...of SpikeSource, an open source services provider that landed investment this year. For that reason, she sees the growing interest as a healthy development, rather than a speculative bubble.
"I see serious, well-grounded interest and a realisation that if companies aren't using open source, then they probably aren't managing their business wisely. If that's the case, that means there's a huge demand for open source software and business models," Polese said.
Open source practices are firmly entrenched in the software industry. Alongside tiny start-ups, established providers from IBM to Microsoft are seeking to capitalise on open source products or replicate the collaborative approach used in their development.
But the business model has its limits, said Skok of Matrix Partners.
Skok, who led investment in open source Java software provider JBoss, said he recently passed on funding a business-intelligence start-up. One problem was that it didn't have a sizable open source community behind it.
A strong community of users can contribute bug fixes if the product is developer-oriented or provide feedback on desired features, executives said.
Perhaps more significantly, an active community of users helps sell revenue-generating products and services. By giving away entry-level products, potential customers can try out the software without a long, complex sales process. That dynamic can dramatically lower the cost of sales and marketing for a provider.
SugarCRM, for example, does not employ direct sales people, who are typically highly paid. Instead, the users of its open source product are the primary source of sales leads, chief executive John Roberts said. A smaller sales and marketing budget allows it to divert its resources toward engineering, he added.
There is a drawback. By the same token, open source companies can be slowed if an active group of customers switches to another product, said Winston Damarillo, the chief executive of software developer Mergere.
Other questions
There are questions about other aspects of the open source business
model. For example, if a company relies entirely on services revenue,
it is likely to need to have a high-volume of customers, analysts said.
By contrast, small closed-source providers can get off the ground
serving a small number of customers with expensive products.
"There are many open source business models, and...
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Talkback
These are not right. Let the minds free.
Microsoft is supporting and instigate ZD.Net and other to open minds. Microsoft and others are all against the technology and humanity. They just suck our bloods and so our money.
If open-source code project develop very well(it seems as it) the IT technology will go further.
Microsoft INTEL AMD and the all others are against the technology, they are just thinking about the money. while doing this they exploit the open mind and smart people in are of poor countries such as turkey, indian, china .
Open your mind & Open your source
Recai, try to take it easy right!
Open source is still confusing... Who is supporting? Who is back of it? Tell me about this. Microsoft is still the giant of software and/or op.systems. They do their best. I think you should get all info, and forward your opinions here last...
Yeah! They do their best to suck your money from your beatiful country.
Microsoft is a micro soft.
Nothing is better than open sources. Never will be.
this is childish!!
microsoft is a company that has made huge sucess out of the computing world, such huge profits boil down to one thing the correct organisation and planning ,
Sucess is made at the work desk not at at high street shops or the like but if you have got sucess at the desk you'll have outcome of sucessful profit
microsoft have not thing agains't the use of Opensource software or so I belive..
futhermore on the note of questions being posed about opensource software.
who is in control?
everyone and anyone, instead of companies it is the public that write the programs, it the public who manage the opensource nework.
it the public people like you or me, it the public fix the bugs and write the fixs.
Opensource is movement for free software.
not free in the sense of cost but bing able to modify and expand the programs to your needs.