Profiting from open source -- without selling out

Here are 8 business models for balancing openness with revenue

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Open source business model 5: Sell hardware
The biggest devotees of the more prominent open source software movement have always been the hardware companies. Whether they're looking to bargain with Microsoft by releasing Linux netbooks or building the guts for products like the TiVo, hardware companies love open source software because it lowers the cost of getting their products out the door.

Linus Torvalds worked for a chip company while Linux blossomed, and many of his compatriots did the same. BSD Unix? Many contributors worked for either Sun or Apple. And Hewlett-Packard and IBM weren't shy about hiring them, either.

The open source license is perfect for hardware companies: They can take what they want from the common distribution and maintain full control. There's no fear of lockdown or the problem that the central OS company, such as Microsoft or Apple, might demand higher fees, more control, more commoditization, or all three.

Because they demand little beyond the copyright notice, some licenses, such as BSD, are easier to swallow. Others, such as GPL, can require that all new code be contributed back into the common pile, but there are usually ways around it. TiVo, for instance, releases some of its changes to the Linux distribution, but the main application is just that: an application. It doesn't link together tightly with the Linux code, so it escapes the GPL.

Hardware companies don't need to worry about coming up with a compelling sales pitch to get people to contribute when they download an app for free. There's no need for a tip jar or yearly support contract because people have no choice but to shell out for hard items that make a sound when you drop them.

Open source business model 6: Don't sell software
The best open source solution may be to not be the software business at all. One executive at Google told me flat out, "We don't distribute, so the GPL doesn't apply to us." (He was speaking about other open source packages, not the ones Google hosts at Google Code.)

Google may roll its changes into the general distribution of the projects it uses -- or it may not. It's not selling software, after all. It has an entirely different business model: Google and many other Websites don't sell software per se; they just sell the results of using the open source software, so all of the confusing issues about sharing your source code and even duplication go away. Google doesn't need to worry about someone taking its work and setting up another search engine. However, this doesn't mean that Google doesn't contribute in other ways. It often sponsors students to work on open source software under the auspices of projects like the Summer of Code.

Cloud computing and software as a service are trendy technology approaches that work easily with all but the stickiest open source licenses. This flexibility angers some devotees who believe that companies that offer Websites should be forced to distribute their source code if they use open source, an attitude that led the Gnu Software Foundation to create the Affero General Public License (AGPL). However, though there are several projects like the Ryzom gaming platform released under the AGPL, it will be several years before anyone can make any decisions about its success or failure.

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