May 19, 2004 4:30 PM PDT

Open-source companies see profit aplenty

SAN FRANCISCO--It's easy to make money giving away software--just don't give away too much of it.

That was the upshot from a group of open-source software executives at the Software and Information Industry Association's Enterprise Software Summit, with panelists saying there's plenty of room for profit in Linux and its siblings.

One of the keys for MySQL in building a profitable business from its open-source database products has been to offer a variety of licensing plans, said Zack Urlocker, vice president of marketing for MySQL. Folks can still get the software for free by agreeing to an open-source license that commits them to sharing any enhancements they make to the software. But many businesses would rather pay for a license that allows them to keep their work.


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"We actually make our money very much similar to a traditional software company; most of our revenue comes from licensing," Urlocker said. "We have a quid pro quo licensing policy--if we're free, you're free. The flip side is that if you don't want to publish your source code, you can pay for a license that allows that."

The mix of license models has been controversial among open-source believers, but Urlocker said it's vital to MySQL's success. "We're not a religion, we're not a cult, were not a charity--we're a business," he said. "There's always going to be grassroots people...who see open source as a free ride, but there are corporate customers who are absolutely willing to pay for reliability, flexibility, support."

Matt Asay, director of Novell's Linux business office, agreed that flexible licensing terms, along with support and services, are important for making a business out of open-source products.

"The perception has changed--people no longer feel like they're going to get something for nothing," Asay said. "But they're paying for something different. (In the case of licensing), they're paying for something that gives them freedom."

"Linux is a way of bringing the total cost of the (software) stack down," Asay continued, "and that's the big motivator for a lot of businesses investigating Linux, but there's still plenty of money to be made there."

It also helps to not be a purely open-source company, said Steve Gerdt, program manager for open-source strategy at IBM. While Big Blue is amid a major Linux push, the company stills sells a lot of proprietary software, much of which gets integrated into Linux environments, he said.

"A lot of people talk about open-source versus commercial, but they're not mutually exclusive," he said. "Don't view it as an all-or-nothing prospect. Open source behaves nicely with proprietary software. Figure out the right mix for your business."

 

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