Monday, May 25, 2009

Monetizing Open Source - The Framework For Success

I was asked on my blog regarding open source by Mabimal on April 17, 2009 at 05:49 AM EDT the following: 

Hello Dave,
It's nice to update my knowledge on open source, but i m always eager to know how do open source project get revenue. Can you please provide the details on that?

Mabimal, sorry for taking twelve days to address the real key point of open source. I should have taken the time to address it as part of the initial posting, but then thought I would do it separately. Since the 17th, things have changed for Sun Microsystems, but my core belief in the importance of open source and how we need to frame open source monetization has not changed.

First, my early thinking on open source has been largely shaped by Scott McNealy, Bill Joy and Rob Gingell. My thoughts on open source monetization has been largely shaped by Rich Green and the two founders of MySQL - Monty Widenius and David Axmark. I really believe that Rich Green was on the exact right track prior to him leaving Sun. 

Prior to Rich leaving, he was in the process of standardizing our software strategy much like MySQL had already put together. My personal belief is that it is absolutely critical to have the Dave Edstrom 4 Cs as I like to call them:
  1. Clear
  2. Concise
  3. Compelling
  4. Consistent
Consistent is the most important to really drive volume. You can not have each Product Manager rolling their own strategy. That will just confuse the marketplace. The marketplace being customers, partners, developers, employees, ....

Below is the high level monetization framework that MySQL used. You create a community or platform with your free Community Edition. You support your Community Edition with a binary, for sale Enterprise Edition that emphasizes the unique vertical markets or massive scaling aspects that customers are willing to pay for. I have heard the founders of MySQL say this countless times. Of course, there are professional services that can go along with this.

Something that MySQL did was list the questions to determine whether or not you or your company should go with the Community Edition or the Enterprise Edition. This really helps the individual determine their own skill sets and and needs. Please see below:

The image below is what is commonly called inside Sun, the Rainbow or Donut Blue Print for Open Source Monetization. The key to this is that the light green is the community version/edition and the orange is the Enterprise Edition. The Enterprise Edition is based on a revision of the Community Version, but also has the massive scaling, industry specific addons , 24x7 support, best practices, hot fixes and enterprise monitoring that large enterprises will want/need **IF** they do not have the in house expertise. My personal opinion is if you think you will make all your money off professional services and indemnifcation, you better go back and do some more financial modeling. Speaking of Professional Services, this is predicated on having a strong support and services organization.

I believe that we will see another layer to this model and that is cloud services. You can not simply throw your applications into a cloud and think you now have a cloud. That is like putting a 638hp Chevrolet Corvette LS9 ZR1 engine into a Vega and thinking you now have a sports car :-) More on adding the cloud layer to the donut or rainbow later.

Hope this helps Mabimal ....

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