Todd Barr (Director of Marketing at Red Hat) has a great post about open-source revenue mechanics and how they shift as an open-source company becomes an established player. Net net: giving away free software is great for driving adoption, but an open-source vendor needs to figure out more than how to give things away to build a great business.
Sound simplistic? Just try it. Sexy as open source is, you spend far longer ramping revenue (revenue, mind you, not bookings/sales) to cover expenses than you would in a typical proprietary license-based software model, as Todd points out. I've argued that open-source startups have benefits that proprietary vendors can't match (a focus on ubiquity, for one thing, and the attendant benefits that derive from "abundance"), but it's not easy sailing.
So, start-up open source companies necessarily need low-cost, high-impact marketing tactics. And, by golly, providing awesome software to download for free is a great tactic - it drives a lot of web traffic, builds your brand, helps you get your early adopters, and quickly builds a community of advocates that might buy your value-added services in the future. But the free download tactic is less relevant to the challenges of a mid-sized company:… Read more