Language Selection

English French German Italian Portuguese Spanish

Open-source companies chase steady money

Filed under
OSS

When entrepreneur Byron Sebastian started his company last year, he set his sights on the business software industry's ultimate cash cow: maintenance contracts.

Rather than charge large up-front fees for a product, his company, SourceLabs, will try to siphon off some of the millions of dollars corporate customers earmark for support. Like a growing number of start-ups, Sebastian's weapon of choice is open source.

The spread of open-source software, which generally is freely available, allows smaller companies to compete for maintenance money that until now has been locked up with incumbent software vendors, he said.

"Open source creates a competitive market for support and maintenance contracts," Sebastian said. "For the first time, you can build a successful business by being great at that, rather than just being mediocre."

Many industry veterans argue that open source is accelerating a shift that has been going on in the software industry for some time: Rather than hinge their business on big-ticket license contracts, software providers increasingly rely on recurring maintenance revenue.

And because most open-source tools don't have license fees attached to them, commercial open-source companies are often forced to build their businesses around services revenue, in the form of support, up-front installation or training.

With this model, purchasing software is more like committing to a yearlong cell phone contract--and less like buying a car with a large cash outlay and making regular payments later.

Although upstart open-source companies are relatively small and untested, the services-led business model reflects how more value is being attached to follow-on services than the actual the software, analysts and industry executives say. In fact, this week, industry executives at the Open Source Business Conference in San Francisco will consider the impact of open-source products on how software is acquired.

Full Story.

More in Tux Machines

Wayland in Fedora 23 Linux Allows for Use of Multiple Monitors with Different DPIs

Fedora Project, through Christian Schaller, was proud to report on the progress made for the next-generation Wayland display server that it might be used by default on the upcoming major release of the Fedora Linux operating system, Fedora 23. Read more

GNOME Developers Discuss Codenames, GNOME 3.18 Might be Dubbed "Gothenburg"

Allan Day, a GNOME UX designer working for Red Hat and renowned GNOME developer/contributor, opened an interesting discussion on the official GNOME mailing list, about possible codenames for upcoming releases of the acclaimed desktop environment for GNU/Linux operating systems. Read more

Developer lowers Drupal's barrier to entry

From a consumer perspective, I'd like open source to be ubiquitous to the point of invisibility. Using recent Ubuntu distros, I'm always shocked at how professional the environment feels. Just five years ago, you'd need to hunt down drivers and do a bunch of fiddling to get basic things like a sound card working. Now there are so many pushbutton ways to deploy open source tech, from OSes to CMS distros on Pantheon to buying an Android-powered mobile phone. We're not quite to the point where CMS users can feel like open source is transparent; there's still a huge investment in vendors to give you the expertise to manage your Drupal or WordPress site, for example. But we're closer than we were a decade ago, and that's pretty exciting. Read more

Intel invests $60 million in drone venture

Intel is investing $60 million in UAV firm Yuneec, whose prosumer “Typhoon” drones use Android-based controllers. Intel Corp. CEO Brian Krzanich and Yuneec International CEO Tian Yu took to YouTube to announce an Intel investment of more than $60 million in the Hong Kong based company to help develop drone technology. No more details were provided except for Krzanich’s claim that “We’ve got drones on our road map that are going to truly change the world and revolutionize the industry.” One possibility is that Intel plans to equip the drones with its RealSense 3D cameras (see farther below). Read more