is that you lack patience.

    Linux doesn't need to take over the world today. Nor does it need to take over the world tomorrow. All it needs to do to achieve world domination is to continue on the slow, steady path that it has been going down. Linux already sells more retail desktop licenses than MacOS. Mac workstations outnumber Linux on the desktop only because of the tremendous installed base of the venerable Macintosh operating system.

    Rome wasn't built in a day. Great empires are built slowly, bit by bit. A slow soaking rain builds up a considerable amount of groundwater. A torrential downpour evaporates and runs off before the ground can absorb all the water.

    I have absolutely no problem admiting that Microsoft's Windows, Be's BeOS, Apple's MacOS (and many other operating systems) are a good deal ahead of Linux in certain areas regarding the desktop. This matters not at all. Windows 3.1 pummelled MacOS into the ground regarding marketshare at a time when Windows was incredibly lacking in features in comparrison. Aside from Microsoft's heavy handed tactics, Windows won that marketshare for two reasons: price and lock-in. A computer with Windows 3.1 was vastly less expensive than a computer with Mac OS. Buying an IBM compatible PC gave one a variety of vendors to choose from.

    More and more, Microsoft's WIndows licensing is beginning to resemble Apple's sales plans. Microsoft wants to lock its customers in so that the customers have no choice but to pay whatever price Microsoft charges. Hence, the current attempt to move buying an annual subscription instead of a shrink-wrap license with Windows XP. When the competition is free, Microsoft might very well be digging their own grave. Slowly.

    The Free Software movement isn't going away anytime soon. It has been around for decades and is healthy and robust. Free Software is now critical to the business plans of many, many very successful companies. These companies have a vested interest in keeping the Free Software community rolling along. While it may be that funding Gnome, KDE, Apache, or any other one project would be too large a burden for one company to bear, they don't have to. There are many, many companies shouldering the burden together.

    The ironic part about all of this is that Free Software has succeeded in getting a disparate group of organizations to cooperate in a manner that has failed time and time again with proprietary software. Consider OpenDoc and CDE.

    [ Parent ]

    I think it comes down to this (4.00 / 1) (#54)
    by spacejack on Sat May 26, 2001 at 02:42:38 AM EST

    Should the hardware and general technology of the desktop and end-user software paradigms ever "freeze", then that is when MS & Apple has to worry. So long as technology keeps moving forward, MS and Apple will always have the edge. If the technology freezes however, then I can see open source apps gradually taking over more and more, starting with the most common applications, and expanding outward from there.

    The thing is, I have a hard time imagining that computer technology will freeze. OTOH, I have a hard time imagining that it will keep accelerating like it has for the past 20 years.

    [ Parent ]
    Antiquated thread model? (3.00 / 1) (#52)
    by tzanger on Fri May 25, 2001 at 10:49:25 PM EST

    Hell, Linux still hasnt even got a decently working java yet, mainly due to linux's antiquated thread model.

    Now I'm not calling you a liar, but could you elaborate? I was under the impression that Linux's threads all run as processes (the kernel doesn't see much, if any, difference between the two). Even though this fact may be true, the context switch time between processes under Linux is faster than most other (Win*) OS' thread switch time...

    Note that while IANATP (Thread Programmer), I would like to hear more about this.



    [ Parent ]
    fundamental lies (4.00 / 1) (#56)
    by newellm on Sat May 26, 2001 at 05:40:40 AM EST

    it would take millions, upon millions, of dollars to bring gnome and the like up to the level where windows and mac GUI's are today.

    Yes, well Gnome sucks. Try comparing windows and MacOS to KDE. KDE has Windows beat in damn near every area. Mac is a little better, but is still not as good as KDE(Even though MacOS seems to be a little more consistant at times).

    Not to mention porting all the common features that you see for home users, and webbrowsers.

    Do you mean porting common features for web browsers, or porting web browsers? That sentence was very poorly constructed.

    What common features need porting? You make all the claims, but give no evidence to back them up. As far as web browsers go, Linux has 3 very usable choices. Konqueror, Qpera, and Mozilla. I agree that IE is currently the best browser, but Konqueror is better in many ways and is also very good.

    Hell, Linux still hasnt even got a decently working java yet, mainly due to linux's antiquated thread model.

    Java works great on linux, usually faster than on windows.

    Linux has very good threading. It has the fastest context switching time around. There is no difference between a thread and a process in linux becuase any processes can have any of the properties of other OSs' antiquated threads. You need to stop spreading lies.

    It would be a monumental task to bring all that to linux, and by the time it's done, I think the only GPL'd part of it that would still exist would be the kernel. It's not something that can be done by volunteer organizations, and do you really think corporations are going to pump millions of dollars into something only to GPL it? Nah.

    All what? You fail to mention specifics. You have proven that you don't know what you are talking about, and it is time for you to shut up.

    Linux has a market - servers are the big one. Devices are up and coming. Home desktops seems rather difficult to do, given that the market there is already consumed by windows and mac, and linux is technologically years behind in that respect.

    Mention one single technology that it is years behind in. Give me some facts to chew on, not these broad lies.

    So, in conclusion, it would take millions (if not billions) to bring it up to speed where Joe Blow would even consider using it, and by the time that's done, the only people who could make the software, is for-profit corporations, who are most certainly not going to GPL the thing because they need a decent return on their considerable investment.

    It didn't take millions and billions to get where it is now. And guess what, Joe Blow is already using it. Why don't you go read some statistics somewhere.

    Matt Newell

    [ Parent ]
    You are full of FUD (4.00 / 2) (#55)
    by newellm on Sat May 26, 2001 at 05:22:22 AM EST

    The success of an operating system is determined by the company behind it.

    I believe this was true 5 or ten years ago, but this is not true anymore. This is the first time in history that any group of people have collaborated over the internet and actually made a full featured OS.

    The only place where a piece of free software has been truly successful, is where it got there first, before commercial products. Think Apache.

    Free software is truly succesful all over the world. What makes you think that Apache was anywhere before commercial products?

    Linux did not get there first. Linux most likely will never be able to compete with companies for the home market, simply because it takes a gazillion dollars to develop and test a good user interface.

    First of all, Linux was not in the Server market first, yet it is a leading player there. It was not first to the embedded market, yet it is a leader there. I think that your ideas are flawed. How can you say that linux will not compete with companies for the home market? Linux already is on more computers than MacOS. Is Apple not a company? Linux is steadily gaining ground and Windows is losing ground(they can't go anywhere but down).

    Why does linux need a good GUI? Windows is the #1 desktop OS and it has a horrible GUI. The only reason that people like to it is because they are used to it and have never learned anything else. KDE is an outstanding GUI that has far surpassed the quality and consistancy of windows. It is the most sophisticated and advanced GUI ever made.(Even though MacOS X is very good)

    Volunteer organizations simply dont have the ability to overtake the commercial ones (they are FAR behind), much less surpass them and claim victory. Face it. Linux's place is already being sorted out, and it's on the embedded device and server market. For homes, it's just a hobby.

    You probably would have said the same thing about the embedded market two years ago, and the server market 5 years ago.

    Matt Newell

    [ Parent ]
    Hot damn and hallelujah (4.00 / 1) (#23)
    by regeya on Thu May 17, 2001 at 08:38:39 PM EST

    I honestly don't expect to see many new linux-based software businesses anytime soon (or many successful ones, anyway). I do think we'll continue to see "appliance" businesses adopting linux as their platform. I think the way to go with software will probably follow the Gnome Foundation/Apache Foundation model. Basically, software will be developed by volunteers and a small core of paid staff, who are primarily funded by hardware companies who think they can profit from the results.

    But...but...I thought the failure of VA was "proof" that Linux is the automatic kiss-of-death, simple economics, and all that. ;-)

    You know, I'd been thinking on that very subject, and the longer I've thought upon it, the more sense this approach makes. Don't found a business trying to "be Microsoft" by selling software...Microsoft made money through a wild set of circumstances and shenanigans. Try to get corporate sponsorship.

    Heck, if Allchin & Co. have their way, the develop-neat-Free-Software-things-on-a-grant may become illegal, and being a corporate leech may become the only way to produce free stuff. That, or wash dishes during the day, and code/beg for hardware at night. ;-)

    [ yokelpunk | kuro5hin diary ]
    [ Parent ]

    Linux and VA (none / 0) (#26)
    by rusty on Thu May 17, 2001 at 09:35:53 PM EST

    But...but...I thought the failure of VA was "proof" that Linux is the automatic kiss-of-death, simple economics, and all that. ;-)

    I know this was meant kind of tongue-in-cheek, but I'm gonna take up the point anyway, because a lot of people say stuff like this and do really mean it. VA is an odd thing, in my mind. They want to sell a commodity product, right (that is, servers), and they're competing with some really big established companies (Dell, Compaq, et al). So you'd think that specializing in Linux would give them a leg up, by keeping costs down. And yet, time and again, VA's machines are more expensive than their competitors. I suspect it's mainly an issue of scale -- they don't have the kind of buying power that the big guys do. Still, it's strange.

    But VA actually hasn't failed, contrary to popular opinion (in some quarters). And I think they will sort things out and bounce back. At the very least, having some rough times is not indicative of failure. Dell had them, Compaq certainly had them, and the list goes on. Time will tell.

    I agree with you about MS though. They had some skillful business steering, and some really wild-ass strokes of luck (we're looking at you IBM). I don't think anyone could set out to be another MS and succeed.

    I have some deep suspicions that software-as-a-business is on the decline again, at least for a while. It's just way too hard to make any money at it.

    ____
    Not the real rusty
    [ Parent ]

    random thoughts (4.00 / 1) (#30)
    by regeya on Thu May 17, 2001 at 10:31:45 PM EST

    I know this was meant kind of tongue-in-cheek, but I'm gonna take up the point anyway, because a lot of people say stuff like this and do really mean it. VA is an odd thing, in my mind. They want to sell a commodity product, right (that is, servers), and they're competing with some really big established companies (Dell, Compaq, et al). So you'd think that specializing in Linux would give them a leg up, by keeping costs down. And yet, time and again, VA's machines are more expensive than their competitors. I suspect it's mainly an issue of scale -- they don't have the kind of buying power that the big guys do. Still, it's strange.

    Yup, tounge-in-cheek, guilty as charged. :-)

    My suspicion about e price of VA's machines is along those lines, too. Just about any busness, like some sort of manufacturing (which can include computers), as well as businesses such as my chosen dead-end line of work, newspapers ;-) get things wholesale. More units==lower price per unit. I'm sure that's the case for VA...hey, I know you don't have ties there, but I'm sure the k5 connection couldn't hurt. I'm sure if you asked, you'd find out it was something boring along those lines. :-) Still seems strange that, given the money saved per unit on not purchasing licenses, that their machines would still be more expensive than, say, NT machines. Hm.

    I have some deep suspicions that software-as-a-business is on the decline again, at least for a while. It's just way too hard to make any money at it.

    I'm surprised that anyone ever thought of it as a moneymaker. Open source or no, free-from-cost licences or no, people still trade software for free. And it's funny to see people get so upset over XP, because MS has been trying for years to find ways to thwart illegal copies. I doubt that their latest effort will work.

    So, I suppose let's leave it at that. MS makes money with software because at one point they got extraordinarily(sp) lucky, then got ruthless, and managed to stay king of the hill for a long time. I doubt that someone like Red Hat could take over just because, as you say, software isn't all that commercially viable. Unless, of course, you manage to pull off a coup and get vendors to pay you for units to ship your software with their hardware, which I don't see happening with free OSs. I could see vendors shipping free OSs with computers, but I can't see them spending money on shrink-wrapped boxes. Maybe, but it's a stretch. There are advantages to having a RH-like entity in that, if there's one overly-dominant system, and the company can afford to start up, pay employees to ship product, etc., it makes financial sense to buy licenses for boxed product from a centralised company because the centralised company can (here we go with bulk-buying again) get better per-unit rates on larger CD-ROM runs, manual printing, etc. OTOH, perhaps hardware manufacturers could come to agreements on co-opping manuals and CD-ROMS. Hm.

    Anyway, sorry for the rambling tract. :-}

    [ yokelpunk | kuro5hin diary ]
    [ Parent ]

    Linux is not a product (none / 0) (#74)
    by wfaulk on Tue Jun 05, 2001 at 07:20:02 PM EST

    ... we'll continue to see ... businesses adopting linux as their platform ...
    I agree. But to put it more bluntly...

    Linux is not a product. It's a tool. Surely there are few people out there that make their money off of selling MS Windows. In fact, most companies that come closest to this, hardware manufacturers, these days seem to be lamenting the fact that they have to pay for Windows at all. Okay, so that's a little bit of an overstatement.

    What I mean is that Linux is a tool to be used to develop other products. No one is excited just to install the new version of Windows (no one who really knows, anyway). No one installs a new version of Windows and proclaims it great because of the powerful builtin applications. Sure, it might have a networking stack or graphics renderer or other widget that kicks the crap out of everyone else's, but without something to do with it, it remains useless.

    It's the same with Linux. Sure, it may be easier think of MS Windows as a final product because it spurs more average end-user development (read games), but both of them simply allow real things to be done. One possibly more efficiently than the other.

    So stop trying to sell Linux. If you could get a hammer for free, why would you want to try to sell it? Just tell everyone else where to get the free hammers and go on to making the best nails you can. Sell products that use Linux. Or use Linux yourself to develop something that rocks. But stop thinking about how Linux itself can make money. It can't. And Linus doesn't seem to be too shaken up by it.

    [ Parent ]

    yes, and (none / 0) (#47)
    by speek on Mon May 21, 2001 at 03:54:25 PM EST

    ... where I work (Xerox), there's an entire staff from a different company (EDS) that's completely in charge of our computers on our desks. They buy them, then install software on them, they get them running on the network, manage users and permissions, and fix things when they break. Of course, we're using Windows. The same business model could apply to Linux, and it wouldn't be any indication of it's imperfection that such support was a good idea.

    This business model would only require that some large companies decided to standardize on Linux.

    --
    al queda is kicking themsleves for not knowing about the levees
    [ Parent ]

    A trend alright (none / 0) (#71)
    by stuartf on Thu May 31, 2001 at 12:00:05 AM EST

    See a trend yet?

    Yes, basically the trend is if you want to make money providing Linux services at this stage, you must have an alternate stream of revenue to cover the loss you will make.
    Of course, things may change in the future such that providing Linux services is profitable. Support is not a profitable model however...

    [ Parent ]
    Eazel, Nautilus, Linux Business ... (3.33 / 3) (#10)
    by captain soviet on Thu May 17, 2001 at 09:58:14 AM EST

    Any business, related to linux, will only succeed, if it does not depend solely on selling self-developed software. Software can be pirated very easily and most simple programs will have open-source equivalents, soon.

    So the trick will be providing services for linux users, - system administration services, setting up linux clusters, servers, providing taylored solutions for ebiz. That's where you can make money.

    So Eazel's buisness plan wasn't as stupid as many people assumed. They didn't try to make money by selling software but by selling services. The problem about Eazel was, that they miscalculated the time it would take to create Nautilus by at least a year.

    Today Nautilus is still too slow, too instable and it's still lacking of some important features.
    I think it will rule, once the gnome people have found a way to combine stable versions of nautilus, evolution and galeon (I hope they will do so in Gnome 2.0)



    software (3.60 / 5) (#11)
    by ikarus on Thu May 17, 2001 at 10:52:31 AM EST

    i think the real problem with developing software for linux (for a profit) is that people have been spoiled into getting everything for free. "how dare you try to sell me something you money hungry corporate communist!?" people, i think, have basically demonstrated their lack of interest in paying for, not using, anything linux.

    take a look at what corel did. they gave away free versions of software they sell on the windows platform. then they tried to sell "professional" linux versions.

    oh, one other problem with developing software for linux: which desktop? GNOME or KDE? i think that's a big problem in convincing people to develop.

    just a pointless nitpick (none / 0) (#25)
    by andrewm on Thu May 17, 2001 at 08:43:19 PM EST

    "money hungry corporate communist"" ?

    there's something there that just doesn't seem right to me , especially as "communist" is a word used now and again to describe anyone who supports any variant of open source :)



    [ Parent ]
    corporate communist? (none / 0) (#59)
    by DrEvil on Sat May 26, 2001 at 04:41:01 PM EST

    I must say that corporate communist is a good oxymoron!

    [ Parent ]
    Buy software? (none / 0) (#34)
    by John Milton on Fri May 18, 2001 at 12:09:26 AM EST

    Little question for everyone? What software do you really buy? I don't "buy" software. I don't know anyone who does. There's too much freeware for me to ever buy softare for windows or for linux. Looking through the software I bought, I see a 3d world atlas, a digital library cd, corel wordperfect, french and spanish cdroms, descent, and B&W. Of all those Corel, B&W, and the digital library cd are the only ones I really wish I had bought. Every other piece of software I have came with some bit of hardware.

    Moral: It's hard selling services to people, because there will always be someone else willing to do it cheaper or better. Selling a service isn't like selling a product. It's more like running a restaurant. You better hustle, because there's some guy down the street trying just as hard as you and you don't have the exclusive right to make food.

    There is no market for baseline applications. Period. Think about the applications you use every day as an average user. Napster isn't commercial. That nifty chat program isn't. God help you if you were stupid enough to buy a shareware zip extractor. Where is all this commercial software that Windows is famous for? The home user brings no money to the table except in the arena of games and word processors.

    The real money market for Windows software has always been the business user with their multiple licenses. Photoshop? Graphics Design artist and Web Graphics Designers. Same for Flash and everything else Macromedia makes. Corel? Word? Every business in the world. Why did I buy Wordperfect? I have to type out reports, but I don't have to exchange them with anyone digitally. If I had to exchange them, I would have bought Word.

    Which leads us to the real cash cow of commercial software. Word documents. The Microsoft document format is the ultimate money maker. It's lock-in pure and simple. No business is ever going to change over to linux unless they can open and create word documents.

    Now tell me, why can the open source community not hack the word format. Is it really that hard? It's the only thing people really want. To be able to save word files and to be able to exchange them with other users. If anyone could actually create a word processor capable of interpreting and saving all of Microsofts formats, there's the cash cow.

    It's obvious to everyone that we need this. Why isn't there a project to completely understand the word formats? Yeah, I've heard the documentation is bad, but at least it has some documentation. Besides, I don't think that would stop someone who was a real hacker.


    "When we consider that woman are treated as property, it is degrading to women that we should Treat our children as property to be disposed of as we see fit." -Elizabeth Cady Stanton


    [ Parent ]
    What do I buy? (none / 0) (#46)
    by greycat on Mon May 21, 2001 at 11:36:09 AM EST

    What software do you really buy?

    Games. And not very many of them, either.



    [ Parent ]
    Reading/Writing word documents (none / 0) (#60)
    by richieb on Sat May 26, 2001 at 10:15:13 PM EST

    Now tell me, why can the open source community not hack the word format. Is it really that hard? It's the only thing people really want. To be able to save word files and to be able to exchange them with other users. If anyone could actually create a word processor capable of interpreting and saving all of Microsofts formats, there's the cash cow.

    Actually there are several projects that are working on this:

    MS Word format does not have to be "hacked". The format description has been published by MS - and few times I even found it on their web site.

    ...richie
    It is a good day to code.
    [ Parent ]

    Poor way to start a business (4.40 / 5) (#12)
    by ScuzzMonkey on Thu May 17, 2001 at 01:13:31 PM EST

    If you're really interested in starting a business and making money off it, you're starting at the wrong end--you shouldn't be looking at the tools until you know the product. IMHO, I think that's where a lot of the dot-com trouble started--a few geeks sitting around saying, "Wow, man, it would be totally cool to put a business together with all this neat technology." Not to say that the tech isn't worthwhile--it's just not where you should start. Come up with a model that makes sense and then figure out how to apply technology to it to make it better. Wanna use Linux? Great. But come up with a good business plan that doesn't rely on it first, or you'll be making it look bad by tanking like the rest.
    No relation to Happy Monkey (User #5786)
    Starting from tools makes sense as an advantage (4.00 / 1) (#32)
    by pavlos on Thu May 17, 2001 at 11:20:19 PM EST

    Although what you say is correct, you should focus on the product, wanting to start a business because you have some neat technology has merit if it gives you a competitive advantage.

    It is OK to say "We have invented better lenses. Lets's buld some optical instruments. Telescopes, cameras, whatever", so long as the advantage is real and outweighs the general barrier to entering the market. Typically a niche market (telescopes) is a better one to enter on the strength of technology than a commodity one (cameras).

    Every business has to have a sound economic case along the lines of "We will build A at cost X and sell it for X+Y. Customers will buy N per year because we can already point out M*N who need it". And so on. However, you need to also answer questions like "Why will we do better than the competition" or "Why will we succeed to enter the market"

    Given a basically sound economic case, driving a business plan by technological tools is perfectly valid, because it answers the competitive questions. What you must be careful about is that you really do have a valid economic case and that, in this case, Linux gives you a competitive advantage rather than merely levelling the market. Many Linux .com plans have failed on the latter aspects.

    [ Parent ]

    Developing solutions to non-existent problems... (none / 0) (#57)
    by Zapata on Sat May 26, 2001 at 10:45:48 AM EST

    ... is the wrong way to start out (I'm agreeing with ScuzzMonkey, here).

    I'm a consultant, but my partner and I have often wanted to develop software targeted at our market. What we're lacking is that 'killer idea' - the problem that needs to be solved, and can be solved by us with our available resources.

    With our current client, we can get away with solving problems they don't have. We see something cool we want to do, we make a little demo, and if we're lucky, *poof*; we've solved a problem they didn't know they had.

    Lucky us.

    But to go into business with the idea that you're going to 'work with Linux' without a clear idea of what problem you're going to solve will probably get you disappointing results.

    Executive summary:

    1) Solve a problem.
    2) Find people who have that problem.

    Conversely,

    1) Find people who have a problem.
    2) Solve that problem.

    "If you ain't got a camel, you ain't Shiite."


    [ Parent ]
    Magic Cauldron (3.50 / 2) (#14)
    by FelixTheCat on Thu May 17, 2001 at 02:30:28 PM EST

    One place you might look for ideas is Eric Raymond's essay The Magic Cauldron. You can find a link to it at http://tuxedo.org/~esr/writings/magic-cauldron/. In it, he lists some ideas for business models based around Open Source Software/Free Software. While I realize that Mr. Raymond is one of these "you-either-love-him-or-loathe-him" people, I personally think he makes some interesting points to think about in this essay.

    You can also get a dead-tree version of this essay in his book The Cathedral and the Bazaar available either on-line or at your local bookstore.

    heh... (2.00 / 3) (#17)
    by rebelcool on Thu May 17, 2001 at 05:14:05 PM EST

    esr is the last place i would look for advice on..well, anything. Anyone with a basic knowledge of business and economics can see basing a business off software you're going to give away is a pretty foolish idea that was riding the coattails of a booming economy.

    COG. Build your own community. Free, easy, powerful. Demo site
    [ Parent ]

    Business models. (4.12 / 8) (#16)
    by gblues on Thu May 17, 2001 at 02:37:54 PM EST

    I think trying to "sell Linux" or "sell Linux software" is a fallacious line of thinking. This would be like trying to sell merchandise at a homeless soup kitchen.

    Rather, the integration of Linux into a product, such as a retail POS system or embedded OS, is more likely to generate profit. By offering a pre-packaged product, you are offering convenience to the customer (who could put it together himself, but doesn't have the funds/time/interests) as well as support services for the POS equipment and software.

    There is no need to release the source to the POS software (if you write it yourself, anyway), and even if you do, you still have the advantage of offering the integrated package. The only changes you would need to release would be any kernel changes--and even then, you are only required to release those changes to your customers.

    As another poster mentioned, Linux lowers the barrier of entry. In a Windows environment, you'd spend over $1000 for the development tools alone, to say nothing of OS licenses for each terminal/device.

    But I think basing a Linux business off software alone is GPL suicide.
    ... although in retrospect, having sex to the news was probably doomed to fail from the get-go. --squinky
    Support is the way to go. (3.50 / 2) (#18)
    by enterfornone on Thu May 17, 2001 at 05:19:25 PM EST

    I used to work for a SCO reseller. We would charge a grand for the SCO licence and another $500 or so to put it on a machine and configure it the way the client wanted it (plus the licence for whatever proprietary software they run on top). Most of these people were small businesses with little or no tech staff, and certainly no Unix admins.

    Switching over to Linux would mean getting the OS for free and still making the money installing it. So as profit margins go it works out much better.

    We did do a bit of Linux and FreeBSD work, mainly installing mail server and net gateways, but it seems that most of the stuff SCO is good for (POS terminals, inventory, accounting etc) is not available on Linux - hopefully that will change soon.

    --
    efn 26/m/syd
    Will sponsor new accounts for porn.
    Linux requires support? (4.00 / 3) (#24)
    by andrewm on Thu May 17, 2001 at 08:39:58 PM EST

    And this is different from, say, Windows, how? :) There's a lot of companies making their money from supporting windows.

    I'ld love to think linux was perfect, but you're right: it's complex, and that doesn't look like changing any time soon. As more and more companies start using linux, the need for support will increase.

    For an end user, linux and windows are about the same complexity. The biggest difference is that windows comes already installed, and linux just comes on a CD (or is downloaded, if you have enough bandwidth.) Having done computer tutoring, I've seen a lot of people who can use windows fine, and could have been trained to use linux just as easily, but would be unable to install either OS from scratch, and have no interest in learning to install an OS> (I know, people keep telling me how easy linux is to use, and how it's all automated - I agree it could be worse, but it could be better, too. and most people don't have any need to know how to install an OS - spending huge amounts of time learning it just doesn't make sensem when it can be done for you for a reasonable fee, freeing your time to do things that you are interestested in.)

    Linux isn't free as in "no cost" . It's free as in "you're not tied to one vendor, and if one company isn't up to scratch, they can't stop you going anywhere else." (question: why is linux considered to be a threat to microsoft? in case you're wondering, technical quality is not the big issue - windows actually is good enough for a very large number of companies, no matter how much you personally hate it :)

    I can see a market for custom linux software existing. GPL or open source is great, I'm sure, but throwing a list of requirements onto the net and waiting for perfect software to just appear means you'll be waiting a very long time. If the perceived benefits of using the GPL (eg: increased options for support) outweigh the perceived cost (loss of control) then custom software can be developed for profit, and still made available under the GPL. If not, custom software doesn't _have_ to be released under the GPL - it just has limits on what existing code can be reused.

    To be honest, I'm not yet convinced one way or the other - I happily support the GPL as it encourages sharing, while providing legal protection against people taking and not contributing. However, I'm still waiting to be convinced it will work commercially.

    The biggest issue I have is that the GPL covers code and documentation - but design takes a significant part of development time, and I have yet to see how the GPL helps that. (Most GPL s/w is "designed" by accident, and can take a long time before it reaches a truely useable state - and this is less than ideal when you have specific needs to be met.) Providing advice on what software can help with specific problems will always be valuable - whether you identify existing software, or design new programs.

    If nothing else, hopefully some useful ideas will pop up in this discussion.


    Support is OK (3.80 / 5) (#29)
    by sigwinch on Thu May 17, 2001 at 10:17:48 PM EST

    Now LinuxCare and its ilk scare the living daylights out of me, and should set off alarm klaxons in the minds of anyone considering Linux. LinuxCare makes its money providing support for Linux. If Linux were perfect, or nearly perfect, there would be no need for outside support. Things would be smooth and intuitive. The tiny percentage of people needing help with complex or low-level tweaking would not go to a company like LinuxCare for assistance.
    Tiny percentage?! Anytime you have ten or twenty million lines of general purpose, totally configurable code, you are going to have the possibility for subtle problems and inefficiencies. Unless the software is deliberately hardwired and simplified, there will be the need for support.

    --
    I don't want the world, I just want your half.

    Re: Support is ok (none / 0) (#49)
    by oolon on Wed May 23, 2001 at 07:50:44 PM EST

    You miss one other thing about support, the easier the system gets in terms of administration, and we are with linuxcare talking about administration support. The more it will open up to the market of more "stupid" aka Non computer Geek people, these people will require a different kind of support, for example my dad aways gets me to install his anti virus software! So as a result support will not go away, the kind of support required will just change. I believe infact this would mean a greater need for support rather than less.

    James

    [ Parent ]
    Sell hardware, like Apple (4.00 / 3) (#33)
    by pavlos on Thu May 17, 2001 at 11:49:06 PM EST

    I also believe that the way to make money off Linux is mainly by selling some hardware product that requires an OS, and using Linux as a high quality, low cost component.

    Even Eric Raymond would agree :-) that the main value of Open Source software is its use value and not its exchange value. Therefore, the general recipe is: try to make money by using, rather than selling, Linux.

    The most successful example of such a product would be Apple and OS-X. Granted, it does not use Linux, but it uses another open source Unix as its foundation. It could just as well have used Linux in the same way.

    This example brings up the classic questions: Is apple a hardware or software company? Could it release Mac-OS (OS-X) for PCs? I think at least in principle it could. But hang on, that would then be an example of selling superior software (OS-X) on top of a standard Unix, without a hardware tie-in.

    I think that one could sell on top of Linux a superior high-level operating system for PCs that makes the user's interaction with the computer much more pleasant and productive. Such a system would lose painful concepts such as files and applications and perhaps behave more like a PalmPilot.

    The cost of such an undertaking would be enormous, which is why I would only expect Apple, which is also coincidentally a good hardware company, to have enough creative engineers to do it. Even with a large company such as Apple, using Unix as a base is significantly more cost-effective than designing a proprietary kernel themselves.

    Pavlos

    Indirect profits - service industry (4.33 / 3) (#35)
    by GiTm on Fri May 18, 2001 at 03:14:40 AM EST

    What about basing a service oriented company on Linux? Web hosting, ISP, etc - many of these companies already use Linux or FreeBSD to drive their hardware and are quite happily making a profit - not from selling, supporting or distributing Linux but from using it.

    What about using Linux as a component of your system - I remember reading a while ago about a version of Oracle that included a Linux kernel and simply installed and ran without needing any other OS or support software. I'm not sure how true this rumour was though.

    I personally have been looking into Linux as a distributable games platform. Make your game available on a bootable CD with a Linux Kernel and appropriate drivers to make playing a game on a PC as easy and as simple as playing a game on a console (put in CD, turn on, play). Obviously a bit more complicated with the wide and varied PC hardware out there though.

    Linux is a tool and any carpenter will tell you that you can make more money using a hammer than selling one.

    gitm.
    --- I have nothing funny to say here.
    Some ways... (3.75 / 4) (#36)
    by jd on Fri May 18, 2001 at 10:47:20 AM EST

    • Sell hardware, give OS for free. (IBM's early sales model. They didn't do too badly from it, either)
    • Sell Value-Added software and/or hardware. Linux is great, for "general purpose" stuff, but all the mainstream medical and scientific software is written for DOS or Windows. Usually DOS.
    • Give the basic software AND the hardware for free (to inflate the Linux market), then sell "popular", non-GPL Linux programs.
    • Sell "awkward-to-roll" configurations to specialised markets. eg: SELinux, MOSIX and IPSec will NOT merge, without some serious work. None of the regular distros sell such configurations, so you've no real competition.
    • Sell embedded Linux systems, eg: as burglar alarms, automatic pet feeders, automatic oil changers, etc. The more novel the market, the better, especially if Linux' stability can become a selling-point.


    I still don't see a good answer... (3.00 / 2) (#61)
    by ghjm on Sat May 26, 2001 at 10:48:49 PM EST

    Sell hardware, give OS for free. (IBM's early sales model. They didn't do too badly from it, either)
    Yep, good, if you're a hardware manufacturer then this is worthwhile for you - essentially, you nuke the whole software business ("cut off its air supply") and gain lock-in/monopoly control of the customer base based on their hardware, not software choices. RMS might not like it, but even RMS hasn't proposed that equipment wants to be free. End results: Programmers who want to eat wind up working for a small number of hardware companies.

    Sell Value-Added software and/or hardware. Linux is great, for "general purpose" stuff, but all the mainstream medical and scientific software is written for DOS or Windows. Usually DOS.
    Either you keep it closed source, in which case you get nasty letters from RMS, or you make it open source, in which case you get nasty letters from your landlord.

    Give the basic software AND the hardware for free (to inflate the Linux market), then sell "popular", non-GPL Linux programs.
    Same as before. You've abandoned free software principles by selling closed source software. So why do you want to be on Linux in the first place? If you don't believe in open source/free software, Windows is a better market.

    Sell "awkward-to-roll" configurations to specialised markets. eg: SELinux, MOSIX and IPSec will NOT merge, without some serious work. None of the regular distros sell such configurations, so you've no real competition.
    Either you find some weasel-argument that lets you get away with not GPLing your mods to GPLed software, and get really nasty letters from RMS, or you're back to arguing with your landlord.

    Sell embedded Linux systems, eg: as burglar alarms, automatic pet feeders, automatic oil changers, etc. The more novel the market, the better, especially if Linux' stability can become a selling-point.
    But at this point nobody cares that it's Linux. Whatever you're selling, you have to sell on its merits. It's only one step away from, say, the Burlington Coat Factory business - sell apparel and run your cash registers with Linux. You really can't say this is an open source business model.


    In the closed source world, a lone programmer can set up shop, develop some software, work at marketing and selling it, and - if everything goes just right - pay the rent and maybe even hire another programmer. The question at hand is: how is this possible in the open source world? Suppose I spend the next six months writing LINABM (which stands for LINABM Is Not A Better Mousetrap). Maybe I rang up some credit card debt, maybe I just burned through a bunch of savings, but either way I really need to see some return on this effort. Suppose it turns out that there are a few hundred thousand people who need LINABM and they are all willing to pay $20 for a copy. Great! But they certainly won't pay a cent if I set my asking price at $0. Closed source means that if I can find a way to communicate to these people that the software exists, maybe I break even, and there's a small chance I might even turn a profit. Open source, in this situation, means I gain hacker cred and some prime real estate in the noosphere, I can walk into any LUG and gain instant friends and admirers, I get all the ego gratification I can stand, maybe I even get some reasonably attractive job offers...but there's that darn landlord after me again.

    I know someone who was recently laid off from Nortel. This is exactly the choice he is facing: Get a job, or write software and try to start a business? I've been racking my brains on this, and I can see no possible way for a small firm to launch successfully by releasing GPLed code to the world. As per all of your suggestions above, the only way to make money in an open source environment is to make the money on something else - which doesn't really help you if the business you want to be in is software.

    Maybe someone else in this topic will have a brilliant idea, but I've been scouring the Web and I haven't seen any yet...

    [ Parent ]

    Offshoot of the pay-hardware free-os idea (4.00 / 3) (#44)
    by Paradocis on Sun May 20, 2001 at 12:23:15 AM EST

    How about creating distros matched and optimized to specific (high volume)OEM configurations out of the box? Particularly in laptops, and low cost machines (e-machines comes to mind) where all the hardware is "integrated"; drivers, configuration, and optimization can be horribly painful. You could then sell these custom pre optimized distros to the OEMs, and possibly offer additional OS trouble shooting on supported systems to the customer.

    Just a thought.


    -=<Paradocis>=-
    +++++++++++++++++++++
    "El sueño de la razon produce monstruos." -Goya
    +++++++++++++++++++++


    OSS doesn't need to make money (3.33 / 3) (#45)
    by jesterzog on Sun May 20, 2001 at 05:26:51 PM EST

    Why does linux, or any open source software, need a business model? And why does someone need to make money off it in any of the ways you're proposing?

    Businesses don't have to be making money from open source in order to use it in their day-to-day business. If they want a product that will do something, and an open source app is available, then they can use it.

    I'm sure there's some room for service models if it's done right, but open source was never intended to make money. If it was, it wouldn't be given away. It was intended to make good software so that people, and therefore businesses, could use good software, with the side effect being that they might make money out of completely different things.

    If businesses need to be convinced of anything, it's that open source (linux included) is often a good alternative way of conducting their business. Isn't that a good enough reason in itself for some business to consider supporting and contributing to OSS? Trying to directly make money off open source itself just seems wishful thinking, though.


    jesterzog Fight the light


    the way you describe it (3.50 / 4) (#48)
    by speek on Mon May 21, 2001 at 04:01:08 PM EST

    it sounds as though open source software is a business model that is out-competing all for-profit business models that try to compete with it. I find that insight extremely interesting. Basically, you can't develop a for-profit business model that will be able to compete. The only alternative is to develop a business model that doesn't compete with software, but rather, complements it. Support (will only take off when large companies start to standarize on Linux), hardware that run Linux stuff, and once-off custom software are the only alternatives that I can think of off the top of my head.

    --
    al queda is kicking themsleves for not knowing about the levees

    Paying software companies what they deserve (3.71 / 7) (#50)
    by MyrdemInggala on Fri May 25, 2001 at 01:30:49 PM EST

    First of all, I would like to explain the reasoning behind my ideas by summarising my thoughts on the subject of selling information.

    I don't think that information can be owned, and ethically I'm all for open source software and the GPL.

    Now, I agree that people who write software deserve to be rewarded for their efforts. What I don't agree with is the widespread assumption that they have right to make money per copy of the software distributed, and charge as much as they like.

    Burning a finished product onto CDs is not work - it costs nothing but button-pushing time and the price of blank CDs. Therefore, if I purchase a software CD or download a copy of a piece of software from the internet I don't feel obligated to pay the software company the vast amount of money which it usually expects me to pay.

    Software writers should be paid for writing the software. That is the work they do. They should be devising business plans based on this idea.

    This leads me to a proposal for a software business model. I realise that it is not really a viable option for large projects like operating systems, GUIs and the like, but I think that it would work very well in, for example, the world of scientific research, where smaller programs with more obscure functions are in demand by a relatively small number of people.

    My idea is for a company to make programs to order, and then release them under the GPL. It would charge, once, the party that placed the order. After that, the software would be freely available.

    "Now hang on," I can hear people say, "Why would someone pay to have software written if everyone else will be able to get it for free?"

    My pre-emptive response is - why should they care what other people pay for it? They need a piece of software. They pay someone to write it. They receive what they paid for. I think that the condition that the software must then be GPLd is an entirely reasonable one compared to the conditions that come with your standard closed source software.

    Buying this kind of software means that you don't have to pay for licences - you can install it on as many machines as you like without paying anything. You can make modifications to the code if you can program. If you can't, you are not obligated to go back to the same company to have modifications made - you can hire anyone you like. These are really very good terms.

    A similar informal system is already in place. Researchers frequently hire students to write strange little programs, and these programs are almost always open source because it just isn't worth trying to sell any copies of them. This is the only way that code this specialised can be written.

    I think that this system can be extended to a larger scale, and used by small companies to sell larger pieces of software.

    I would appreciate it if someone pointed out any companies that already do something like this. I haven't heard of any.

    Just a thought...



    -- 22. No matter how tempted I am with the prospect of unlimited power, I will not consume any energy field bigger than my head. -- Evil Overlord List
    It's been tried (5.00 / 1) (#53)
    by fluffy grue on Sat May 26, 2001 at 12:44:29 AM EST

    This was how SourceXChange was intended to be. Unfortunately, they didn't make any headway before abandoning the project. I think it still has potential, though, it's just that a lot of their legalese was written in a way which scared the potential programmers (and employers) off.

    Personally, I think I'd love to make some extra cash doing that.
    --
    "Is not a quine" is not a quine.
    I have a master's degree in science!

    [ Hug Your Trikuare ]
    [ Parent ]

    Three words (5.00 / 2) (#58)
    by cooldev on Sat May 26, 2001 at 02:49:25 PM EST

    Economy Of Scale.

    You're repeating what I consider one of the biggest fallacies of the open source community, and that is that the first person that wants XYZ software can pay the entire up-front development cost, get the software, and then not care if everybody else gets it too.

    This fails in both horizontal and vertical markets. It fails in horizontal markets because high quality nontrivial software often costs hundreds of millions of dollars to develop. This is feasable today because a large number of customers are able to collectively absorb the cost. The low reproduction cost of software means that the number of copies sold translates directly to the profit margin. This is why Microsoft is successful.

    It fails in vertical markets because software taylored to a specific company or industry gives them a competitive advantage. The first company can't afford to put up the entire research and development cost, only to have all of their competitors get it for free.

    I suspect that most of the people repeating this myth are either students or not directly involved in the software industry. The reality distortion field distorts both ways.



    [ Parent ]
    Three other words (none / 0) (#68)
    by bignose on Tue May 29, 2001 at 10:27:04 PM EST

    Effective Code Reuse.

    high quality nontrivial software often costs hundreds of millions of dollars to develop.
    Such software is never developed and delivered all in one fell swoop; it is developed in stages, each re-using and re-working the code that went before. With the ability to release the result under the GPL, companies would be free to use all the existing GPL software out there instead of coding huge parts from scratch or paying proprietary library royalties.



    [ Parent ]
    or a proprietary add-on (3.00 / 1) (#62)
    by Delirium on Sun May 27, 2001 at 03:47:58 AM EST

    If you write something proprietary that really is amazing, then you wouldn't have the problem of "well I could just download the ISO or copy it from a friend" (except for piracy). Of course the main problems here are not running afoul of the GPL, and competition for non-proprietary Linux stuff. But it is possible to succeed from this angle if you create something really amazing, so much so that many people will buy your product simply because it's so much easier-to-use/more-functional/etc. than the competing Linux distributions.

    Caldera and a few other companies have tried this, but none have really added a great deal of value, IMHO, so they haven't been extremely successful.

    It should be the other way around (3.80 / 5) (#63)
    by Fred_A on Sun May 27, 2001 at 08:45:17 AM EST

    I think the article looks at the problem backwards. The question shouldn't be how to make money off of Linux but how to make money in IT while using Linux.

    If you run some kind of consulting shop as I do, you'll view Linux not as an end but as a tool. As such it's sufficiently versatile that you can use it almost everywhere, but it's still a tool.

    Let me take a real life example. Company X calls me because their LAN talks to the outside via ADSL through some kind of Windows Proxy. The whole thing is flakey, has to be restarted fairly often and they want it replaced.
    So I got in, removed NT, installed Linux, NAT, diald, mail services and a basic firewall. As a result, the thing worked flawlessly and they never had to touch it again. They just forgot about it and focused on their work.

    Here my point wasn't how can I sell them Linux but how can I solve their problem with the tools I have. It just happened that, as is often the case, Linux was a perfect tool for the problem.

    Now I know I typically won't do any Windows work (except when there are Windows client stations) because I'm not interested enough to keep up to date with Windows, so I'm pretty much running only on Linux and *BSD.

    Does this mean I am making money off of Linux ? IMO not really, I'm making money off of my general IT knowledge and just happen to use Linux as my main tool.

    More generally, I think there are just 3 ways to run an IT company with a chance of success while relying mostly on Linux:

    Support
    Everybody needs support. Every OS needs support. Even Windows users need support. Like everybody, Linux users need support. And of course, your own setups (the ones you've sold previously) require support too.
    Generic consulting
    Whenever you deploy a solution for a customer, you can base it on Linux. Savings for everybody.
    Software
    If you can identify a niche where there's a need and no solutions, write a piece of software to fill it. Here in France, I know I'd love to find a decent accounting package that runs on Linux. I'd be ready to pay a good price for that.
    All the other suggested approaches, reselling software and creating distributions are already crowded. Getting in would be extremely difficult.

    As a final word, one thing suggested in the article might be worth considering: drivers. Prospect with all the hardware companies and offer to write drivers for them (distributed as source or binary, whatever) under the proper NDAs or whatever. I think the main reason behind the lack of drivers is that the hardware companies don't know Linux, and don't want to build Linux epertise for a market that's still small. But if that was offered from the outside. Picture a kind of Loki focused on drivers. I think that would have a fair chance of working out.


    Fred in Paris

    Maybe not GPL... (none / 0) (#64)
    by costas on Sun May 27, 2001 at 12:41:24 PM EST

    I don't want to start a flamewar, but it seems to me that the article is pointing out problems with businesses based on selling GPL software, not "open-source" software.

    I am thinking of the example of Python: python is a great open-source language, but its license is more BSDish than GPLish. As a result, it has companies (and government labs) backing it up, paying developers to work on its development (because advances roll back in to their proprietary python-based products) as it's in their own advantage to keep the language popular, and in fact make it more so (more trained developers for their own use, more external libraries, more advances in a core component of their own product).

    What the Free Software movement has really proven, IMHO, is that keeping the source open makes great engineering sense. I think businesses are taking this lesson to heart and adapting the practices around it. In that respect, sooner or later, it's possible that most software development uses free software/open source engineering ideals, if not political ones.

    Now, basing business on GPL code, I think that's an entirely different matter.

    memigo is a news weblog run by a robot. It ranks and recommends stories.
    Linux is only a tool (4.50 / 6) (#65)
    by cafeman on Sun May 27, 2001 at 07:16:52 PM EST

    Someone else has probably already said this, but Linux is only a tool. You want to make money, figure out what people want.

    Business don't care what product they use - they use whatever they feel will give them the biggest advantages with the lowest total cost. These guys are where the big money is. If you want to go into business, don't build your model from scratch around Linux (unless you can come up with a damn good model). Figure out a model that works, then see if Linux fits within that model. Here's an example. Would you say:

    I want to start a business. Gee, I like hammers! What business models can I think of that will make me money and are focussed around hammers?

    Sure, it'll work if you can make a hammer better than the next guy or offer services that go along with that hammer better than anyone else. But with the GPL, any innovations you make to that hammer will be copied by every other hammer maker out there. Your services may form a business model, but wouldn't you work with a bigger market if you also offered the services of a wrench, a saw, and a ruler? Now, you can build anything ... before, you could whack things.

    Fit the tool to the job. Linux is just a tool. Like I said, figure out what you want to do and then see if using Linux in that model is better than anything else. Setting up a business around Linux because it's "trendy" or "cool" is just setting yourself up for Chapter 11. Look at the dot.com bust.

    If your point was to show the pointlessness of business models revolving around Linux, you've done well. If it's not proprietary, it's hard to produce a differentiated good. Hence the problems with Linux business models. One potentially successful model is that of a consultant, where Linux forms one service offering. To be good though, you'd probably need to offer other solutions as well. But then you're getting into alliance problems etc. Coming up with a good profitable business models is hard work :).

    That's about all I can think of. Insert the usual disclaimers here



    --------------------
    "No Silicon heaven? But where would all the calculators go?"


    How about this? (none / 0) (#67)
    by cr0sh on Mon May 28, 2001 at 09:59:15 PM EST

    Not sure if this would work well with the GPL or other open source licenses (so if it don't - please enlighten me!)...

    Why not sell "package install distros" - have a license that says that while the packages contained in the distro are open source, free to distribute, etc (basically, according to the individual licenses), the installation system used by the package install distro isn't, and can't be copied or used in any "outside" manner.

    Find packages that are good and easy to install, that install right (by those who know ./configure, make, make install) - but add a front end to select packages - that does all the "behind the scenes" stuff - look for the feature rich stuff (the cream of the crop), drop it on distro CDs with the license (so if you want the easy install, you have to purchase), and the simplified installer frontend...

    I don't know if this would violate anything - I don't think it would - as long as you wrote the installer from scratch yourself, without using any GPL'd code, etc. It would be a "service" type business - you would be scouring the net looking for the best programs for the distro, and releasing new distro versions every now and then - so it would be like a search service, in a way, and a packaging service. However, no one but you could provide the install images (CD-ROM, dl'd ISO, etc)...

    Does this sound like something that could be done, or would there be licensing issues (like I said, I don't think there would be)...

    Already sort-of done (none / 0) (#70)
    by cafeman on Wed May 30, 2001 at 07:12:35 PM EST

    You'd have a to do a remarkable job of it, because Mandrake and RedHat are already trying to do this for free. Mandrake 8.0 comes with a package manager that's better than the Windows control panel.



    --------------------
    "No Silicon heaven? But where would all the calculators go?"


    [ Parent ]
    Hmm... (none / 0) (#72)
    by cr0sh on Tue Jun 05, 2001 at 04:10:06 PM EST

    I am thinking Mandrake will be my next (ok, maybe the next after the next - I figure Yellow Dog will be the next, since I have a PowerPC machine lined up to install on)...

    But what I was thinking originally was you would be selling the service of looking for the "cream 'o' the crop", so to speak - you would look for the best packages, out there (and hey, maybe you could use the Redhat or Mandrake installer - then you would be selling a service - rather than software. Nothing against the GPL there), package them up on a CD or distro of some sort, and sell that?

    [ Parent ]

    Sort-of OT: Mandrake and package rating services (none / 0) (#73)
    by cafeman on Tue Jun 05, 2001 at 07:00:18 PM EST

    Mandrake is impressive ... I used to use RedHat and Caldera, but Mandrake 8.0 takes the cake. Helps that it comes with XFree86 4 (anti-aliased fonts), KDE 2.1 and the Gnome 1.4. That and the font manager makes setting up truetype fonts a breeze. I've heard RedHat 7.1 is good, but I've had no difficulties with Mandrake so far (but used to have a few misc difficulties with RedHat 5.0, 5.2, 6.0, 6.1 and 6.2 ... no show stoppers though). Haven't used Yellow Dog, but that's because I don't have a PPC.

    Back on topic now, I think classifying packages as the cream of the crop is difficult. My experience is that most packages offer different advantages and disadvantages (tradeoffs between speed, features, space, and usability). What may be cream of the crop to you might be far too hard for the next business. Having said that, there may be a market in providing an easy to use interface in categorising and installing all the different packages out there (rating them across a series of core features). But, considering most businesses will only install a few core services on each server (eg database, user account management program, print server, etc), I doubt they'd make regular use of the service. I'd imagine they'd be more interested in a service that automatically keeps their programs up to date (apt-get or the RedHat premium service).

    I don't think home users would be interested in paying for such a service, as it's addtional money and most home users don't want to install heaps of packages on a regular basis. But, I could be wrong :)



    --------------------
    "No Silicon heaven? But where would all the calculators go?"


    [ Parent ]
    Linux-related business plans | 74 comments (70 topical, 4 editorial, 0 hidden)
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